By Paul Homewood
Fiona throws her toys out the pram!
The world’s state-owned fossil fuel companies are poised to invest about $1.9tn (£1.4tn) in the next decade in projects that would destroy any prospect of meeting the Paris agreement climate goals.
A large proportion of these investments are likely to become stranded assets, with at least $400bn unlikely to be profitable if the world sticks to its promises to hold global heating to less than 2C (3.6F) above pre-industrial levels, according to a report from the Natural Resource Governance Institute thinktank.
David Manley, the lead author of the report and a senior economic analyst at the thinktank, said: “A lot of the oil industry wants one last party, and they are going to invest trillions. We are worried about how long that party will continue. If the energy transition [away from fossil fuels and into clean energy] is to be fast enough to meet the Paris agreement, the party needs to be over very quickly.”
National oil companies (NOCs) produce about two-thirds of the world’s oil and gas and own about 90% of reserves. They are rarely scrutinised, however, as their state ownership means they can operate secretively, without publishing much detail on their finances or operations, as publicly listed oil companies such as Exxon, BP and Shell must.
While some publicly listed oil companies, including BP and Shell, have bowed to shareholder pressure and vowed to reduce their greenhouse gas emissions and divert at least some investment into green technologies, the power of the NOCs is such that they could easily outweigh the emissions-cutting efforts of other major players with their own investments. Manley said: “We can see some of these NOCs cancelling out the progress made by some of the big oil companies.”
NOCs are generally accountable only to their national governments, and often only a handful of top officials within those governments are responsible for decisions on hundreds of billions of pounds in investment. Such officials tend to be responsible for generating revenues from their state-owned fossil fuel assets, but carry little or no responsibility for climate change targets.
“They are still holding on to visions of being world-class operators and strutting the global stage with these companies,” said Manley. “We are worried that they are not seeing the need to reassess their long-term strategies.”
Many of the countries with NOCs are highly dependent on oil and gas revenues. They should be helped to overcome this dependence, according to Manley. “These countries are often quite poor, and it’s not their fault – it is not as easy as saying to BP and Shell they should shut down,” said Manley.
China, India and Russia are expected to be responsible for the biggest chunk of investment from NOCs. China has signed up to a long-term goal of net zero emissions by 2060, and India has laid out a strong investment plan for renewable energy. Russia is signed up to the Paris agreement, but has not taken a strong stance in favour of climate action at international talks and has worked behind the scenes to scupper some progress at previous talks.
Perhaps somebody ought to tell the Guardian most of the countries mentioned actually don’t give two hoots about the Paris Agreement, nor are they in any way committed to it.
China, India, Russia, the Middle East and others in Africa and Latin America are concerned first and foremost with their own economies and the wellbeing of their citizens. If that means continuing to drill for oil, then that is what they will do.
Indeed the fact that 90% of the world’s gas and oil reserves is owned by NGOs makes a nonsense of attention handed out to companies like BP and Shell. If disinvestment and other forms of pressure succeed in driving them from the market, NGOs will quickly take their place.
Even if China’s 2060 promise was credible, they and the rest of the world will continue to need oil and gas in ever increasing quantities until then. And that means investing in and developing oilfields for decades to come.
via NOT A LOT OF PEOPLE KNOW THAT
February 12, 2021 at 08:27AM