Two of the London Stock Exchange’s largest companies have continued to back multibillion-dollar projects that would be uneconomic if the world commits to the Paris climate goals, according to Carbon Tracker.
Royal Dutch Shell (RDSB), the largest FTSE company by market capitalisation, and BP (BP.) have continued to give new oil and gas projects the green light despite making noises about considering ways to limit global warming in the project development stage.
Carbon Tracker’s new report looks at the economics of major projects signed off in 2019 and 2018 in a scenario where the world limits global warming to “well below two degrees”. The headline figure is 18 projects worth $50bn (£40.5bn) in capital expenditure have been sanctioned since January 2018, and all would be uneconomic if temperatures were held to 1.7 to 1.8 degrees due to a forecast slump in oil and gas demand alongside the move to a less carbon-intensive global economy. Shell’s $6.5bn LNG Canada project and BP’s $1.3bn Zinia 2 (to be operated by Total) could end up as stranded assets, according to the report.
In the International Energy Agency’s more intense 1.6 degrees of warming scenario (‘beyond 2 degrees’), which assumes mass take-up of carbon capture and storage technology, oil would fall to $40 a barrel and therefore higher-cost projects would become unfeasible in the long term.
Carbon Tracker’s Andrew Grant said the two supermajors knew the climate science but were ignoring it in a practical sense. “What we can see is that these companies are investing on the assumption that Paris won't be achieved,” he said. In a speech in July, Shell chief executive Ben van Beurden said his company wanted to be part of a “global climate coalition of business” dedicated to hitting the Paris goals. He also underlined the company’s goal of cutting 50 per cent of the net carbon intensity of its products by 2050.
Mr Grant said Shell’s goal was on a per-joule basis and therefore could have no impact on its overall carbon emissions. “It means they can continue to produce oil and gas on a steady level, or even increase it, as long as they add low-carbon power,” he said. BP is working on a plan to outline how much of its spending is Paris compliant.
