Fossil fuel giants reject calls to keep oil, gas and coal in ground

Heads of Statoil, Glencore and Total use Paris summit to register climate concern but dismiss stranded asset fears

(Pic: BP)

(Pic: BP)

By Megan Darby in Paris

Very few fossil fuel executives today openly reject the basic science of man-made climate change. US coal giant Peabody’s recent attack on “flawed models” was an exception.

Indeed, at this week’s Business and Climate Summit in Paris bosses of Statoil, Glencore and Total are joining calls for an effective global emissions-cutting deal.

Saudi Arabia’s oil minister is present, talking up his country’s renewable energy plans.

But their responses to warnings coal, oil and gas assets could be “stranded” by climate action tell a different story.

“We are going to produce oil and gas for a long time and I see no scenarios where that is not the case,” says Statoil’s Eldar Saetre, in a typical statement.

There is not a single coal, oil or gas company that has a business plan in line with the internationally agreed 2C warming limit.

The emissions from burning their products, as things stand, will blow the carbon budget.

All expect significant energy demand growth out to 2050, to be largely met by fossil fuels.

And the International Energy Agency’s forecasts back up that message. Ali Al Naimi, oil minister and climate negotiator for Saudi Arabia, cites another IEA figure – 1.3 billion people around the world lack access to electricity.

“Our priority must be access to energy for all – and by this I mean access to all forms of energy,” he says. “Our challenge is to make this energy affordable, reliable and climate-friendly.”

Scientists estimate more than 80% of coal, half of gas and a third of oil are “unburnable” in a 2C world. Increasingly, oil and gas companies are happy to foresee the death of coal, but insist their own assets will not lose value.

When pressed, the typical response is that they don’t see the political will to enforce 2C – exactly the political will this summit is meant to bolster.

Statoil, which aims to be the most carbon efficient oil company in the world, according to Saetre, is exploring the Arctic for oil and gas.

That is one of the most expensive sources, analysts say, and will not pay off if effective emissions curbs dent oil demand.

Saudi Arabia is better placed, with its mature oil infrastructure, to be one of the last to halt oil production.

In an economically rational world, its relatively cheap oil will find a market longer than other sources.

Peabody is not represented in Paris. Glencore Xstrata, which in its latest sustainability report insists none of its coal mines will be stranded, is.

Tony Hayward, chairman of Glencore and CEO of oil company Genel, turns on Asia’s emerging economies.

“Unless what we deploy allows China and India to complete their industrialisation in a different way to how we industrialised, we are simply rearranging the deckchairs on the Titanic,” he says.

India is planning 200GW of coal-fired power stations, claims Hayward. They are using old technology and should be helped to invest in more efficient plants, he argues.

Small steps

That is not to say they are doing nothing. Total has a majority stake in SunPower, the world’s second biggest solar energy company.

Statoil is investing heavily in offshore wind power – an industry in keeping with its expertise working in harsh sea conditions.

Both talk about ending routine flaring and cutting operational emissions.

Saudi Arabia aims to be producing solar power at gigawatt scale in the next five years, according to Al Naimi.

Ultimately, he says: “Instead of exporting fossil fuels, we will be exporting gigawatts of electric power.”

But on the subject of when fossil fuels will be phased out of the global economy, he says: “I don’t believe we can do it by 2050.”

That may be put to the test. There is increasing support for a long term emissions goal as part of a global climate deal in Paris this December.

There are various options under consideration, the most radical involving net zero emissions by 2050.

Scientists at Climate Action Tracker say the world needs to go carbon neutral between 2060 and 2080 for a decent chance of limiting temperature rise to 2C.

That means virtually eliminating fossil fuel use and reversing decades of deforestation.

The presidents of Germany and France have thrown their weight behind a target to totally decarbonise before the end of the century.

Whatever fossil fuel producers say in support of climate action, this drive directly threatens their interests.

Read more on: Carbon bubble | Energy | |