Chinese state oil companies China Petroleum & Chemical Corporation (Sinopec), PetroChina and CNOOC rank near the bottom on a gauge of climate pledges made by the world's largest oil and gas companies, just above Saudi Aramco, according to a report by Carbon Tracker.
The London-based independent think tank's Absolute Impact 2023 report, released on Thursday, assessed and ranked the emissions-reduction commitments of 25 of the world's largest listed oil and gas companies.
The report warned that the companies have no plans in place to reduce production by amounts sufficient to comply with the Paris Agreement goals that aim to limit human-induced global temperature increases to 1.5 degrees Celsius.
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"Our analysis shows that the world's largest oil and gas companies are far from aligned with the 1.5-degree Paris goal and they continue to put investors at risk by failing to plan for production cuts as the energy transition gathers pace," said Mike Coffin, head of oil, gas and mining at Carbon Tracker and co-author of the report.
PetroChina Southwest Oil and Gasfield Company began drilling a 10,520-metre-deep borehole in Jiange County, in southwest China's Sichuan Province, in July 20, 2023. Photo: Xinhua alt=PetroChina Southwest Oil and Gasfield Company began drilling a 10,520-metre-deep borehole in Jiange County, in southwest China's Sichuan Province, in July 20, 2023. Photo: Xinhua>
"Investors have the least influence on majority-state-owned companies and they should be aware that these are doing the least to align with Paris."
Carbon Tracker's fourth annual report on climate targets expanded its analysis from 15 to 25 of the world's largest publicly traded companies, by volume of production in 2022, and included majority-state-owned companies for the first time.
Sinopec, the world's largest oil refiner by capacity, brought up the rear among the Chinese state-owned companies and was ranked 24th. PetroChina, China's largest oil and gas producer, was in 23rd place, while Chinese offshore oil and gas firm CNOOC had the highest ranking at 20th.
None of the Chinese state-owned oil and gas companies, along with all those on the list except for Italian energy company Eni, fulfilled the minimum requirements to align with the Paris Agreement, according to Carbon Tracker.
According to Sinopec's reduction targets for greenhouse-gas emissions, published on its website, it aimed to reduce 12.6 millions tonnes of carbon dioxide emissions during the 2018-to-2023 period. However, in its 2022 sustainability report released in March, it said it had already reduced 19.68 million tonnes of carbon dioxide emissions as of the end of 2022.
PetroChina has set a goal to reduce operational emissions to "near-zero" emissions by around 2050, according to its 2022 environmental, social and governance (ESG) report, released in March.
Meanwhile, CNOOC has set targets to achieve a cumulative reduction of more than 577,000 tonnes of carbon dioxide equivalent in 2023, ramping that up to 1.5 million tonnes by 2025, according to its 2022 ESG report in April.
In order for a company's emissions target to be potentially aligned with the Paris Agreement, it must include full life-cycle emissions, target net-zero by 2050 on a full life-cycle basis with absolute interim goals, and cover emissions from the company's own production and product sales on a full-equity share basis, including downstream product sales from third-party crude, according to Carbon Tracker's report.
Saudi Aramco has set a net-zero target for its Scope 1 and 2 greenhouse gas emissions - those generated directly by companies' own facilities or indirectly through externally bought energy, respectively - but only for "wholly owned operated assets".
"Saudi Aramco is the only company in our universe to restrict emissions reductions to wholly owned operated assets, which is a narrower definition of operated assets that excludes those that may be co-owned by other investors," Climate Tracker's report said. "As such, it brings up the rear."
CNOOC, Sinopec, PetroChina, Saudi Aramco and Eni did not immediately reply to the Post's requests for comments.
Oil and gas majors have been returning more capital to their shareholders than they have been reinvesting in low-carbon areas, according to Bain & Company's Global Energy and Natural Resources report, released on Thursday.
In the oil and gas sector, only 43 per cent of capital was reinvested for growth in 2022, down from 58 per cent in 2018, according to the report, compiled by Bain from S&P Capital IQ data on 75 of the top energy and natural resources firms by market capitalisation in each sector as of April 2023.
According to Bain's early 2023 survey of more than 600 executives across the global energy and natural resources sectors, the top barriers to decarbonisation were concerns around the return on investment and customer's willingness to pay, chosen by 78 per cent of respondents.
"Energy transition ambitions demand record-setting investment in many sectors, and so far, capital expenditure is significantly lagging," said Joe Scalise, global head of Bain's energy and natural resources practice, in a statement.
"Far from this being an issue of 'dry powder' or capital availability, it's an issue of customer value, willingness to pay, and the ability of policymakers and regulators to set the rules of the game to generate sufficient returns."
