The International Energy Agency (IEA’s) World Energy Outlook estimates that, based on Scope 1 (direct emissions) and Scope 2 (purchased energy), oil and gas operations today account for around 15% of total energy-related emissions globally. This is the equivalent of 5.1bn tonnes of greenhouse gas (GHG) emissions. Essentially there are only two ways in which the oil and gas industry can meaningfully cut its GHG emissions: reduce fossil fuel production; and reduce emissions at the source of production. Doing both alongside reductions in oil and gas consumption, would, according to the Agency’s Net Zero Emissions by 2050 Scenario, result in a 60% reduction in emissions from oil and gas operations to 2030.

Achieving these targets, however, is fraught with difficulty, particularly because that relies on oil and gas companies setting, and then adhering to, emissions targets. As Imperial College London’s Professor Jim Skea, Chair of the Intergovernmental Panel on Climate Change (IPCC) and a former Energy Institute (EI) President, remarked at International Energy Week in February 2024: ‘Without the energy sector, we cannot have successful action on climate change. A carbon budget will allow us to know how much cumulative CO₂ is put into the atmosphere. But the emissions from the oil and gas sector from the current infrastructure, if conventionally run, would more than exhaust the carbon budget for a 1.5°C increase in global temperature above the pre-industrial average.’

Yet despite the urgency there are clear signs that some players in the oil and gas sector are not only dragging heels but in some cases rowing back from earlier production commitments. Oil major BP stands accused of muddling its targets, on the one hand by pledging in 2020 to cut emissions by 40% by 2030, but then only last year announcing a reversal. In February 2023, the company promised shareholders it would invest heavily into oil and gas projects and ‘recalibrate’ its oil and gas reduction goal from 40% to 25% by the end of the decade. According to the Financial Times, this decision ‘will increase investment in the production of fossil fuels for the rest of the decade by about $1bn per year, beyond previous plans’.

As BP’s former Chief Executive Bernard Looney stated: ‘The conversations three or four years ago were somewhat singular around cleaner energy, lower-carbon energy. Today, there is much more conversation about energy security, energy affordability.’ Defending the company’s stance was Anja-Isabel Dotzenrath, BP Executive Vice President for Gas and Low Carbon Energy, who said that the increased capital expenditure demonstrated the group’s continued commitment to rolling out 50 GW of renewable power by 2030. BP will also maintain a long-term ambition to reach net zero emissions by 2050, she insisted, and to use 50% of investment on low-carbon businesses by 2030.

This optimism could be unfounded, according to Mike Coffin, a former BP geologist who is now Head of Oil, Gas and Mining at Carbon Tracker. ‘Progress on emissions has stalled. We’ve seen incremental progress and some new net zero goals but very few commitments to cut production. But decarbonising oil and gas production basically means planning for production decline,’ he said in a recent report.

BP is not the only oil and gas company to be accused of taking backward steps on its climate strategy. Shell, under new Chief Executive Officer Wael Sawan since 2023, has been criticised in its adherence to its net carbon intensity (NCI) targets by Carbon Tracker. It says that the company fails to guarantee the reductions in absolute emissions required to meet the goals of the Paris Agreement. Without a significant shift in strategy, Shell could possibly fail to reach its 2030 NCI target of a 20% reduction in carbon emissions intensity.

Shell says that it uses NCI to track progress in reducing the overall carbon intensity of its energy products. NCI measures emissions associated with each unit of energy sold, compared with a 2016 baseline. It reflects changes in sales of oil and gas products, and changes in sales of low and zero-carbon products such as biofuels, hydrogen and renewable electricity. ‘To reduce our NCI and meet our targets we need to shift our portfolio to grow sales in low-carbon intensity products,’ Shell said.

It continued: ‘We don’t control our customers’ emissions. We have introduced an ambition to reduce customer end use emissions associated with the oil products we sell (Scope 3 Category 11) by 15–20% by 2030 (compared to reference year 2021). However, we do not believe that setting an absolute Scope 3 target across our gas and LNG sales will help reduce global emissions and progress in the energy transition.’

Moreover, Shell’s much-vaunted reduction in hydrocarbon production (of 1%/y to 2030) will mainly be achieved only through divestments, says Carbon Tracker. Shell’s claim to have achieved an NCI reduction of 3.8% over FY 2016–2022 is also disputed by Carbon Tracker modelling. It claims that when divestments are included – as per the GHG Protocol’s Corporate Accounting and Reporting Standard (GHG Protocol) – Shell’s NCI has actually increased by 5% over this period.

In response, Shell said: ‘To decarbonise our operations and achieve the Scope 1 and 2 reductions to date, we have focused on making portfolio changes such as acquisitions and investments in new, low-carbon projects. We have also decommissioned plants, are divesting assets, and reducing our production through the natural decline of existing oil and gas fields; improving the energy efficiency of our operations; transforming our remaining integrated refineries into low-carbon energy and chemicals parks, which involves decommissioning plants; using more renewable electricity to power our operations; and developing carbon capture and storage (CCS) for our facilities. That is part of delivering more value with less emissions.’

Gulf Arab companies accused of ‘greenwash’ targets
Meanwhile, in the Arabian Gulf, the world’s biggest oil producer Saudi Aramco is seeking a 15% emissions decline by 2035. However, that is on a ‘carbon intensity basis’. This means it aims to reduce the average amount of emissions for each unit of energy produced, rather than absolute emissions. Environmentalists point out this will make it easier for the company to increase overall production while still nominally hitting its target. They accuse the state-owned Saudi Arabian giant of ‘greenwashing’ by touting its 15% decline target while at the same time maintaining production capacity at 12mn b/d of crude oil.

Cutting emissions from oil and gas production requires in the first instance cutting Scope 1 and 2 emissions at source. This needs to be done by reducing methane leakage, eliminating the flaring of excess gas on site, powering oil and gas production facilities with green electricity, installing carbon capture and storage (CCS) technology, and expanding the use of green hydrogen to power refineries. Methane is the principal component of natural gas and a potent contributor to global warming. At the December COP28 Dubai summit, the meeting President and head of the Abu Dhabi National Oil Company (ADNOC), Sultan al-Jaber, launched the Global Decarbonisation Alliance (GDA) to commit to ‘near zero’ emissions of methane from oil and gas member company’s operations by 2030.

The GDA is focused on three key pillars: rapidly scaling the energy system of tomorrow; decarbonising the energy system of today; and targeting methane and other non-CO₂ GHGs. The Alliance includes the launch of the Industrial Transition Accelerator (ITA), which will accelerate decarbonisation across key heavy-emitting sectors and encourage policymakers, technical experts and financial backers to work hand-in-hand with industries to unlock investment and rapidly scale the implementation and delivery of emissions-reduction projects.

However, the initiative has met with criticism. David Tong, Global Industry Campaign Manager at Oil Change International (OCI), a research, communications and advocacy organisation, said: ‘The Global Decarbonisation Accelerator is a Trojan horse for big oil and gas “greenwash”. It is filled with hollow promises and recycled commitments that only address operational emissions, and ignore the 80–90% of oil and gas producing companies’ climate pollution from the oil and gas being burned.’

Scope 3 as elusive as ever
While tackling Scope 1 and Scope 2 emissions are comparatively straightforward, it is Scope 3 emissions – which involve the supply chain – that pose the biggest challenge. The up-front investments required are also formidable.

According to IEA estimates, Scope 3 emissions result in an additional 40% of emissions over and above the 15% of total energy-related GHG emissions from Scope 1 and Scope 2 sources. The Agency estimates that at least $600bn would be required to halve the total emissions intensity of oil and gas operations globally by 2030. Carbon Tracker claims that only nine of the world’s largest oil and gas producers have so far committed to address Scope 3 emissions – BP, Chevron, Eni, Equinor, Occidental Energy, Repsol, Shell, Suncor and TotalEnergies. It adds that, out of these, only Eni’s targets can be judged to be ‘potentially Paris-aligned’, as they include interim goals to cut emissions in absolute terms before 2050.

Some estimates suggest that the oil and gas producers who signed up to the decarbonisation pact at the COP28 summit are set to collectively emit more than 150bn tonnes of CO₂ from their products by 2050. Using the Rystad Energy database to investigate the oil and gas production plans of the over 50 signatories to the pact, the campaign group Global Witness found that overall, the total emissions released will amount to 156bn tonnes of CO₂e. Of the signatories, the most polluting national oil companies are Saudi Aramco and ADNOC, with a combined production of 136.4bn barrels of oil and 5.5bn m³ of gas between them. It contends that the most polluting international oil companies are Eni, ExxonMobil, Equinor, Shell and TotalEnergies, with a combined production of 57bn barrels of oil and 8.4bn m³ of gas.

One major difficulty in tackling Scope 3 emissions is determining exactly who is responsible for cleaning them up. An article in media outlet Carbon Credits outlines the key steps that need to be taken in order to identify indirect emissions sources. These include engaging stakeholders by collaborating with suppliers and customers to gather data on emissions throughout the value chain; undertaking life cycle assessments (LCA) to analyse the environmental impact of products/services from raw material extraction to end-of-life disposal; comparing performance against industry averages to identify areas for improvement; and leveraging advancements in technology, such as data analytics and digital tools, to enhance the accuracy of emission measurements.

Finally, Shell said: ‘The pace of transition depends on action in many areas, including government policy, changing customer demand and investment in low-carbon energy. Our aim is to play our part in a balanced energy transition, where the world achieves net-zero emissions without compromising on delivery of secure and affordable energy which has improved so many lives, and which people will continue to need today and for many years to come.’

• Further reading: ‘Methane emissions: the view from 500 km up’. Jean-Francois Gauthier, Senior Vice President, Strategy, at remote monitoring company GHGSat, reflects on recent changes in national and corporate attitudes to fugitive emissions in the oil and gas sector.
• ‘Escalating action to reduce methane emissions in the oil and gas industry’. Julien Perez, Vice President of Strategy & Policy at the Oil and Gas Climate Initiative (OGCI), calls for a shift in mindset at oil and gas companies in order to successfully tackle methane emissions.