Energy giants Shell and Total continue to spend 90% of their investments in planet-warming fossil fuels amid commitments to reduce their greenhouse gas emissions, according to an industry study conducted exclusively by AFP.
With combined emissions equal to that of Germany — the world’s fourth largest economy — both companies are likely to fall “just short” of their own sustainable investment goals, the Institute for Energy Economics and Financial Analysis (IEFA) said.
The study comes after a series of business behemoths have committed themselves to reducing their carbon emissions in line with the Paris climate agreement of 2015, which calls for global warming to be capped below two degrees Celsius above pre-industrial levels.
It notes that even two of the energy companies most associated with the objectives of the agreement often invest just a fraction of their revenue on raising their emissions.
Shell, which plans to minimize its net carbon footprint by 65 per cent by 2050, invests just 3-5 per cent of its resources on renewables and is likely to meet its target of $4-6 billion annually for green energy projects by 2020, IEEFA said.
In the same way, Total would be difficult to achieve its own goal of building 25 gigawatts of renewable energy by 2025, the report found.
The French energy giant has vowed to be “net zero” in Europe by 2050 and to reduce its carbon emissions by 60% or more by then.
Carbon intensity refers to the amount of greenhouse gas emissions produced per unit of energy created.
Shell spokeswoman said that the firm does not have a clear investment goal on renewables, but spends 55% on the energy transition — including natural gas and biofuels.
“We agree that action is needed now on climate change, we fully support the Paris Agreement and the need for society to transition to a lower-carbon future and we’re committed to playing our part,” she told AFP.
Total did not comment on the IEEFA report, but said it already spends more than 10% on low-carbon energy. It plans to increase this to 20% by 2030.
-Big emitters-The IEEFA said that while both majors have made strides in greening their portfolios, they are on track to lose out on their renewable goals without a major move away from fossil fuel finance.
It is projected that Shell and Total will need to invest $10 billion annually in renewables — about 50 per cent of their capital spending and much more than they currently spend.
“It is difficult to see how either company will achieve the massive transformation in carbon intensity they aim for without a fundamental shift away from oil and gas investment,” said Clark Butler, who compiled the analysis.
Taking into account their Scope 3 emissions — that is, carbon pollution generated when customers use their products — Shell and Total are “one of the most important contributors” to the build-up of greenhouse gasses in the Earth’s atmosphere, the study said.
Shell ‘s cumulative annual emissions last year amounted to 656 million tons of CO2 equivalent, while Cumulative released 458 million tons, according to the company’s own estimate.
By contrast, Australia, the world’s 14th largest economy, produced 530 million tons of CO2E in 2019.
“Shell and Total together are responsible for more carbon emissions than Germany, the world’s sixth largest emitter,” Butler told AFP.
“It is impossible for them to be net zero unless they invest more in zero emissions energy and less in fossil fuels.”
Some progress-The study said that in recent years, Shell and Total have invested substantial capital in renewables.
Total has expanded its renewable energy capacity from 3GW in 2019 to more than 6.6GW currently under production. It is preparing to build an additional 4.6GW by 2023.
“No other major oil company is rising renewables this high,” said the report.
Since 2019, according to the IEEFA, Shell has signed more renewables deals than any other big company.
Nonetheless, it said that such transactions were fairly small, adding that it was difficult to see how Shell ‘s 2017-2020 renewables target will be achieved “unless it drastically modified its approach.”
The study compared the two strategies with some of their business rivals, including the Spanish energy firm Iberdrola, the American NextEra and the Danish company Orsted.
For example, Iberdrola has vowed to invest EUR 34 billion in renewables by 2022.
Butler noted that Iberdrola’s share price has risen by 54 percent in the last two years, relative to Total (down 35 percent) and Shell (down 53 percent).
“An investor might well ask, why invest in Shell or Total to gain exposure to renewable energy when I could invest in NextEra, Orsted or Iberdrola, given these firms are far more advanced in the transition?” he asked.
