The main source of carbon dioxide emissions is burning fossil fuels. The ongoing burning of fossil fuels is increasing global temperatures and causing climate change. However gas and oil companies continue to invest in new projects that will increase fossil fuel burning. This has the potential to be disastrous for climate change.
Fossil fuels include coal, petroleum, natural gas, oil shales, bitumens, tar sands, and heavy oils (Britannica). When they are burned, they release large amounts of carbon dioxide into the air. Carbon dioxide is a greenhouse gas (Client Earth).
Greenhouse gases trap warmth in our atmosphere and increase temperatures, causing global warming. Global warming causes a number of detrimental effects to climate (drought, floods, fires, etc) and nature (coral bleaching, desertification, habitat destruction).
Together with industry, burning fossil fuels caused 89% of carbon dioxide emissions in 2018. The Intergovernmental Panel on Climate Change (IPCC) wants us to halve fossil fuels within the next 11 years in order to keep temperatures 1.5 degrees warmer than in pre-industrial times.
Oil and gas companies continue to invest in fossil fuels
However a new report by Carbon Tracker has found that most oil and gas companies are planning long term projects fueled by fossil fuels. In 2021 and 2022 large oil and gas companies approved 166 billion dollars of new oil and gas field projects that are ‘almost all’ not compatible with meeting the 1.5 degree target. Up to 58 billion dollars of this budget is planned for projects that could cause temperatures to reach 2.5°C in excess of pre-industrial levels.
In 2023, they are scheduled to make further decisions on another 35 billion dollars in projects. Of this budget, 23 billion dollars is planned for projects that could see temperatures exceed 2.5°C.
“Oil and gas companies are marketing themselves as part of the solution to climate change while simultaneously planning production increases that would lead to climate catastrophe. Companies cannot claim to be aligned with global climate targets unless they are planning to cut production.”Thom Allen, Oil & Gas Analyst (on Carbon Tracker)
Of 20 of the world’s major producers, BP is the only firm that is planning to reduce oil and gas production (Sky News). Shell, Total Energies and Eni plan to reduce oil production but increase gas production. This is despite the fact that the International Energy Agency (IEA) found in 2021 that not one single field is compatible with reaching the 1.5°C target.
“The world will still need oil and gas for years to come, including for sectors like heavy industry that cannot easily run on electricity. Investment in oil and gas will ensure we can supply the energy people will still have to rely on, while lower-carbon alternatives are scaled up.”Shell Energy on Sky News
The industry expects demand for gas to level off and demand for oil to continue to grow into the 2030s. We have written before that the UK is still heavily dependent on fossil fuels like oil and gas for heating, cooking and transport. In September this year, the UK Government announced new licensing for oil and gas production in the north sea.
Financing fossil fuels
In 2020, HSBC invested up to 1 trillion dollars in clean energy as part of a ‘net zero’ pledge. Then in 2021, the bank was criticised for investing 8.7 billion dollars in new oil and gas (BBC).
HSBC has announced this week that it will join Lloyds Bank and will not finance new oil and gas fields, although they will maintain existing loans. In 2021, Lloyds loaned 1.1 billion dollars to commercial gas and oil companies (Reuters). Lloyds made an announcement in October 2022 that it would not fund new projects.
It is hoped that other major banks will follow Lloyds and HSBC. Banks will play a critical role in reducing greenhouse emissions. We can take action by ensuring that we place our business with banks that share our values and support clean energy.