29 March 2024 – On March 18, oil and gas CEOs at the annual CERA week conference in Texas announced that the clean-energy transition is failing and that the world should ‘abandon the fantasy’ of a fossil-fuel phaseout. Two days later, the world-renowned Carbon Tracker Initiative announced that not a single one of the largest 25 listed oil and gas companies are in alignment with the goals of the Paris Agreement. Quite the opposite, most of the companies evaluated are actually planning to increase fossil fuel production over the next decade.
Driven by the record profits of 4 trillion dollars over the last year, oil and gas companies are doubling down on production and blatantly ignoring their responsibility to transition to a low-carbon future and limit global heating to 1.5C. Indeed, over 400 projects are being planned that could release 1,180 gigatons of CO₂ over their lifetime. This would blow the remaining carbon budget, updated at just 250 gigatons of carbon dioxide. The math speaks for itself: the volume of new CO₂ released by the 400 carbon bomb projects is double the actual carbon budget remaining needed to prevent irreversible consequences from climate breakdown.
This is a sobering reminder of just how far off the mark we are in the climate change battle, especially compared with the authoritative science that has been settled for years. The International Energy Agency has warned in their annual reports since 2021 that there can be no new investments in oil, gas and coal after 2021 if we are to limit global warming to 1.5ºC.
But fossil fuel companies and the governments who sanction expansion are not just the only duplicitous parties. Last year, banks invested more than $150 billion into companies whose giant “carbon bomb” projects could destroy the last chance of preventing climate breakdown. New evidence reveals that between 2016 and 2022, American, Chinese and European banks were responsible for over $1.8 trillion in financing to companies planning or operating carbon bombs. The duplicity in these banks’ fossil fuel financing practices stems from the fact that financial institutions continue to invest billions after having openly committed to net zero when they joined the Glasgow Financial Alliance for Net Zero (GFANZ) at COP26. Shockingly, 229 of the world’s largest fossil fuel companies have since received finance from the 161 GFANZ members.
The chain of responsibility also extends to the top shareholders of the five oil companies, notably the world’s most dominant asset managers: BlackRock, Vanguard, and State Street Global Advisors who are rapidly increasing their shareholdings. These top institutional shareholders have increasingly exercised their voting power to block a swift transition away from fossil fuels. Instead, they are pressuring fossil fuel companies to focus on higher financial returns rather than energy transition projects.
At a time when the world is gripped in a planetary emergency, the fossil fuel industry is pouring hundreds of billions of dollars into oil and gas, hedging bets that the global emissions will not be curbed, thereby protecting trillion-dollar profits that are recycled back into a system that is drawing us further to climate breakdown.
Indeed, BP, ExxonMobil, Chevron, Shell and TotalEnergies together posted $200 billion in profits in 2022. But these profits have been distributed almost entirely to shareholders in the form of dividends and share buy-backs, thereby rewarding CEOs and shareholders, at a time when millions globally live without access to electricity or are struggling to heat their homes. It has been estimated that just 18 days of fossil fuel companies’ profits would cover the entire UN humanitarian appeal for 2022.
The fundamental issue that must be called out is that oil companies, asset managers, institutional investors, and financiers continue to behave with impunity. From sustained campaigns of disinformation, withholding true risks to investors, and blocking progress at international COPs and domestically, all these petroactors are operating in a state of lawlessness. The problem is that the Paris Agreement does not contain any legally binding agreements, and most petrostates who fought fiercely against the call from 130 nations at COP28 for a fossil fuel phase-out, do not sufficiently regulate oil and gas companies. In many cases, national governments have also been too lax with due diligence and anti-greenwashing laws to prevent oil and gas companies from claiming net zero ambitions. Moreover, windfall profits are rarely taxed, and in many oil producing states, oil revenues are spent on subsidies.
The fact that oil and gas companies continue to act with impunity, is as much a responsibility of our economic, political and legal systems as it is the CEOs of these firms who are all avoiding responsibilities to phase out fossil fuels. This is part of a deeper systemic problem. Our current model of economic competition grossly underestimates the price and risks of fossil fuels and underspends on green recovery because it upholds over everything, the maximisation of shareholder value – at any cost.
The hard reality is that this fundamentally flawed system is now seriously out of control. It is locking the world into a fossil fuel path-dependency that will most certainly increase climate chaos, poverty and inequality, all of which drive up social tensions and drive down wellbeing everywhere.
This scenario is highly likely, but so is another one. It is a world where renewables actually get us to net-zero emissions by 2050. Renewable energy technologies exist and are being rapidly deployed around the world because they are cheaper than coal and fossil fuels. In a year with a record number of national elections, more than 2 billion people will go to the polls in 50 countries. Now is the time for voters to counter the stranglehold that the fossil fuel interests have on political decision-makers. Now is the time for them to bring real pressure to bear on their governments to muster the political courage to rapidly scale up renewables, starting with the tripling of investments in renewables to the amount of 4 trillion each year until 2030. This amount is nowhere near the global amount spent on fossil fuel subsidies, but these investments could actually save the world up to $4.2 trillion per year by 2030.
There is no way around tackling the climate crisis without ending our reliance on fossil fuels. In the words of the UN Secretary-General António Guterres, “fossil fuel phase out is inevitable. But the lifeline is right in front of us, and without renewables, there can be no future”. Once again the math is clear. The money is there.
What is missing is the moral rectitude of governments, multilateral development banks, and public and private financial institutions to align their lending to accelerate the renewable energy transition.
Anything else plays into what the UN Secretary-General describes as the “grotesque greed” and sheer immorality of oil and gas companies making record profits on the backs of a fuel and food starvation crisis gripping billions around the world.
Authoritative climate science and justice demands an end to the impunity of all those petroactors who continue to benefit from $2.8 billion in daily profits when more than two billion people live in energy poverty. Petroactors must face a hard moment of truth: become part of the solution by embracing the shift to renewable energy or continue to contribute to the worsening of the climate crisis, driving greater instability of the planet and threatening the future of humanity.
