In question is a proposed development called the Energy Transition Zone (ETZ), which is intended to bring in more renewable energy investments as the city tries to cut its dependence on the oil and gas industry that has defined it for half a century. 

As the UK’s new Labour government promises not to issue any more oil and gas licences, the future of the sector is in doubt and the company behind the ETZ says it wants to “protect and create as many jobs as possible” in the region through investing in clean energy.

But the ETZ has received significant pushback from community groups in the part of Aberdeen it is destined for. That’s because the proposed development, as currently designed, would pave over about a third of St. Fittick’s Park in Torry, the only public green space in one of Scotland’s most neglected urban areas.

The battle over St Fittick’s Park illustrates the friction that is emerging more frequently around the world as the ramp-up of clean energy infrastructure changes communities. Climate Home has reported on these tensions provoked by Mexico’s wind farms, Namibia’s desert hydrogen zone, Indonesia’s nickel mines and Germany’s Tesla gigafactory.

Just transition?

The ETZ is backed by fossil fuel giants BP, Shell and local billionaire Ian Wood, whose Wood Group made its money providing engineering and consulting services to the oil and gas industry.

The plan is to create campuses focused on hydrogen, carbon capture and storage, offshore wind, and skills development in an area initially the size of 50 football pitches, but expanding as private investment grows. 

To this end, ETZ Ltd – the company set up to build and run the zone – will receive up to £80m ($103m) from the UK and Scottish governments. Announcing some of that funding in 2021, the Scottish government’s then net zero, energy and transport secretary Michael Matheson said “urgent, collective action is required in order to ensure a just transition to a net-zero economy”, adding “Scotland can show the rest of the world how it’s done”.

But many Scottish climate campaigners don’t see this as a just transition. About 100 of them travelled to St. Fittick’s Park last week to hold a five-day “Climate Camp” in a clearing that would become part of the ETZ.

One camper, who did not want to give her name, told Climate Home that the energy transition should not “exacerbate existing inequalities, but try to redress existing inequalities”. A just transition, she said, must protect both workers in the fossil fuel industry and community green spaces.

Another protestor who did not want to giver her full name is Torry resident Chris. She said “the consultation process was flawed”. Not many people participated to start with, and some stopped going to meetings because “they were disillusioned with the way that good ideas were co-opted and then used to justify the expansion of the industrial area into the park”, she added.

Green MSP Maggie Chapman at the Climate Camp on 13 July (Photo: Hannah Chanatry)

Local Member of the Scottish Parliament (MSP) Maggie Chapman, from the Scottish Green Party, agreed, adding “the best transition zone plan in the world will fail” if it is done to a community rather than with meaningful input from them.

Another protesting resident, David Parks, said wealthier parts of the city would not have been disregarded in the same way. “You wouldn’t see this in Old Aberdeen and Rosemount,” he said. “[Torry] is just kind of the dumping ground for all these projects that you wouldn’t get off with anywhere else.”

Industrial developments have encroached on the old fishing town of Torry for decades. Today, residents are hemmed in by an industrial harbour, roads and a railway and live alongside a waste-to-energy incinerator, a sewage plant, and a covered landfill. 

David Parks at the Climate Camp in St. Fittick’s Park on 13 July (Photo: Hannah Chanatry)

Some of the activists also take issue with the emphasis the ETZ places on hydrogen and carbon capture and storage, which they see as “greenwashing”. 

Hydrogen is a fuel that can be made without producing greenhouse gas emissions, and used to decarbonise industries like steel-making which are difficult to clean up.

But a Climate Camp spokesperson told Climate Home that, “given the industry’s tendencies” and the fact that 99% of hydrogen is currently made using fossil fuels, they assume it will be produced in a polluting way at the ETZ.

Backers respond

ETZ Ltd told Climate Home in a statement that the project is committed to collaborating with the local community, particularly on efforts to refurbish what would be the remainder of the park. 

While the ETZ’s opponents argue there are existing industrial brownfield sites in the area that could be used instead of the park, the company said the area in St. Fittick’s Park next to the port is essential for the development to draw in substantial investment for renewables and for Aberdeen to compete in a new energy market.

Many brownfield sites are already planned for use by the ETZ, and would not provide the kind of logistical access needed for the planned projects, they added.

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“Almost all other ports in Scotland are making similar investments, and we simply don’t want Aberdeen to miss out on the opportunity to position itself as a globally recognised hub for offshore renewables and the significant job benefits this will bring,” said the statement.

The company added that the original plans for use of the park had been considerably reduced and the new master plan includes several measures to revitalise parts of the park and boost public access. It includes several parklets, a boardwalk, enhanced wetlands and a skate and BMX bike park.

While the oil industry’s backing has raised campaigners’ eyebrows, ETZ Ltd said the industry’s involvement is key to ensuring the development of skills and jobs central to the ETZ’s goals. 

The section of St. Fittick’s Park  up for development was rezoned in 2022 by the Aberdeen City council in order to allow industrial use of the land. Campaigners have challenged that decision and Scotland’s highest civil court will issue a judicial review later this month.

“You can’t just switch it off”

The ETZ dispute is just one example of efforts across Scotland to navigate the planned shift away from fossil fuels to renewable energy.

Tools to support a transitioning workforce have stalled. An offshore skills passport is meant to streamline and unify the certification process for both the fossil fuel and renewable offshore industries, to enable workers to go more easily from one sector to the other. But it was delayed for years before a “roadmap to a prototype” was released in May this year.

“The people can see a future, but it’s not happening – and they can see the current reality, which is [fossil fuels] declining, and that makes it very challenging,” said Paul de Leeuw, director of the Energy Transition Institute at Aberdeen’s Robert Gordon University. 

He said the focus needs to be on manufacturing and the supply chain, as that supports about 90% of employment in renewables such as solar and wind power. “If you don’t get investment, you don’t get activity, you don’t get the jobs,” he added.

That’s the key concern for Alec Wiseman, who spoke to Climate Home while walking his dog in St. Fittick’s Park on Saturday. He seemed mostly unbothered by the climate camp, but complained it meant he couldn’t let his dog off leash. 

Alec Wiseman walks his dog in St. Fittick’s Park on 13 July (Photo: Hannah Chanatry)

A Torry resident, Wiseman worked offshore for 25 years. He said he wants the ETZ to leave the park alone – and he also wants the overall energy transition to slow down until there is a clear plan.

“The government needs to sit down with the oil companies and figure out something proper” for both the transition and the ETZ, he said, expressing scepticism about employment in wind energy. Overall, operating wind farms, once they’re up and running, does not require as many skilled workers as operating an oil and gas field. “You can’t just switch it off [the oil and gas],” he said.

Lack of planning is what worries Jake Molloy, the recently-retired regional head of the Rail, Maritime and Transport Workers Union (RMT). Before leading the union, Molloy spent 17 years working offshore, and now sits on Scotland’s Just Transition Commission. He has spent years advocating for a fair deal on behalf of workers and local communities.

“We need to do that value-sharing piece, that community-sharing piece, which was lost with oil and gas,” he said, referencing the privatisation of the industry in the 1980s. Right now, he says, communities that bear the brunt of the impact of oil and gas production don’t see the majority of the benefits – those flow to corporations. “If we allow that to happen again, we’re a million miles away from a just transition,” he warned.

UK court ruling provides ammo for anti-fossil fuel lawyers worldwide

Molloy also thinks the investment and jobs promised by the ETZ are not realistic, because previous changes to government policies caused too much whiplash, making investors shaky. However, he is curious about what will come from Labour’s announcement of Great British Energy, described as a “publicly-owned clean energy company” headquartered in Scotland.  He also hopes to see climate change addressed on a crisis footing, similar to the approach to the COVID pandemic.

There are indications of renewed momentum on renewable energy in the UK. The Labour government has already lifted an effective ban on onshore wind in England and brought together a net-zero task force led by the former head of the UK’s Climate Change Committee,  Chris Stark. 

“In the context of an unprecedented climate emergency,” the ETZ said in a statement, “there are widespread calls from government and industry for energy transition activities to be accelerated.”

But, for many, it is still too soon to know whether that shift will materialise, and be implemented in a just way.

“The opportunities are there,” said MSP Chapman. But, she added, “it requires political and social will to make it happen and that’s the big challenge.”

(Reporting by Hannah Chanatry; editing by Joe Lo and Megan Rowling)

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According to satellite data released by the World Bank on Thursday, gas flaring increased by 7% in 2023, reversing a decline in 2022. The rise resulted in extra planet-warming emissions equivalent to 23 million tonnes of carbon dioxide (CO2) – similar to adding about 5 million cars to the roads, it said.

Gas flaring emits greenhouse gases including black carbon and methane, which has a warming effect about 80 times more potent than CO2 over a 20-year period.

The top flaring countries in 2023 were Russia, Iran, Iraq and the United States, with just nine countries responsible for 75% of gas flaring globally.

Last year also saw an uptick in the intensity of flaring, meaning the amount of gas flared per barrel of oil produced, as oil prices spiked above $90 a barrel in the autumn.

In some countries, such as Iran and Libya, increased flaring intensity was attributed to increased oil production, coupled with a lack of investment in and prioritisation of gas recovery and utilisation.

Intensity was also high in countries affected by conflict, such as Syria, where operators struggle to address flaring.

“We’re hopeful that this is somewhat of an anomaly and the longer-term trend will be dramatic reductions,” said Zubin Bamji, manager of the World Bank’s Global Flaring and Methane Reduction (GFMR) Partnership, which monitors flaring and supports governments and oilfield operators to reduce related emissions.

Decoupling trend

That hope is underpinned by the “decoupling of a long-standing correlation between oil production and gas flaring” since the late 1990s, Bamji explained in emailed comments.

Operators can minimise flaring through measures such as re-injecting gas back into the earth or capturing it for utilisation.

Demetrios Papathanasiou, director of the World Bank’s energy and extractives global practice, said in a statement on the data that if the wasted gas were captured and used, it could displace dirtier energy and generate enough power to double electricity supplies in sub-Saharan Africa.

EU warns “delaying tactics” have made plastic treaty deal “very difficult”

But others argue that using flared gas more efficiently – or regulating flaring and its related methane emissions – will not be eliminate the practice as long as fossil fuels are still being produced.

“The number one thing we need to do is put the oil and gas industry into decline,” said Lorne Stockman, research co-director at Oil Change International (OCI), a nonprofit group that campaigns against fossil fuels.

Pledges versus regulation

The increase in flaring suggests that growing global attention and initiatives to eliminate flaring have not been “sufficient or sustainable enough”, according to the World Bank’s report.

Operators and countries representing about 60% of flaring worldwide have endorsed the World Bank’s Zero Routine Flaring by 2030 (ZRF) initiative, while 155 countries have signed a Global Methane Pledge, launched at the COP26 climate summit in 2021, to collectively cut methane emissions.

Jonathan Banks, global director of methane pollution prevention at Clean Air Task Force, an environmental group focused on decarbonising energy, said those initiatives are “helpful”.

But, he added, governments and companies are still “not doing nearly enough” to stop flaring, whether in the form of policies to force businesses to take action or energy firms’ own plans and investments.

Despite dilution, officials say new nature law can restore EU carbon sinks

That is changing, Banks said, referring to recently introduced regulations in the United States, Canada and the European Union which aim to reduce methane emissions. “But those new policies take time to be implemented and enforced,” he noted.

The EU’s Methane Strategy, adopted in May, will include a methane transparency requirement on gas imports that looks to penalise gas flaring and venting – an even more polluting practice of releasing unignited gas.

“The potential to use access to the European market as a way to drive action is huge,” Banks said, adding that only a global standard, applied to all internationally traded oil and gas, could bring an end to flaring and venting.

US gas “certification”

Without such a standard, oil and gas companies are in practice policing themselves when it comes to curbing flaring and methane emissions more broadly.

In the US, for example, third-party gas “certification” companies track methane emissions coming from oil and gas infrastructure and tell consumers their gas is “responsibly sourced”.

According to OCI, there is no set standard for what level of methane leak reductions qualify natural gas for this label.

“Methane became a reputational issue for the US oil and gas industry a few years ago,” said OCI’s Stockman. “Suddenly we saw this proliferation of companies offering to monitor methane, and provide a certification to gas producers as an incentive to sign up.”

Gas certification is currently part of oil and gas companies’ voluntary efforts to act on their methane pollution – in the US, Colorado is the only state that directly measures methane emissions from oil and gas infrastructure. But, according to OCI, the industry is pressing regulators to use certification “as a proxy for regulatory oversight.”

Fossil fuel industry under pressure to cut record-high methane emissions

Research by Earthworks and OCI found that these certifying companies use unreliable technology, which missed all but one of the emissions “events” captured by researchers’ own monitoring equipment.

They also found conflicts of interest on the part of leaders and board members of certification companies, including holding investments in the same oil and gas clients they were working with and promoting fossil gas as a clean energy source.

While regulation is needed, Stockman said, it must be monitored by governments and is near impossible to enforce at scale, due to practical and technological limitations.

Even satellite technology is limited in its capacity to observe small-scale emissions events at “hundreds of thousands of individual sites”, he said.

“We can’t trust the industry,” he added. “The way to keep methane out of the atmosphere is to keep it in the ground.”

(Reporting by Daisy Clague; editing by Megan Rowling)

The post Gas flaring back on the rise, fuelling calls for stronger regulation  appeared first on Climate Home News.

This is Azerbaijan’s first large-scale solar power plant. It opened last October and the Emirati company developing it, Masdar, says it can power 110,000 homes.

Climate Home visited the solar park as part of a media tour organised and sponsored by the Azerbaijan COP29 Presidency, which is arranging the UN climate summit in Baku this November.

At the park’s opening ceremony, in front of Sultan Al-Jaber – Masdar’s CEO who led the COP28 climate summit in Dubai – Azerbaijan’s President Ilham Aliyev boasted about his country’s determination in “moving towards a green agenda”. 

“This is our contribution not only to the future development of Azerbaijan but to the issues related to climate change,” he told the assembled dignitaries. 

But despite this rhetoric, climate scientists have questioned Azerbaijan’s climate credentials as it prepares to host the COP29 summit. 

An increase in renewable energy production does not mean Azerbaijan is planning to leave its vast oil and gas reserves in the ground. Aliyev said last month that Azerbaijan will try to sell abroad the gas it saves by not using it in power stations at home. Europe is the main target customer, as it shifts away from Russian gas supplies.

In Nagorno-Karabakh, Azerbaijan’s net zero vision clashes with legacy of war

On top of selling its surplus, Azerbaijan is planning to extract more gas thanks, in part, to fresh investments from foreign fossil fuel giants like Britain’s BP, France’s TotalEnergies and Emirati oil giant ADNOC, which Al-Jaber also heads. 

Bill Hare, CEO of climate science non-profit group Climate Analytics, called Azerbaijan’s plans “a fantasy”. “Ramping up renewables won’t make a dent in emissions unless they displace fossil fuels in the system,” he told Climate Home. “You can’t tackle climate change without getting rid of fossil fuels.” 

A spokesperson for COP29 said gas is “an ideal transition fuel in the production of electricity”. In emailed comments, they added that gas exported to Europe can replace coal power – which currently provides around 15% of the EU’s electricity – in the short to medium-term, thereby reducing greenhouse gas emissions.

Azerbaijan is not alone in pursuing both renewable energy and fossil fuel production. Most fossil fuel producers – including wealthy nations like the US, UK and Canada – have no plans to stop producing oil and gas. That’s despite the International Energy Agency (IEA) warning that new fossil fuel extraction projects are not compatible with limiting global warming to 1.5C.

The COP29 spokesperson said Azerbaijan’s strategy does not contradict IEA scenarios, noting those do not exclude continued investment in existing oil and gas assets and approved projects.

A fossil fuel economy

Azerbaijan’s fossil fuel industry is steeped in history. As early as the 13th century, Italian explorer Marco Polo wrote of Baku’s “stream of oil in such abundance that a hundred ships may load there at once”. 

In the 19th century, Azerbaijan gave birth to modern crude refining, and by the 20th century it accounted for around half of the world’s oil production, helping fuel the Soviet Union’s victory in World War Two.

Oil and gas remain omnipresent today. The Flame Towers, Baku’s iconic skyscrapers, are a symbol of fossil fuel wealth. At night, their facades light up to display flickering flames in a reference to the naturally-occurring fires produced by gas leaks that earned Azerbaijan its name, “The Land of Fire”. 

The logo of SOCAR, the state-owned oil and gas firm, emblazons the national football team shirts, while one of the country’s oldest oil fields sits just behind Baku’s Olympic Stadium, the venue for the COP29 climate summit. 

Oil fields on the outskirts of Baku, Azerbaijan, April 2o24. Photo: Matteo Civillini

By global standards, Azerbaijan is no longer a major fossil fuel producer, pumping less than 1% of the world’s oil and gas. But its economy remains heavily dependent on the income they generate. Fossil fuels make up over 90% of all exports and 64% of government revenue.

At the Petersberg Climate Dialogue in Berlin last month, Aliyev said that “having oil and gas deposits is not our fault. It’s a gift from God. We must not be judged by that. He added that “our oil and gas will be needed for many more years, including in European markets”.

A shrinking market?

European countries have historically been the main destination market for Azerbaijani oil and gas, and flows have been rising in the wake of Russia’s invasion of Ukraine. 

As Europe tried to wean itself off Moscow’s supplies, the European Commission went looking around the world for alternative sources of gas to keep the lights on and curb skyrocketing prices. In Azerbaijan, it struck a new deal to double gas exports by 2027. 

Baku is now scrambling to make good on that pact, while using it as a lever to expand its lucrative gas industry. The country could boost its gas production by more than a third over the next decade, according to data analysis by campaigning group Global Witness. 

“We are largely investing in increasing our gas production,” said Aliyev in Berlin, “because Europe needs more gas from new sources.” 

But energy experts question that reasoning. While looking for new gas supplies in the short term, the war in Ukraine also prompted the EU to fast-track its transition towards renewable sources of energy. Its strategic energy plan, laid out in 2022, would see overall gas demand in the bloc halve by 2030. 

“There will be a lot of supply globally and not that much demand on the European side,” said E3G analyst Maria Pastukhova. “Looking at the amounts alone, the EU will not need any additional gas from Azerbaijan if it delivers on its energy transition policies.”

Clean, cheap or fair – which countries should pump the last oil and gas?

But much will also depend on what kind of gas the block will continue to rely on. Norway, Europe’s top supplier, Algeria and Azerbaijan provide it through pipelines, while the United States and Qatar ship liquefied natural gas (LNG) to the continent. 

“It’s hard to say at the moment [which supplies will remain],” added Pastukhova. “But it isn’t very likely that Azerbaijan can continue to bank on crazy gas revenues from the EU. We don’t see readiness from European buyers to sign long-term contracts beyond 2035.” 

Sell, don’t burn

Meanwhile, Baku also wants to ensure that its gas is channelled towards the lucrative export market not burned at home.

Central to this strategy is the rollout of renewable energy. With strong winds blowing from the Caspian Sea and sun shining for a large part of the year, Azerbaijan boasts significant clean energy prospects.

But that potential has so far been largely untapped. Renewable sources, mainly from three hydro power stations, produced only 7% of Azerbaijan’s electricity in 2023. The government wants to increase that to 30% by 2030. 

If that target is met, Aliyev says that solar and wind will pump 5 gigawatts of clean electricity into the national grid, freeing up “at least” 5 billion cubic metres of gas for the European market.

At Masdar’s sprawling solar park in Garadagh, this plan is being rolled out. The park spans the equivalent of 770 football pitches, but was built in just under two years. It cost $262 million, with multilateral development banks stumping up just under half of that.

Speaking to journalists inside the plant’s control room, Kamran Huseynov, deputy director of the Azerbaijan Renewable Energy Agency, said eight more solar and wind projects are being developed for the coming years. “We are quite sure we can reach the target [of 30% renewables capacity] by 2028,” he added. 

As in Garadagh, foreign energy companies will be at the helm of those eight projects. Masdar will build two more solar parks and one onshore wind farm. Saudi Arabia’s ACWA Power is erecting a wind farm just north of Baku by the Caspian Sea.

Renewables-processed fossil fuels?

Later this year, BP is expected to start building a solar farm in the district of Jabrayil. This is one of the territories Azerbaijan captured after a long-running dispute with Armenia centred on the Nagorno-Karabakh region. 

Baku seized control of these areas in a two-part military offensive that started in 2020 and ended last autumn. As a result, some 136,000 ethnic Armenians who had lived in Nagorno-Karabakh fled in a mass exodus which, according to Armenia and the EU Parliament, amounted to “ethnic cleansing”. Azerbaijan has rejected those accusations. 

In Nagorno-Karabakh, Azerbaijan’s net zero vision clashes with legacy of war

The Azeri government is now promoting a green vision for Nagorno-Karabakh which involves the construction of government-branded “net zero” villages. It has also designated the region as a “green energy zone”, aiming to attract investment in renewable energy.

BP was the first major international energy firm to jump at that opportunity. In 2022, the company’s regional president for Azerbaijan, Georgia and Turkey, praised Baku’s efforts to turn Karabakh into “the heart of sustainable development”. 

BP wants electricity produced from Jabrayil’s solar power plant to make some of its vast oil and gas operations in Azerbaijan less dirty.

The British energy giant runs the Sangachal terminal, one of the world’s largest oil and gas processing facilities and the starting point for the pipelines transporting gas to Europe. Processing all of this oil and gas requires power, which BP currently gets from burning gas in generators.

The Sangachal oil and gas terminal in Azerbaijan. Photo: Azerbaijan Presidency

According to Elnur Soltanov, Azerbaijan’s deputy energy minister and the COP29 CEO, these are “very inefficient” and produce “some of the dirtiest electricity” in the country. After being electrified, the fossil fuel processing plant will receive the same amount of electricity from the grid as the solar park generates, according to Azernenerji, the country’s grid operator.

The process will also free up “more gas to export to world markets”, BP says.

BP’s project is being developed in partnership with SOCAR, Azerbaijan’s state-owned oil and gas giant. After setting up a “green energy” unit last year, SOCAR says it is working with international companies, like BP, “in order to get the know-how” and “learn in the process” with the goal of transforming into a “comprehensive energy company”.  

“Sooner or later, hydrocarbons will slowly die out – not right away,” Teymur Guliyev, deputy vice president for the energy transition at SOCAR, told reporters including Climate Home. “But we have to start our transformation process when we still have plenty of time to plan accordingly, go through trial and error.” 

The COP29 spokesperson said Azerbaijan “is making significant progress” towards reducing its greenhouse gas emissions. Currently, Azerbaijan has a goal to reduce emissions 40% by 2050 as outlined in its national climate plan (NDC). It has promised to submit a new NDC that is aligned with limiting global warming to 1.5C, which is due by early 2025.

How to move it

While the current priority for Azerbaijan’s renewables push appears to be maximising its gas exports, the government is also wrangling over how to sell its clean energy to Europe, when gas demand falls.

COP29’s Soltanov told Climate Home and other international journalists that he is “very optimistic” about Azerbaijan’s green transition. “Azerbaijan has been at the forefront of the oil revolution, it has been at the forefront of the gas revolution, and it has all the conditions to be at the forefront of the clean energy revolution as well,” he added. 

But the transportation of green electricity remains an obstacle.

The main option being explored is laying an electric cable under the Black Sea, stretching over 1,155 kilometres between Georgia and Romania. Originally the project, under discussion for several years, had the stated intention of linking Georgia to the European transmission network and boosting its energy security. 

But it was recently revamped as a possible route to carry Azerbaijan’s clean energy to the European market. In December 2022, the leaders of Azerbaijan, Georgia, Romania and Hungary formed a partnership to push the project forward, indicating it could be completed by 2029 at a cost of €2.3bn ($2.5bn). A two-year long feasibility study is currently in its final stage, according to President Aliyev. 

The leaders of Azerbaijan, Romania, Hungary and Georgia, and the European Commission President, at the signing of a green energy partnership in December 2022. (Photo: Inquam Photos/Octav Ganea via Reuters)

Implementing the project could be challenging given the fragile geopolitical situation in the region. The cable would run just south of the Crimean Peninsula, under Russian control, and near a theatre of war in Ukraine with the strong presence of military vessels. 

For Climate Analytics’ Bill Hare, “it’s a tricky location to attract investment and get built at the moment, but it would provide a lot of benefits in the long-term”. 

There are also questions over whether Azerbaijan’s current plans to export green energy via the Black Sea cable will yield a high-enough return to compensate for selling less fossil fuel.

“Electricity trade is a stable source of revenue, but it is also capital-intensive and not very high margin,” explained E3G’s Pastukhova. “It will not replace the same amount of export revenue that gas and oil have been contributing.”

“What Azerbaijan is doing right now [on renewables] is not enough and quite alarming because this country is so dependent on oil and gas revenue,” she said.

(Reporting by Matteo Civillini in Azerbaijan; editing by Megan Rowling and Joe Lo)

Matteo Civillini visited Azerbaijan as part of an “energy media tour” organised and sponsored by the COP29 Presidency.

The article was updated on 17 May to include comments from a COP29 spokesperson received after publication. 

The post Azerbaijan pursues clean energy to export more ‘god-given’ gas to Europe appeared first on Climate Home News.

As global policymakers, nonprofit advocates and industry leaders meet this week in Geneva to turn lofty promises to slash methane emissions into meaningful action, a crucial stakeholder will largely be missing from the table: the private sector.

The aim of the 2024 Global Methane Forum is to build on the Cop26 climate summit, where more than 150 countries pledged to reduce global methane emissions by at least 30% by 2030, as well as other methane commitments made at last year’s Cop28.

But ratcheting up private sector action remains a looming agenda item. Because for all those promises, we aren’t seeing the companies in the sectors that contribute most to humanity’s methane emissions – agriculture and energy – take the ambitious steps needed to fulfill them.

In fact, new findings show the energy industry’s methane emissions didn’t budge last year from a near all-time high. Nor have we seen enough investors step up to drive this needed action in the companies they hold.

Fossil fuel industry under pressure to cut record-high methane emissions

Food companies’ agricultural activities, especially raising livestock, and fossil fuel operations, largely from oil and gas companies, are responsible for nearly equal parts of 75% of human-caused methane emissions worldwide.

Food and energy corporations must confront the escalating material financial risks they face from climate change. Lowering methane emissions is one of the fastest and most cost-effective ways to slow the overheating of our planet in the short term.

There are three key actions companies across both sectors can take to mitigate their main sources of methane pollutants – and in doing so, accelerate the transition to more sustainable and resilient systems for feeding and powering our world.

Disclose plans for reducing emissions

Before they can tackle them, companies need to understand what their methane emissions are, where they come from, and how they can reduce them. These details should be disclosed in their transition plans so that external stakeholders, including investors who use the information to evaluate climate risk in their portfolios, can hold companies accountable for voluntary methane commitments.

More major food companies benchmarked by Ceres in our investor-led Food Emissions 50 initiative are reporting the drivers of their supply chain emissions, but only a few, such as Yum! Brands and Starbucks, have disclosed how they address livestock emissions. Since most of the sector’s methane emissions – and around 12% of global greenhouse gas emissions – stem from livestock, it’s critical that companies include this in their plans.

Oil and gas companies, for their part, should join sector-wide efforts like the United Nations Environment Programme’s Oil and Gas Methane Partnership 2.0, which seeks to improve accuracy and transparency of methane data and track corporate progress. Over 130 businesses globally are participating in this partnership and have committed to report their measurement-based emissions, set a methane reduction target, and submit an implementation plan.

Leverage technology

In both sectors, companies must embrace existing and emerging technologies for the global community to successfully reach its methane reduction goals.

Food companies won’t be able to meet their emissions targets using current agricultural technologies and practices, but livestock emissions could be cut substantially through sustainable changes to farming practices. Companies will have to invest in, and incentivise farmers to adopt, new technologies that are already gaining traction, such as seaweed feed additives for cattle, and other proven and ready-to-deploy methods for curtailing agricultural methane.

To achieve net zero by 2050, methane emissions from fossil fuel operations need to fall by around 75% between 2022 and 2030. That may seem like an enormous task, but oil and gas companies can avoid more than 75% of current emissions using known technology, including replacing methane-emitting equipment with zero-emitting alternatives, with close to 50% of emissions avoidable at no net cost.

Despite Putin promises, Russia’s emissions keep rising

Advocate for new policies

Government policies can create new opportunities and mandates that support sector-wide methane action – and companies need to advocate for them. Ahead of Cop27, 800-plus investors representing nearly $42 trillion assets under management signalled just how essential policies are to reaching a net zero economy when they called on governments to radically increase their climate ambition.

Recently, we have seen new policies open important pathways for funding and advancing lower-emissions agricultural solutions, such as when the U.S. Food and Drug Administration streamlined the process for methane-inhibiting feed additives to gain regulatory approval last month. Before and at Cop28, the European Union adopted more stringent regulations, and Canada proposed robust regulations to significantly reduce oil and gas methane emissions.

With the international climate community’s eyes on methane this week, and 2030 rapidly approaching, it’s time to focus on igniting action where the opportunity – and responsibility – for cutting emissions is the greatest. If food and fossil-fuel companies do not clean up their operations, they will not be able to uphold their climate commitments, nor will we meet our global methane goals.

The post Companies still missing in action on methane-cutting goals appeared first on Climate Home News.

Governments failed to agree on this wording at previous climate talks and this phrase is likely to divide nations at the Cop28 summit in Dubai in November.

The UAE’s environment minister Mariam bint Mohammed Almheiri told the Munich Security Conference: “We need the oil and gas sector to be with us. We need to shift the way they are doing business and we need to decarbonise what they are doing. We need to then phase out oil and gas in a just way.”

A Cop battle line

At the Cop26 climate talks in 2021, all governments agreed to commit to a “phase down” of coal. This was the first time a fossil fuel had been mentioned in a Cop decision.

At the next year’s talks in Egypt, a broad coalition of nations including India, rich nations and vulnerable islands pushed for an agreement to phase out fossil fuels, which would include oil and gas as well as coal.

But a handful of oil and gas producers opposed that language, the hosts Egypt did not include it in the final text and the coalition pushing for it eventually decided not to block the agreement over the issue.

The battle is set to continue at Cop28. While hosts are supposed to be neutral, they have a lot of power over which requests from governments make it into the Cop draft decisions.

Breaking cover?

At Cop27, the UAE was quiet on the fossil fuel issue. The resistance to criticism of fossil fuels was led by Saudi Arabia whose lead negotiator Albara Tawfiq told the plenary that the UN climate convention “needs to address emissions and not the origins of the emissions”.

Saudi Arabia officially spoke on behalf of the Arab Group at the talks – a coalition of 22 nations across the Middle East and North Africa which includes the UAE. But the extent to which each member of the group supports the Saudi position is unclear.

Kristian Coates Ulrichsen, fellow for the Middle East at Rice University’s Baker Institute, told Climate Home in December that Cop28 “might force them to break cover”.

Cop president

The UAE’s hosting of this year’s climate talks has come under heavy criticism following the appointment as its boss of Sultan al-Jaber, the head of state oil giant Adnoc.

Campaigners said his appointment sent the wrong signal and that the fossil fuel industry was hijacking the world’s response to the global warming crisis.

UAE plans to have it both ways as Cop28 climate summit host

Responding to the criticism, minister Almheiri said al-Jaber had been placed in Adnoc to change the company and guide it throughout the energy transition.

“We’re always going to be an energy exporter, but the type of energy we export is changing already and will change in the future,” she said.

Experts around table

Sultan al-Jaber himself took to the stage at the Munich Security Conference on a panel discussion with US Climate envoy John Kerry.

The Cop28 boss said the UAE would focus on promoting an “inclusive” climate agenda, which does not exclude fossil fuel players.

“When you talk about energy transition please include the energy experts,” said al-Jaber. “Don’t think you are going to come up with solutions without the experts around the table.”

Al-Jaber was keen to highlight the UAE’s push for renewable energy happening under his watch. On top of his Cop28 and fossil fuel jobs, al-Jaber is the chairman of Masdar, the UAE’s renewable energy company.

Thanks to its abundance of sunshine, the UAE boasts some of the world’s cheapest solar power. The government expects to have installed more than 9GW of solar capacity by 2030, tripling current levels.

The UAE was the first country in the region to set a 2050 net zero goal. And at Cop27, it became the first to announce absolute emission cuts, instead of from a hypothetical business-as-usual baseline.

Pragmatism and balance

But, in an address sprinkled with repeated appeals for “pragmatism” and “balance”, Al-Jaber also reiterated the UAE’s resolve on the need for continued investment in oil and gas in the short term.

UAE’s Cop28 boss calls for “course correction” on climate change

“Transitions usually take time. Any successful transitional is built on a practical, not emotional roadmap,” he told the audience in Munich. “We need to adopt a diversified energy mix approach.”

Adnoc, the oil and gas company presided over by al-Jaber, plans to boost investment by $150 billion over the next five years. The funding will also speed up an increase in oil and gas production capacity.  

The International Energy Agency said in 2021 that new fossil fuel investments are incompatible with limiting global warming to 1.5C.

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The sobering effect of drunken forests: Why this Arctic community chose conservation over Big Oil

By Edward Struzik

Angus Sanguez is 67-years-old and whippet-thin. His face has been weathered by years of living in the Dehcho region in Canada’s Northwest Territories, a sub-Arctic wilderness that is on the frontlines of climate change.

Sanguez was born and raised in the Dene community in Tthets’ek’ehdeli (also known as Jean Marie River), one of six indigenous communities in the Dehcho region. Covering 215,615 sq km, the Dehcho is twice the size of England, inhabited by only 3,000 people, as well as countless moose, bears and bison that roam over a massive storehouse of carbon trapped in permafrost.

Sanguez was visiting the Scotty Creek Research station in Canada’s sub-Arctic when he had a eureka moment while gazing upon all the dying trees that could no longer root themselves in the thawing peat. “So that’s why they call this a ‘drunken forest,’” he said. “I heard that term many times. But I never knew what it meant. Now I see these how these trees that have fallen down everywhere are likes drunks coming out of a bar, falling down and leaning up against each other. We are seeing a lot of this.”

Climate change is the latest threat to the lives and livelihoods of the Dene people and other indigenous communities throughout Canada. For decades, they have successfully fended off Big Oil and resisted wit one notable exception, offers to partner with fossil fuel companies, opting instead to collaborate with scientists and the national government to create Canada’s first indigenous protected area in 2018 and appoint indigenous guardians to monitor environmental changes. Scientists say their approach could serve as a conservation and climate adaptation model for other indigenous communities.

Climate threats

Climate change is transforming the Dehcho. It is one of the most rapidly warming regions on Earth.

In recent years, Sanquez and the Dene have experienced catastrophic flooding, massive landslides that have drained and browned lakes, and runaway wildfires like the ones in 2014 that burned 570,000 hectares of forest in the southern territories. Those 380 fires released roughly 94.5 megatonnes of carbon, half of the carbon sequestered annually in all of Canada, as well as a potentially toxic form of mercury that has been locked in permafrost.

William Quinton, a Laurier University scientist who has been monitoring the impact of climate change on permafrost in the Dehcho for 23 years, runs the Scotty Creek Research Station 50 km south of Fort Simpson, a remote village, 500km west of the capital Yellowknife.

Permafrost is like a cement that holds carbon rich peat, rocks and mineral-richly soils together. In addition to warmer temperatures, drilling for oil, and mining for metals and minerals can hasten its thaw and complicate the maintenance and cleanup of mines such as the abandoned Cantung mine located along one of the headwaters of the Nahanni River system.

The thawing permafrost can also be seen in the seismic lines around Scotty Creek that were bulldozed to identify sources of oil and gas, The lines, the single largest human disturbance in the Dehcho region, were streaming with water that had percolated up from the thawing permafrost.

In the 1950s, permafrost covered nearly 75% of the 152 square km drainage area of Scotty Creek. It’s down to a third of that. Where there still is permafrost, it is often covered by a layer of talik, unfrozen ground that does not refreeze in winter when snow acts like a blanket, trapping some of the heat.

Thick, long lasting snow cover followed by a quick spring meltdown helps spread the thaw downwards and outwards. Trees literally drown as the ground surface collapses into depressions, and as melting snow and rain fills those depressions with water. Quinton has had to move his research camp twice to avoid being flooded out.

“What we’re seeing perhaps more clearly than any other place in the world is ecosystem change occurring in fast motion,” said Quinton. “The involvement of the Dene is important to our understanding of what is happening because the elders here have a longer record of what was there in the past and how it is affecting fish and wildlife.”

From Fort Simpson, a small single-engine float plane flew us across a wilderness that spread out as far as the eye could see towards the Mackenzie Mountains where the last icefields in the mainland of the Northwest Territories are wasting away as fast as sea ice is melting.

The lessons learned at Scotty Creek have been sobering, said Quinton at Goose Lake. It was so hot and buggy that on shore, the typically gregarious ravens (datsą́) and trickers whisky jacks, (ohk’aa), were lying low. The Mackenzie Valley can be the hottest place in Canada in summer and the coldest in winter.

“It’s tough to be a tree in this landscape,” Quinton said. “The thawing that we are seeing is turning forests into bogs and other wetlands that may not be able to support the fish and animals that the Dene rely on for food and clothing.”

“The implications for water quality, vegetation changes, biodiversity and for the people living in this part of the world are profound,” he said.

The best way of visualising what Quinton is talking about is to describe what occurred 300km to the northeast in the Mackenzie bison sanctuary. Warming temperatures and the 2014 wildfires thawed permafrost so intensely that incoming water from groundwater channels drove most of the 700 wood bison out of the protected area.

The exodus was so complete, according to Terry Armstrong, a biologist working for the government of the Northwest Territories. He told Climate Home that he had a difficult time finding animals when he flew in to do a count the following year.

No one can say with certainty whether it was swamping that drove the animals out. But York University scientist Jennifer Korosi who was there at Scotty Creek says it’s hard not to make the connection considering the amount of water in the sanctuary doubled between 1986 and 2014 and Falaise Lake, the largest in the sanctuary, grew by 824%.

The tree ring and sediment coring Korosi did indicates that flooding has occurred in the past, but not nearly on this scale, for the past 300 years. Indigenous elders say nothing like it has happened in their lifetime.

Fusing science with indigenous knowledge

The message from indigenous elders and leaders at Fort Simpson was unambiguous. “Climate change is not going to wait for us to find a way of adapting and mitigating,” said Gladys Norwegian who was once chief of Jean Marie River and grand chief of the Dehcho.

“It’s happening now. We need to work as partners with scientists at Scotty Creek to see what is coming. We also need to get our own act together,” Norwegian said.

What the Dene community would like to know from the Canadian scientists they are collaborating with is how future warming will further impact their food, water and infrastructure, which is built on rapidly thawing permafrost. They are working with scientists at Scotty Creek as equal partners, to learn and better evaluate resource developments and climate impacts on their land.

Quinton believes the “unique fusion of science and indigenous knowledge” provides a model for other indigenous communities in Canada facing climate threats.

“It is a clear departure from how science and land management was conducted in the north in the past,” he said. “Because the livelihoods of the people here are so closely dependent on what is happening on the land, a management approach that puts them in leadership positions is critical.”

Not only does thawing lead to erosion and flooding, it dissolves carbon in water and enhances microbial activity that can transform harmless elemental mercury securely stored in permafrost into toxic methylmercury. This brownification of streams, rivers and lakes is how University of Waterloo scientist Heidi Swanson and University of Alberta ecologist Dave Olefeldt got involved.

With Sanguez’s assistance, Swanson is testing fish for mercury and at their request, advising people what fish they can eat. Olefeldt and his team are tracking the movement of mercury through these catchments.

There is no discernable sign yet that the contaminated fish are affecting human health. But George Low, who coordinates the aquatic resources and oceans management programme for the Dehcho First Nations, says it’s important to keep track of what’s going on, given how many fish are consumed by indigenous people.

It’s not just a matter of monitoring the situation. Community members like Sanguez are also assisting Swanson in an experiment to remove some of the older, bigger fish from lakes. This leaves the younger fish with more food and the opportunity to grow fast without accumulating so much mercury.

The merging of science and indigenous knowledge has been a long time in the making largely because of prejudices that persisted since the days when Simpson, the governor of the Hudson Bay Company, was in charge and described the Dene women he bedded as his “bits of brown.”

A more constructive meeting of minds began to slowly gel in the mid -1970s when a consortium of energy companies proposed building a 3,860 km long natural gas pipeline through the Mackenzie Valley. No one in the indigenous communities knew how a pipeline as big as that might affect caribou migration, or whether it could stand up to thaw. Neither did the energy companies. In spite of many other knowledge gaps, the Canadian government enthusiastically supported the project until public hearings overseen by Justice Thomas Berger came to a fiery head in Fort Simpson in December 1975.

Speaking for all the Dene people, Jim Antoine, a young leader from Fort Simpson, told Berger that he was willing to lay down his life to stop the $10 billion project.

Antoine’s speech made news all across Canada. Few people believed that it would end as badly as it did in Mexico when the Chontales Indians were violently cleared out as they tried to block access roads to oil and gas installations in 1976. But threats to blow up a pipeline in northern Canada rattled government and resources industry officials who were used to getting their way with indigenous people.

In the end, Berger was sympathetic. In a landmark report that got a reluctant nod from the Canadian government, the judge recommended a ten year moratorium on development in the region until land claims were resolved and wilderness protected for the benefit of the Dene.

Antoine went on to become premier of the Northwest Territories. At the request of the Dene, Nahanni National Park – a United Nations World Heritage site – was expanded to protect the headwaters of many of the rivers that drain into the Mackenzie watershed.

Indigenous guardians

The biggest development occurred this year when the Dehcho First Nations and the Canadian government finalised a deal to set aside 14,218 square km of land in the Horn Plateau, Hay River Lowlands and Great Slave Plain as a national wildlife area. Edéhzhíe became the first indigenous protected area in Canada in 2018 and the government provided a $10 million grant (£6.93m) to the Edéhzhíe Trust Fund to support the Dehcho K’éhodi Stewardship and Guardians Program.

The indigenous guardians work with scientists to monitor climate and environmental changes in the region. They also share scientists’ insights with community members.

William Alger, one of the guardians, is positive about the programme. “I learn from elders where the fish and animals are and the changes they see that are taking place,” he said.

Quinton sees the guardian programme as a way of “ground truthing” the science that he and his colleagues are doing. Once the Dene learn how do the science at Scotty Creek, they will be able to take control of the programme.

“Southern researchers like me have to come to terms with the fact that while the current system in which we operate is well-intentioned, it doesn’t necessarily address the needs of the local community,” Quinton said. “Too often, we fly in and fly out with the data without communicating what that data means.”

The Dene in the Dehcho are not the only indigenous people in northern Canada doing this. The Gwitchin of Old Crow in the Yukon have been moving in this direction for some time. The Dene and Metis people in Sahtu region of the Northwest Territories recently signed an agreement to establish an indigenous protected area – Ts’udé Nilįné Tuyeta – which will be just as big as Edéhzhíe.

Despite the progress, the Deh Cho claim to land ownership has not been resolved. And while oil flowed out of the territories from another pipeline for more than a half century, Deh Cho villages like Fort Simpson are still shipping dirty diesel in from the south to heat homes and to keep the lights on.

“It’s crazy,” said James Tsetso, a Łı́ı́dlı̨ı̨ Kų́ę́ First Nation councillor who was at Scotty Creek. “And look at all of the wood in the forests around us. Why are we still shipping wood products from the south to rebuild and fix up homes that were destroyed by last year’s floods?”

There is no doubt that the Dene need jobs. It’s why they are more open-minded about resource extraction. But some are leery of mining companies like those that operated Mactung and Cantung in the Mackenzie mountains. Neither offered meaningful employment to locals before filing for bankruptcy. Nor has there been an equitable amount of work for northerners to participate in the $2.2 billion cleanup of these and many other abandoned mine sites in the Yukon and Northwest Territories.

Gerry Antoine, the Dene National grand chief, was just 20 years old when he volunteered to rally the Dene during the Berger Inquiry. His brother’s speech still resonates. But getting angry, he says, will bear no fruit.

Antoine is confident that the Dene will adapt to climate change, just as they have with so many challenges they have faced over thousands of years. But he wonders whether southerners will fare as well, given their short history in North America, and their desire to take more than they need.

“It’s all about balance,” Antoine said, while preparing a moose hide for tanning. “You take only what you need from Mother Earth as we try to do here. That’s really the best way of dealing with climate change.”

The post The Arctic community that chose conservation over Big Oil appeared first on Climate Home News.

Russia supplies 40% of EU gas and 26% of its oil imports.

“Today we will propose to ban all Russian oil from Europe,” European Commission president Ursula von der Leyen said in the European Parliament on Wednesday.  “This will not be easy,” she added.

“We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimises the impact on global markets… Thus, we maximise pressure on Russia, while at the same time minimising collateral damage to us and our partners around the globe.”

EU member states have been wary of imposing an embargo on Russian oil and gas but Germany indicated earlier this week it was ready to back an EU ban and said it would weather short-term price hikes and fuel shortages.

The re-election of Emmanuel Macron as French president last week helped tip the balance in favour of a tough EU-wide stance.

Germany to build LNG terminals at ‘Tesla speed’ in shift away from Russian gas

In retaliation, Vladimir Putin signed a decree on Tuesday enabling him to terminate exports and deals on his own terms.

Russia has benefited in the short term from disruption to the coal, oil and gas markets triggered by its invasion of Ukraine, with soaring prices outweighing the effect of international sanctions. Energy and Clean Air estimates the EU has paid €52.5 billion ($55.3bn) to Russia for fossil fuels since 24 January.

To unite the 27-nation bloc, the Commission is expected to offer Hungary and Slovakia exemptions on the embargo. Both countries are heavily reliant on Russian oil, with Hungary importing 60% of its oil from Russia and Slovakia almost 100%, Genady Kondarev, a senior analyst at E3G for central and eastern Europe, told Climate Home News.

Even without their support, the proposed embargo will “shrink the Russian oil market in the EU 14 times,” Kondarev told Climate Home News.

“The embargo may come into force without Slovakia and Hungary being in it. It will still have a severe bite and there will be no risk for the economies of the two EU countries,” Kondarev said.

“This embargo is an important political signal which shows that the EU is following through with what was only a threat a few days back,” independent energy analyst Poppy Kalesi told Climate Home News.

“Civil society in the EU is already pressing for gas to follow so an oil ban can be interpreted as strike one,” she said.

The embargo could accelerate efforts to design cars out of cities, which is already happening across Europe, Kalesi added.

The post EU plans to stop buying Russian crude oil in six months appeared first on Climate Home News.

“The oceans are sacred to us,” said Sinegugu Zukulu, an Amadiba environmental activist. People in training to become traditional healers, known as sangomas, perform rituals on the beach to consult with their ancestors and many African churches perform baptisms in the ocean. “So we cannot allow our ocean to be used for activities that are going to lead to destruction and render the ocean useless to us.”

His warning is addressed at Shell, the European oil major that has paid ships to shoot soundwaves at the bed of the Indian Ocean in an attempt to find oil. Zuklulu and other campaigners took the oil major to court, arguing that local communities were not properly consulted. They say the seismic surveys will scare off fish and any future oil spill would devastate the region’s fishing and tourism industries and cause spiritual damage.

Just before the New Year, a high court judge made an interim ruling in their favour. He ordered Shell to stop drilling while the court case plays out. The timetable for the full case will be decided on Monday.

Shell has cancelled its contract with the survey vessel. As the weather window for surveying is closing, they are unlikely to start again any time soon. The oil major is “considering best way forward,” a spokesperson said.

Zukulu thinks the battle is far from over. “Shell doesn’t give up easily,” he said. “They have got deep pockets. They will always put up a fight”.

Typhoon Rai’s trail of destruction in the Philippines reignites loss and damage calls

But Shell’s stomach for a fight may be diminishing. In December, it pulled out of the Cambo oil field development off the coast of Scotland, only a few months after a Stop Cambo campaign got organised.

A spokesperson said the “economic case for investment in this project is not strong enough at this time, as well as having the potential for delays”. Why would there be delays? Kayaking activists for one. Opposition from Scotland’s first minister Nicola Sturgeon for another.

Under its climate strategy, Shell plans to decrease oil production 1-2% a year on a path to net zero (with caveats) by 2050. That doesn’t mean drilling stops. Its wells have a natural decline rate of 5%. Shell is still exploring new frontiers, just more selectively, prioritising “value over volumes”.

Last May, a Dutch court ruled that the Hague-headquartered company needed to go further, in a landmark case. Shell was ordered to reduce its emissions, including those from customers using its products, by 45% between 2019 and 2030.

Sjoukje Van Oosterhout, who led campaigners’ research for the Dutch court case, said that for Shell to comply with the court’s ruling then “there’s not many other ways than decreasing oil and gas production all over the world”.

The company is appealing but the appeal will not be heard until late 2023 at the earliest. In the meantime, it is legally obliged to comply with the judgement although how this will be enforced is unclear.

Germany ‘must triple pace of emissions cuts’ to meet 2030 target

Mike Coffin, a Carbon Tracker researcher and former BP geologist told Climate Home News that there was a divide between European oil majors like Shell, BP and Eni and US-based firms like Conoco Phillips, Exxon-Mobil and Chevron.

Carbon Tracker’s ranking of oil firms in order of climate ambition

He said: “Those [European] companies… see lower long term oil prices perhaps than North American companies who may be a bit more bullish on how long the oil sector can continue.”

In Argentina, Equinor and Shell’s proposals for offshore oil exploration provoked thousands of people to protest in Buenos Aires last week. Protesters told AFP they were worried about oil spills and the effects of seismic exploration on sealife.

In the US, campaigners are challenging in court an auction of oil exploration licenses in the Gulf of Mexico. Joe Biden’s administration, under pressure from a Louisiana court ruling, launched an auction at which Shell bought several leases.

Shell’s “core positions” for oil and gas production as of February 2021. They’ve now sold their Permian assets. (Photo: Screenshot/Youtube)

Elsewhere, Shell’s oil production has met less resistance. Shell holds a minority stake in Brazil’s offshore Mero oil and gas fields.  Claudio Angelo, communications co-ordinator at Brazilian NGO Climate Observatory, said this development is not a high-profile political issue, partly because journalists and campaigners are focused on emissions from the deforestation of the Amazon rainforest.

“Shell has long seen Brazil as a strategic lifeline as it faced setbacks elsewhere, for climate legislation or other reasons,” he said.

Other major Shell oil and gas production sites include those in Nigeria, Kazakhstan, Oman, Malaysia and Brunei where civil society is generally weaker and less focused on climate change.

The post Why Shell is becoming a softer target for climate campaigners appeared first on Climate Home News.

Prime minister Boris Johnson recently told the Cop26 climate summit “let’s keep 1.5 alive”, calling on leaders to uphold the strongest temperature goal of the Paris Agreement. The International Energy Agency advised this year that there was no room for new oil and gas production in a 1.5C scenario.

Yet ministers are seeking to justify further development of offshore oilfields on the basis they will be less carbon intensive than imported hydrocarbons.

“This has to be a transition, not extinction,” tweeted business and energy secretary Kwasi Kwarteng. “Turning off the taps would put energy security + British jobs at risk – and leave us more reliant on foreign imports.”

An attempt, led by Denmark and Costa Rica, to get countries to promise to end fossil fuel production at Cop26 ended up covering just 0.2% of global oil production.

We are backing the oil + gas sector’s low carbon transition through a new Climate Checkpoint

This has to be a transition, not extinction

Turning off the taps would put energy security + British jobs at risk – and leave us more reliant on foreign importshttps://t.co/mWltQwkdEq

— Kwasi Kwarteng (@KwasiKwarteng) December 20, 2021

Rather than join that club, the UK government is proposing a checkpoint before further rounds of licensing, with the decision to proceed or not based on six criteria.

Of these six proposed tests, three focus on the emissions coming from the production of oil and gas. These emissions come from oil and gas companies leaking and burning methane gas as a by-product and using fossil fuels to operate ships, helicopters and machinery.

One proposed test asks whether the UK is a net importer of oil and gas. The UK is currently a net importer and is expected to remain so. The government argues that producing its own oil and gas is more environmentally friendly than importing it.

The two remaining proposed tests are climate focussed. One asks to consider so-called scope 3 emissions, which come from the end use of the oil and gas. The other considers the global production gap, the fact that the world is producing more fossil fuels than it can burn for 1.5C.

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Greenpeace UK’s chief scientist Doug Parr told Climate Home News the decision should also reflect climate equity considerations. “As a well-developed country with a historic liability and a diversified economy, if we can’t emerge from fossil fuels, how hard is it going to be for those countries which are actually really dependent on oil and gas – parts of the Middle East, Russia, Venezuela?” he asked.

Industry representatives were given the chance to vote on which tests were proposed while Parr said Greenpeace and climate campaigners were “not really consulted”. The tests were originally supposed to be announced in September 2021 but were delayed until after Cop26.

Just to be clear, the 200+ oil & gas fields under existing licences in the UK, both in production & up for approval, contain 6+ billion barrels of oil gas and will keep production going well into the 2030s. The taps will flow for years to come even without new licences.
/1 https://t.co/pR8Sgl8ah4

— Tessa Khan (@tessakhan) December 20, 2021

Parr speculated the ruling Conservative Party was torn between a desire to present the UK as a climate leader and wanting to win votes from the Scottish National Party (SNP) in the north-east of Scotland, where many of the UK’s oil and gas workers are based.

The Scottish National Party’s leader Nicola Sturgeon, who heads the devolved Scottish government, recently declared her opposition to the controversial Cambo oil project.

While oil and gas licensing is not under the Scottish government’s control, project partner Shell pulled out shortly afterwards. Sturgeon’s stance reportedly angered voters and local SNP politicians in Scotland’s oil hubs near Aberdeen.

The UK’s oil industry is also under pressure from climate litigation which is arguing that tax breaks should be factored into licensing decisions. If campaigners win the court battle, it could mean that some new licences are no longer considered to be in the national interest.

The consultation closes in February 2022.

The post UK floats ‘climate compatibility’ test for new oil and gas drilling appeared first on Climate Home News.

As Cop26 president the UK was obsessed with getting something on coal at the summit. They were probably hoping it would distract from anyone asking awkward questions about oil and gas, such as why the UK government is legally committed to extracting every last “economic” drop out of the North Sea.

It wasn’t just the UK that was keen to avoid the topic. None of the G20 signed up to join the Beyond Oil and Gas Alliance last week, apart from France which produces very little of the stuff and will continue to import.

So, we have to ask why, after 26 UN climate summits have oil and gas, which between them are responsible for more CO2 emissions than coal, been virtually ignored?

To begin to answer we need to look beyond a Saturday evening in Glasgow in November to what’s going on in the capital cities of G20 countries.

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One factor is that while G20 governments increasingly support green technologies, lobbyists have successfully persuaded them to provide:

• $5.9 trillion in fossil fuel subsidies in 2020 (“efficient” or otherwise)
• $300 billion since the Covid-19 pandemic began to expand extraction
• Support for options that will extend the use of oil, gas and coal for decades, like hydrogen, carbon capture and storage, and petrochemicals.

My own research on the political power of the oil and gas companies – such as BP, Shell, ExxonMobil and Chevron – has highlighted the grip they have on national governments, whom they have lobbied behind the scenes to delay, delay, and then delay some more.

Companies like Saudi Aramco, Shell, Gazprom, BP, China National Petroleum Company and ExxonMobil are in competition but unite around self-interested positions. They jointly operate major infrastructure (for example Gazprom and Shell on Nord Stream 2 or Saudi Aramco and Sinopec on the Yasref refinery in Saudi Arabia) and they lobby together through global, regional and national oil and gas trade associations.

While the differences between investor-owned and state-owned companies are highlighted they are members of the same oil and gas trade associations at the global, regional and national level.

Saudi Aramco and Gazprom join Shell, BP and Chevron as members of trade associations with a big presence at Cop26 such as the International Emissions Trading Association (IETA) and the International Association of Oil and Gas Producers (IOGP).

At the national level state-owned companies such as Chinese major CNOOC join ExxonMobil in being members of oil and gas trade associations in Canada, Mexico and Brazil. Shell is a member of Federation of Indian Petroleum Industry and of the China Petroleum and Chemical Industry Federation.

Oil and gas company membership of selected trade associations in G20 countries (Source: trade associations, compiled by Dario Kenner)

They have a common agenda: to stop national governments phasing out the production and consumption of fossil fuels. And it’s working. They are successfully hiding behind G20 governments’ mostly hollow net zero promises.

Several G20 countries including the United States and Saudi Arabia set up the Net Zero Producers Forum earlier this year, which may have looked like climate action. But there has been little sign of follow-up and it was nowhere to be seen at Cop26.

It helps us understand why these same countries pursue common goals such as when the US and Saudi Arabia lobbied against fully recognising the IPCC’s 2018 report, or recent leaks showing Japan and Australia tried to remove language on reducing fossil fuels.

The way in which language on phasing out coal and fossil fuel subsidies got watered down in Glasgow was just the latest outrageous example.

Perhaps it’s not surprising with over 500 fossil fuel lobbyists attending the Cop26 negotiations, many of them registered under 27 national delegations including the UK, Canada, Russia and Brazil.

To give Cop27 a chance of doing better, we need to confront the G20’s close ties to the oil and gas industry.

Dario Kenner is a visiting research fellow at the University of Sussex and author of Carbon Inequality: The Role of the Richest in Climate Change and White Knights, or horseman of the apocalypse? Prospects for Big Oil to align emissions with a 1.5 degree pathway.

The post Oil and gas avoided censure in Glasgow for the 26th time. Let’s not make it 27 appeared first on Climate Home News.

Pemex made headlines earlier this month after the leak triggered a huge blaze near one of its platforms, as the world watched aghast. 

For 76 years, the company has received billions of dollars in support from the US’ export credit agency, the Export–Import Bank (Exim), despite warnings of safety and environmental concerns. 

Since 1998, Exim has propped up the fossil fuel company with $16.14 billion in loans and guarantees, according to analysis by the Friends of the Earth of the bank’s annual reports, seen by Climate Home News.

Most recently, in September 2020, Exim approved $400 million worth of support to the company.

The funding would “facilitate the purchase of US oil and gas equipment and services provided to approximately 21 oil and gas field projects,” the Exim press release reads.

According to documents submitted by Pemex to Exim, one of the projects was Ku Maloob Zaap, the oil field located 90km off the coast of Campeche in the Gulf of Mexico, which was the site of the gas fire.

Ocean fire exposes weak regulation of Mexico’s oil and gas sector

Campaigners are demanding an investigation into the environmental and climate damage caused by the fire. 

But with little faith in the Mexican authorities, analysts told Climate Home they were looking to regional allies such as the US to exert pressure to hold Pemex accountable. 

Following last week’s incident, campaigners are escalating calls on Exim to end its support to Pemex.

“I don’t understand how they would be willing to lend any money to Pemex. The hypocrisy of US administrations, who make all these statements about climate, and then allow this company to be its biggest borrower. It’s outrageous,” Veronique de Rugy, a senior research fellow at the Mercatus Center, told Climate Home News. 

The company was Exim’s biggest client until at least 2017, when the bank stopped disclosing its top borrowers in its annual reports.

Between 1998 and 2015, Pemex received Exim money annually, with loans and guarantees averaging $850 million every year, according to the analysis. From 2003 to 2016, the bank had more loans outstanding to Pemex than to any other client, it shows.

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In September 2020, after Exim authorised the latest loan to Pemex, Friends of the Earth wrote a letter to the bank’s chairman Kimberly Reed , criticising the decision. 

The campaign group opposed the loan “due to the hundreds of worker deaths at Pemex facilities from accidents and Covid-19, the harmful environmental impacts of Pemex projects, allegations of corruption against Pemex leadership, and the failure to provide a meaningful assessment of the environmental and social impacts of the Pemex projects”. 

At that time, Pemex had recorded more Covid-19 deaths than any other company in the world, according to analysis by Bloomberg. 

More than 190 workers and contractors died and over 570 were injured in fires, explosions and offshore rig collapses at Pemex sites between 2009 and 2016. 

The gas fire last week was not an anomaly, Kate DeAngelis, international finance manager at Friends of the Earth, told Climate Home. 

“Pemex has a long history of environmental destruction and poor safety record as evidenced by the hundreds of workers who have been killed from explosions, fires and other accidents at Pemex sites,” she said. 

Much of Pemex’s production is heavy sour crude oil, which is particularly polluting, according to DeAngelis. “Pemex has no plans to reduce its harmful environmental impacts,” she added. 

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A 2020 report by the Mercatus Center, a US-based think-tank, outlines significant environmental, safety and corruption concerns surrounding Pemex and questions Exim’s continued support for the heavily indebted fossil fuel company.

“Working with Pemex has posed a reputational risk to the Exim Bank for decades,” the report reads. “The Exim Bank’s willingness to continue lending to Pemex may come down to Pemex being too big to fail.”

At the end of 2020, Pemex said its financial debt stood at $113.2 billion, despite several capital injections from the government. In April, the company said it expected to maintain debt of $105 billion between 2021 and 2025.

Considering its long-standing relationship with Pemex, “Exim could have used that leverage to require strong environmental and worker safeguards, but it appears that Exim has never even attempted to do that,” said DeAngelis.

Exim did not respond to Climate Home News’ request for comment. 

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In a policy paper on the long-term value of energy resources submitted to the Norwegian parliament, the minority government said it will “facilitate long-term economic growth in the petroleum industry” and “pursue its exploration policy with regular concession rounds”.

It added: “The petroleum sector will remain a significant factor in the Norwegian economy in the years to come, although not on the same scale as today.”

Minister of petroleum and energy Tina Bru said the future Norwegian oil and gas sector will be “capable of delivering production with low emissions within the framework of our climate policy”.

The policy proposal also includes measures to develop offshore wind, hydrogen and carbon capture and storage.

Norwegian lawmakers are due to vote on the policy following the summer recess. The government will need the support of either the left-wing Labour Party or libertarian Progress Party, which sits on the right of prime minister Erna Solberg’s conservative party.

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Karoline Anduar, CEO of WWF Norway, said it is “embarrassing how Norway is placing itself on the wrong side of the transition”.

The paper comes after the International Energy Agency found fossil fuel exploration must stop now if the energy sector is to cut its emissions to net zero by 2050 and the world is to limit global heating to 1.5C – the Paris Agreement’s most ambitious goal.

Greenpeace Norway’s Andreas Randoy told Climate Home News the policy paper was likely to be adopted by parliament, perhaps with amendments, as opposition parties are unlikely to agree between themselves on the way forward.

Norway’s position contrasts with other wealthy fossil fuel producers like California and Denmark, which have both pledged to stop producing oil and gas by 2045 and 2050 respectively.

Janez Potocnik, former European environment commissioner and chair of the UN Environment Programme’s international resources panel, said: “Transitioning away from fossil fuels production will be difficult for all countries.”

But, he added, Norway is “best suited to implement a just transition away from fossils”.

“Norway has a well-educated workforce, a large sovereign wealth fund, and the democratic institutions to lead the world’s fight against climate change. With the latest decisions they are seriously undermining the leadership role they could and should play.”

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On Thursday, Norway released 84 new oil and gas exploration licences. Minister Bru said this was “important to maintain the level of activity on the Norwegian shelf”.

With a population of just five million, Norway is the world’s 14th biggest oil-producing country and the 8th biggest producer of natural gas.

It is a founding member of the Net Zero Producers Forum, a joint initiative to reduce emissions from fossil fuel production. The forum has been criticised for not discussing leaving fossil fuels in the ground.

The day before the policy paper was published, Norway’s state-owned energy company Equinor released forecasting which predicted that global oil and gas demand could be roughly the same in 2050 as it was in 2019.

It estimated global oil demand would range between 50 and 115 million barrels per day, compared with 100 million barrels per day in 2019.

Equinor’s forecast for 2050. Source: Equinor

Norway sells oil and gas abroad and puts the proceeds towards its $1.2 trillion sovereign wealth fund. But its own electricity is almost all generated from hydropower. The country is also a world leader in electric vehicle sales. Nearly half the cars sold last year were electric, thanks, in part, to government subsidies.

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Campaigners say that Shell is breaching its international climate obligations and threatening the lives of these citizens by continuing to invest billions of dollars each year in the production of fossil fuels. 

Seven environmental groups, including Greenpeace and Friends of the Earth the Netherlands, also known as Milieudefensie, filed the lawsuit against Shell in April last year, on behalf of over 17,000 Dutch citizens.

They are demanding that Shell cut its CO2 emissions by 45% by 2030 and to zero by 2050, compared to 2019 levels, in line with the toughest 1.5C temperature limit in the Paris pact. This would force one of the world’s largest energy companies to quickly phase down production of oil and gas and invest in clean energy sources instead.

Four public hearings took place in December in the district court of the Hague, where Shell has its headquarters, concluding on Thursday. A verdict is expected in May next year. 

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Campaigners have built their case on a precedent set by the ‘Urgenda case’, a major climate lawsuit taken to the top of the Netherlands court system last year.

In December 2019, the Supreme Court in the Netherlands ordered the Dutch government to cut its greenhouse gas emissions by 25% by the end of 2020, compared to 1990 levels, as its fair share to tackle climate change. The court ruled that the Dutch government was causing an “unacceptable danger” to citizens, for which it has a duty of care, by continuing to pollute. 

The victory by Dutch environmental group Urgenda was seen as a landmark moment for climate justice. 

“We are arguing that you can apply the same [duty of care] law to companies,” Sara Shaw, a campaigner for Friends of the Earth International, told Climate Home News. 

Shaw said that while climate litigation cases are becoming more common, it is unusual for the plaintiff not to claim financial damages and focus instead on setting a future course of action. 

Shell argues that climate policy should be set by governments, not companies and that forcing one energy firm to cut back on oil and gas will only have a minor impact as long as others continue to produce fossil fuels.

“The judge should not intervene with Shell’s policy. It would also be unfair to force one company to take certain climate action if states and consumers do not do so or do so insufficiently,” a lawyer for Shell told the court.

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Unlike the Dutch government, Shell is not a signatory to the 2015 Paris Agreement. But campaigners argue that Shell should help countries achieve Paris goals and accuse the company of violating human rights by undermining global efforts to keep temperature rises below 1.5C. 

“Shell’s policies put it on a collision course with international climate agreements,” said Roger Cox, the lawyer representing the group of campaigners. “It is clear that Shell’s policies continue to pose a major threat to the environment and humanity to this day. A judge can put a stop to this environmental damage,” he told the court. 

“It is impossible to achieve the Paris Agreement climate targets without regulating multinationals,” Donald Pols, chief executive of Friends of the Earth the Netherlands, told Climate Home News. 

On the company website, Shell says it is aiming for net-zero operations by 2050, which does not cover the impact of customers burning its products. The company aims to reduce its carbon intensity, the amount of CO2 emissions produced per energy unit sold, 30% by 2030 and 65% by 2050, compared to 2016 levels.

Shell’s focus on carbon intensity is problematic as it allows the company to claim it is reducing emissions while increasing the sale of fossil fuels, according to Pols. “While they should be reducing their CO2 emissions, Shell [plans to] grow their production of oil and gas by more than 34% by 2030.”

Campaigners and lawyers say the verdict of this case could set an important precedent for other climate litigation cases relating to the Paris Agreement. 

“Big polluters and fossil fuel executives should be quite nervous watching this,” said Shaw. “It would be great to see this spark a wave of climate litigation cases against corporations.”

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In its methane strategy published on Wednesday, the European Commission declared a commitment to tackling emissions from methane, which is the second-largest contributor to global warming after carbon dioxide.

“The Commission will examine options as regards possible methane emission reduction targets or standards or other incentives on fossil energy consumed and imported in the EU in the absence of significant commitments from international partners,” the strategy states. 

EU standards would put pressure on suppliers like Russia, Algeria and Gulf states to take methane emissions seriously. That could significantly impact global methane emissions, as the EU is the world’s largest importer of fossil gas.

Methane, which is released into the atmosphere from abandoned coal mines, farming and leaky oil and gas pipes, has a global warming impact 84 times higher than CO2 over a 20-year period.

The Commission said it planned to introduce legislation requiring oil and gas companies to report methane emissions and repair leaks. It will consider banning flaring and venting, which involve burning methane or directly releasing the potent gas into the atmosphere.

“The Commission will deliver legislative proposals in 2021 on compulsory measurement, reporting, and verification for all energy-related methane emissions and on an obligation to improve leak detection and repair of leaks on all fossil gas infrastructure,” a statement read.

IEA outlines how world can reach net zero emissions by 2050

The oil and gas industry could achieve a 75% reduction in methane emissions by 2030 using current technology, according to the International Energy Agency. 

Methane emissions are rising rapidly, with new satellite data from technology company Kayrros revealing that large leaks have increased by 32% in the past year. According to Kayrros, there are around 100 high-volume leaks happening around the world at any one time. Half of these methane hotspots occur in regions with coal mining and oil and gas industries. One of the worst culprits is Russia – Europe’s largest supplier of natural gas.

EU energy commissioner Kadri Simson tweeted a map of the findings, saying it “shows what we want to fix with #MethaneStrategy”.

#Methane hotspots can be seen from space! At least by satellites like Sentinel-5P. This map shows what we want to fix with #MethaneStrategy! Technology to facilitate the strategy already exists thanks to #EUlong-term investments in satellite programs. #Copernicus #Horizon2020 pic.twitter.com/EmnDzJ1t1n

— Kadri Simson (@KadriSimson) October 13, 2020

Slashing methane emissions is critical to the EU’s climate ambition and its goal to reach net zero by 2050. The EU has a target to reduce greenhouse gases 40% from 1990 levels by 2030, with internal negotiations ongoing to deepen those cuts. In line with this, methane emissions will need to be reduced by around 35% compared to 2005, according to the Commission’s 2030 climate plan. 

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A failure to do so would undermine the EU’s Paris Agreement commitments, Katalin Cseh, Hungarian MEP for Renew Europe, told Climate Home.

Cseh described the EU methane strategy as “a promising step in the right direction” but said it was disappointing that binding targets and standards only remained under consideration. She added that a lack of data and uniform monitoring had hindered opportunities to reduce methane emissions to date.

Jutta Paulus, a German MEP for the European Green Party, said in a statement the strategy did not go far enough: “The European Commission only scratches the surface and limits itself to minor issues like plugging methane leaks and statistics. Counting emissions does not help when the order of the day is to reduce them.”

The EU produces 5% of global methane emissions internally but as the world’s largest importer of gas it plays a major role in influencing the climate policies of other countries, the strategy notes.

The EU imports around 47% of internationally traded gas, Poppy Kalesi, director of global energy at the Environmental Defense Fund, told Climate Home. Companies including Shell and BP have set voluntary targets to curb methane emissions, but legislative action is needed to achieve global reductions, according to Kalesi. 

“Setting a mandatory methane performance standard can catalyse constructive collaboration between the EU and supplier countries by making it easy on large European gas buyers to apply pressure on their suppliers to credibly engage with their methane emissions,” Kalesi said.

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The US, Japan, UK, Italy, Netherlands, South Africa and Vietnam are putting public money towards a $14.9 billion package of loans, the biggest on record in Africa. The African Development Bank and 19 commercial lenders are also contributing.

The mammoth bet on LNG comes amid a global pandemic and despite climate, security and human rights concerns.

French oil major Total, which acquired a 26.5% stake in the project from Anadarko last year, hailed it as a “significant achievement”. “It demonstrates the confidence placed by the financial institutions in the long-term future of LNG in Mozambique,” said chief financial officer Jean-Pierre Sbraire in a statement.

Climate analysts argue that confidence is misplaced, as increasing fossil fuel production clashes with international climate goals. The 2019 Production Gap report found governments are collectively planning to extract 47% more gas by 2040 than can be burned within a 2C global warming limit.

Gas curse: Mozambique’s multi-billion dollar gamble on LNG

“It’s horrible to see Total boasting about funding the biggest fossil fuel project of its kind on my continent, the continent that is being ravaged by climate change. These oil and gas companies are literally profiting from our suffering,” said Mohamed Adow, director of the think-tank Power Shift Africa.

“If Total truly cared about Africa, rather than their own bottom line, they would be helping us to develop using clean, renewable power, not more dirty energy.”

Total and partners are planning to develop two gas fields in the Cabo Delgado province of northern Mozambique and build a plant capable of liquefying 13.1 million tonnes a year for export.

The government of Mozambique expects gas development to generate billions of dollars in revenue and raise the country to middle income status by the mid-2030s. However, this is based on bullish price forecasts that look increasingly unlikely to materialise, since the coronavirus pandemic hit demand.

Residents were initially hopeful the gas discovery would bring jobs and investment to the area, Climate Home News found. Instead, they are now facing an Islamic insurgency, which has killed at least 600 civilians since 2017 and targeted gas workers. Families have been moved from their homes and land without compensation, while watching well paid jobs go to the urban elite or foreigners.

Total denies there was any forced displacement and insists the insurgency has nothing to do with the gas development.

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The Export-Import Bank of the US is the providing the biggest chunk of debt finance, at $5 billion, followed by the Japan Bank for International Cooperation on $3bn.

UK Export Finance (UKEF) is providing up to $300 million in direct loans and $850 million of guarantees to underwrite commercial lenders. This is expected to support 2,000 British jobs.

The UK’s support has received particular attention, as it appears to contradict the government’s mission as host of the next UN climate summit, Cop26, in November 2021.

“Our aim is to ramp up ambition towards a climate-resilient, zero-carbon economy,” said Alok Sharma, business secretary and Cop26 president, at last month’s London Climate Action Week. He asked all countries to make deeper emissions cuts by 2030 and aim for net zero emissions.

To support those goals, Sharma added, “we must… make sure that climate risk is factored into every single investment decision taken around the world”.

Saudi Arabia censors fossil fuel subsidy discussion as G20 host

Matthew Pennycook, lawmaker and climate spokesperson for the Labour opposition party, called on Sharma to review the Mozambique decision in line with his green rhetoric.

Financing fossil fuel projects through UKEF risks “locking low and middle-income countries into high-carbon dependency for decades to come,” he said in a letter to Sharma dated 19 July. Conversely, if governments step up to meet the Paris climate targets, most of these projects “will become stranded assets”.

“We urgently need a different approach,” wrote Pennycook. “The government has an opportunity to match its stated net zero priorities at home with its practices abroad, and to show the leadership and consistency required from its Cop presidency to make next year’s summit a success.”

Think tank E3G estimates UKEF could create 180,000 jobs by ending support for fossil fuels and prioritising low carbon industries.

Louise Burrows, an expert on export credit agencies at E3G, said of UKEF’s funding for the Mozambique project: “This is a wrong and disappointing decision on a number of levels. This project is a sad repeat of colonial history whereby the UK’s interests have been favoured over the economic and social prosperity of Mozambique.”

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One of the biggest investments in Africa, the project to extract, liquefy and export gas raises the hope of catapulting Mozambique, one of the poorest countries in the world, to middle income status by the mid-2030s.

But it is a gamble, coming as the coronavirus pandemic hits gas demand and economic growth worldwide. The bet can only pay off on a dangerously overheated planet.

High rollers from around the world are backing Total, including would-be climate champions. The UK is reportedly set to support the project through its export credit agency, even as it urges leaders to bring more ambitious climate pledges to the Cop26 summit it hosts next year.

The World Bank and International Monetary Fund (IMF) have given technical support and encouragement to the Mozambique government.

Residents of the province have already had a taste of the perils of pegging the economy to a volatile commodity.

“I expected to see the growth of job opportunities for local youth and the implementation of public and private infrastructure,” said Abudo Manana, a university student in the provincial capital Pemba. “This did not happen – quite the opposite. We are now watching a horror movie.”

Since October 2017, an Islamic insurgency has killed at least 600 civilians and clashed with mercenaries that have been brought in, first from Russia, and then from South Africa, to support the Mozambican armed forces. Analysts see grievances around the unfulfilled promise of gas wealth as a driver of the violence.

In Palma, the small town closest to the gas discovery, illiteracy levels are high and residents did not immediately understand the scale of the project.

“Access to information was not exactly easy,” said Julio Ernesto, a representative of the Provincial Union of Peasants. “In the beginning, civil society was seen as an agitator and there were arrests and expulsions from meetings.”

Families were moved from their homes and fields to make way for gas infrastructure, and have still not been given compensation or alternative land to farm.

“They were given a basic basket of goods, but that only lasted six months, and now they have nothing,” Ernesto said. Young people were offered training, but no jobs at the end of it.

There have been some improvements, Ernesto noted: a better road from Pemba to Palma, energy access and a hospital for the village of Quitupo. But that did not make up for the insecurity. “People say this gas brought a curse,” he said

Ali Hassane, a Palma resident, was told workers were needed and joined a short training course. But at the end of it, the bosses “called their nephews” for jobs and he was left unemployed. “We are no longer hopeful for the future.”

The government remains bullish, forecasting revenues from the Rovuma Basin gas sector totalling $35 billion to $63.6 billion over the projects’ lifetimes. It is a prize that would tempt any country, not least one where nearly half the population lives in poverty.

Abebe Aemro Selassie, the IMF’s director of the African department, told a national conference in November 2019: “LNG can be a game changer for economic transformation, development and inclusive growth, potentially lifting millions out of poverty if the right policies are put in place.”

But there are no guarantees that wealth will materialise, nor that it will be shared equitably among Mozambicans.

The public revenue forecasts are based on oil prices of $60-80 a barrel in the mid-2020s, rising to $80-150/bbl by 2050, according to a document from Mozambique’s Ministry of Finance dated June 2018. Most of the gas supply contracts are indexed to global oil prices, rather than gas prices in the destination markets.

In the wake of the coronavirus pandemic, oil prices slumped to around $37/bbl. Analysts and oil majors lowered their price forecasts. First BP, then Shell wrote down the value of their reserves by billions of dollars, based on assumed oil prices over the coming decades of $55 and $60/bbl respectively.

Sources told Climate Home News the Total-led project needs an oil price of $50/bbl to break even.

“From the government circles and almost all the Mozambique elite, natural gas is seen as a really important potential source of revenue,” said Jonathan Gaventa, senior associate at the think-tank E3G, who was living in Mozambique pre-pandemic. “The problem is, that is based on oil and gas prices that we may never see again.”

The price uncertainty increases the further out you look. Under the government scenarios, cash flow to the public purse starts low in the mid-2020s and doesn’t ramp up until the mid-2030s.

“Mozambique is being landed with a pretty serious debt burden for at least the next 15 years, with a big question mark over whether these projects will ever cover their outlay,” Gaventa added.

It depends, in large part, how serious world leaders are about tackling the climate crisis.

The hydrocarbon industry has long promoted gas as a “transition fuel” to a clean economy, citing its lower carbon emissions than coal when burned. But a growing body of research shows methane leaks during the extraction and transport process are worse for the climate than previously thought. And the carbon budget to hold global warming to 2C, the upper limit in the Paris Agreement, is running out.

Collectively, governments are planning to extract 47% more gas by 2040 than is compatible with a 2C warming limit, the 2019 Production Gap report warned.

The number of LNG terminals under construction doubled in the past year, driven by the US and Canada seeking new export markets for their gas, Global Energy Monitor reported.

At least 11 major LNG terminal projects worldwide have stumbled since the coronavirus pandemic hit and oil and gas prices collapsed. Others had already stalled, in the face of organised opposition and challenging economics.

“The economics of this [Mozambique] project are really unfavourable and it is remarkable that they are going ahead with it,” said James Browning, co-author of the Global Energy Monitor report. He accused the gas industry of taking advantage of “chaos” in Mozambique to push the deal through.

The Mozambique case highlights how many financial institutions are entangled in fossil fuels – including some that aspire to climate leadership.

Export credit agencies, which support domestic businesses operating abroad, play a key role. Six countries are understood to be supporting the Total-led deal through their export credit agencies: US, Japan, UK, Italy, Netherlands and South Africa.

Announcing a $5 billion loan to the project in September 2019, US Exim Bank bragged it had elbowed Russia and China out of the deal. “The project now will be completed without their involvement and instead with ‘Made in the USA’ products and services. This is a win for our nation,” said Exim president Kimberly Reed.

Japan’s support, through two different agencies, forms part of an LNG spree. It is coupled with domestic policy to reduce reliance on nuclear power since the 2011 Fukushima disaster.

The UK’s involvement is more surprising. As host of the next UN climate summit in 2021, it is urging countries to submit more ambitious climate pledges. These should ultimately align with the Paris Agreement goals to hold global warming “well below 2C” and aim for 1.5C.

“It shows that they don’t believe in the future they are selling,” said E3G’s Gaventa. “These investments are only going to pay back in a world where demand for fossil fuels is very high. In a 1.5C world, we already have more gas than we can burn.”

Reuters reported last month that UK Export Finance (UKEF) will commit $800 million to the project, citing an anonymous source. At time of publication, that had not been confirmed. A spokesperson declined to comment.

It would be a bigger investment than anything UKEF supported in 2019 and 14 times UK aid spending in Mozambique.

UK government sources said it was the subject of an inter-departmental controversy, with the business and energy department objecting on climate grounds. There was talk of using carbon offsetting to paper over the contradictions, but that brings its own problems. It is hard to reliably estimate emissions from the end consumer and the offsetting bill for the UK share would run into hundreds of millions of pounds.

The World Bank announced in 2017 it would end direct support to oil and gas extraction by 2019. Yet it continues to offer technical assistance to governments opening up for exploration, with the stated aim of improving governance.

The priority appears to be attracting private investment, Urgewald campaigner Heike Mainhardt told Climate Home News. Success is measured by how fast permits are issued, not whether the public benefits.

In Mozambique, two law firms contracted by the Bank to work for the government also advised oil companies involved in the Rovuma Basin. The law firms, SNR Denton and Hunton Andrews Kurth, were in a position to secure tax breaks and government guarantees for clients including Total and Exxon Mobil, respectively. “It is, to me, a

Even Total has climate goals, aiming to become carbon neutral by 2050, in line with EU targets and the Paris Agreement. Conveniently, though, outside Europe the target only applies to operational emissions, not the carbon dioxide generated when customers burn the gas.

Total did not respond to emailed questions about climate and human rights concerns associated with the project.

Justiça Ambiental, a branch of Friends of the Earth, is one of the most vocal opponents of the project in Mozambique.

Daniel Ribeiro, a campaigner with the NGO, pointed to the experience of other African countries. “The history clearly shows that the extractive industry on the continent contributes little or almost nothing to the economy mainly due to corruption,” he said. “It is a small group of people who benefit from the implementation of these projects, while the public remains in misery.”

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The Covid-19 pandemic has scared the global economy to a standstill, slashing demand for the hydrocarbons that to this day are its main source of energy.

As travel restrictions begin to ease and production cuts kick in, oil prices are edging up from rock bottom. But this is not just another cyclical downturn. It is a savage blow at a time when fears of climate breakdown call the whole basis of our energy system into question.

The majority of the world’s oil and gas reserves must stay in the ground, unburned, to stop dangerous global heating. While few in the industry grasp the scale and speed of transition required, oil majors see the writing on the wall.

Will the current oil market turmoil hasten or hinder the shift to clean energy sources? Do governments need to play a more active role in managing production? What, ultimately, does this mean for the climate?

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Producers are drilling less, pretty much everywhere.

The Organization of Petroleum Exporting Countries (Opec) last month struck its broadest and deepest deal ever with non-members including Russia, to reduce global output by 10%. It was not enough to match the slump in demand, but put a floor on how low prices can sink.

Further production cuts will be market-driven. IHS Markit forecasts a drop of 17 million barrels a day worldwide in the second quarter of 2020.

Jim Burkhard, head of oil markets at IHS Markit, said of the analysis: “All producing countries are subject to the same brutal market forces. Some will be impacted more than others. But there is nowhere to hide.”

Extraction is on pause across much of Canada’s tar sands, one of the most carbon intensive sources of oil. US shale frackers are not putting up any new rigs, with many debt-laden small players expected to go bust.

US supermajor Exxon Mobil cut 30% off its capital spending programme. Loathed by activists for its decades-long disinformation campaign on climate change, the once mighty corporation is losing its shine with investors, too. Its stock has declined 10.8% in the past decade, Bloomberg reports in a scathing catalogue of the company’s misjudgments. 

Less oil extracted means less oil burned means lower greenhouse gas emissions. There is an increased risk of polluting methane leaks from abandoned wells and some Russian companies have said they might prefer to pump and burn unsellable oil than cease production. On balance, though, the immediate impact is good for the climate.

Comment: After the oil crash, we need a managed wind-down of fossil fuel production

Historically, oil busts have been followed by recovering demand and then price spikes as supply catches up. This time, most analysts are not predicting a return to pre-Covid levels of demand until late 2021, if at all.

Among oil majors, longer term forecasts diverge.

Exxon remains bullish as ever, seeing population growth and economic development driving oil sales up over the next three decades.

European companies, under pressure from climate-conscious governments and investors, are less confident of the outlook for oil. Or to put it another way, more confident humanity can overcome climate catastrophe by switching to low-carbon energy sources. 

BP, Shell, Repsol and Total have set out strategies to reach “net zero” greenhouse gas emissions by 2050. Unlike earlier generations of climate plans, these assume responsibility for the emissions from burning their products, which dwarf those from drilling and refining operations. While none actually measure up to the “net zero” claim, according to the Transition Pathways Initiative, the plans show an acceptance that oil’s share of the energy mix will shrink.

Shell chief Ben Van Beurden, defending a decision to cut the dividend by 66%, told shareholders he did not expect the oil market to recover in the medium term.

BP’s Bernard Looney told the Financial Times oil demand could even have peaked pre-crisis. “I would not write that off,” he said.

The longer oil prices are depressed, the more oil fields will go untapped. Analysis firm Rystad has cut its production forecast for 2030 by 6%, citing deferred investment in exploration.

Coronavirus lockdown speeds India’s shift from coal to solar power

Renewable energy projects, a tiny fraction of oil majors’ portfolios that historically yielded much lower financial returns than petrol products, now look more favourable. They are largely unpinched in the coronavirus round of belt-tightening.

The International Energy Agency, which has long underestimated renewables, now says they are more resilient in the downturn than fossil fuels.

Carbon Tracker Initiative is calling it: 2019 was “almost certainly” the peak of the fossil fuel era, according to the think-tank’s energy strategist Kingsmill Bond. He doesn’t quite go so far as to say oil and gas have peaked. Coal is assumed to have peaked in 2013; the other fuels may have further to go, but their heyday is over.

“We should not be surprised to see this peak even as we are surrounded by fossil fuels in our daily lives,” writes Bond. “Horse demand peaked when cars made up just 3% of their number, gas lighting demand peaked when electricity was in its infancy, and we had Nokia phones before the iPhone came along.”

The global economy will be reshaped by the response to Covid-19. Many of these changes are likely to keep oil demand down: shorter supply chains, teleworking, health and education services being delivered online.

Others will delay a shift to cleaner energy: principally, people shunning public transport for private cars, to limit their exposure to the disease.

Public attitudes matter: the extent to which air travel rebounds depends on how individuals weigh the heightened health risks against pent-up wanderlust.

Comment: Five ways for governments to green airline bailouts

More important, though, is the policy reaction. Governments are preparing to inject billions of dollars to revive the economy as the coronavirus threat is brought under control. Whether that throws a lifeline to polluting sectors or boosts sustainable infrastructure and retraining is key.

“Green recovery” is the buzzword among UN agencies, climate-hawk governments, urban planners and sustainable business coalitions.

“If our world is to come out of this [coronavirus] crisis more resilient, we must do everything in our power to make it a green recovery,” said Kristalina Georgieva, head of the International Monetary Fund (IMF), at a virtual conference last month.

As the IMF deploys its €1 trillion lending power, it can demand recipients scrap fossil fuel subsidies or work with petrostates to diversify their economies.

Specific investment decisions will be for governments to take. Green spending options include creating cycle networks, renovating buildings for energy efficiency and rolling out better internet connections.

It is also a moment to reconsider oil policy and how it aligns – or not – with climate goals.

The 2019 Production Gap report found governments were planning to extract 43% more oil and 47% more gas in 2040 than was compatible with holding global temperature rise to 2C – the minimum level of ambition in the Paris Agreement.

If production goes unregulated, the usual market dynamics of boom and bust prevail. Cheap oil weakens the incentive to switch to cleaner technology like electric vehicles, undermining climate policies. As drivers revert to gas-guzzling cars, demand for oil picks up and prices spike, spurring fresh investment in exploration.

“The crisis in the oil market does not mean this is the end of oil and gas, so we need government intervention,” says Laurie van der Burg, senior campaigner at Oil Change International (OCI). A ban on new exploration licences, end to public finance for the sector and retraining or early retirement programmes for oil workers is where she would start.

Covid-19 outbreak in Polish coal mines heaps further pain on struggling sector

In the US, the OCI floated the idea of nationalising distressed oil companies and winding them down. It brought them into an unlikely alignment with President Donald Trump, whose administration considered buying stakes in oil companies and imposing production cuts.

The idea was shot down in Congress: shale drillers who had taken on too much debt could not expect a bailout from the Democrats. The White House has yet to muster significant targeted support for the sector, despite Trump’s promise to “never let the great U.S. Oil & Gas Industry down”.

Still, it gives a hint of how constituencies with starkly different motives can have common interests. Managed production cuts, while supporting climate policy, would sustain oil prices at a profitable level and smooth out market volatility.

The oil market crash also spurred Trump into a rare act of international collaboration, as broker of last month’s Opec++ deal.

Petropowers have responded to growing competition from clean energy by pumping as much oil and gas as possible while they still can. Russia and Saudi Arabia continued to aggressively pursue market share as the pandemic lockdown started to bite.

This price war came at a cost. Riyadh was forced to raise taxes and cut spending, unsettling the Kingdom’s fragile social compact. Moscow saw its budget surplus for 2020 turn to a deficit.

A weak anaesthetic for the painful downturn, the Opec++ deal, like international climate cooperation, was hampered by conflicting ideas of how to fairly share the burden.

Comment: Why climate advocates should welcome the historic Opec++ deal

Michael Dobson, a PhD researcher at the New School into the anti-colonialist roots of Opec, argues the deal nonetheless shows Opec’s potential to negotiate an orderly exit from oil.

“Obviously the leadership in most Opec countries at the moment are not that interested in managed decline,” he concedes. But looking at the history of Opec, the idea it could take a conservationist approach is not so outlandish.

Venezuelan co-founder Juan Pablo Perez Alfonso conceived Opec as an ecological organisation, to raise oil prices and deter wasteful consumption. He died in 1979 without owning a car.

“If you want to have a transnational organisation that would bring parties around the table and sit down and allocate oil production in order to meet the market demand but you contract over time… If you wanted to build that from scratch, you would build something that looked a lot like Opec,” says Dobson.

“I do think it’s worth climate people understanding how the oil industry operates and not having an entirely antagonistic relationship to it.”

Comment: How the coronavirus recovery effort can support a European Green Deal

There is also the small matter of millions of workers worldwide dependent on the industry for their livelihoods.

The trade union movement, primed though it is to defend any job under threat, is willing to talk about a “just transition” away from fossil fuels.

This phrase is vague enough not to scare oil workers, while tacitly acknowledging their jobs will vanish.

“We would all like to preserve those jobs,” says Sharan Burrow, head of the International Trade Union Confederation, “if climate action was not an imperative. We are talking about a transition to stave off an extinction of the human race.”

The consolation prize they are fighting for is early retirement or retraining opportunities for workers and regeneration of communities losing out in the shift to clean energy.

“We cannot avoid the shift away from fossil fuels, the question is the timing and how it is done,” says Burrow. “If people don’t trust in the future, if they cannot see themselves with security, see opportunity, they are going to fight it. We have to make sure people move out of those areas in a way that builds hope, with as little damage as possible.”

Comment: No silver lining to coronavirus, but a golden opportunity

At an international level, just transition implies that historically disadvantaged countries should be given some leeway.

“We would like to see rich countries lead the transition and phase out their production first,” says OCI’s Van der Burg, while helping oil-dependent developing countries like Nigeria and Iran diversify their economies.

Many countries have a blind spot when it comes to the impact of oil supplies on climate policy. The UK, for example, has one of the strongest carbon-cutting laws in the world, yet maintains a policy to maximise oil and gas extraction from the North Sea.

That is partly justified by sustaining employment in the sector, but as external forces cause heavy job losses, this could be the moment to address the disconnect. In a letter to the UK prime minister, the independent Committee on Climate Change put retraining oil workers in low-carbon industries high on the priority list.

In efforts to protect jobs, the government should avoid “lock-in” of a polluting status quo, it warned: “Support for carbon-intensive sectors should be contingent on them taking real and lasting action on climate change.”

In a briefing call, the Committee’s chief executive Chris Stark said: “We are seeing the impacts of a disorderly transition play out. What we need is an orderly transition.”

The post This oil crash is not like the others appeared first on Climate Home News.

Together with Nature & Youth, the Norwegian branch of Friends of the Earth, the campaign group has been arguing since 2016 that Arctic oil drilling breaches the constitutional right to a healthy environment for future generations.

A district court and then an appeals court upheld the government’s right to award oil exploration licences in the Barents Sea.

Undeterred, with fresh backing from Swedish teen activist Greta Thunberg, the campaigners have secured a hearing in the supreme court.

All 19 supreme court justices are to hear the case. Frode Pleym, head of Greenpeace Norway, told Climate Home News this was a sign “they think it is super relevant”. Only around one in ten petitions to the supreme court are granted a hearing, typically by five justices.

The latest ruling in January scored a minor victory for the campaigners. Appeal judges agreed Norway was responsible for the environmental impact of its oil exports abroad – an argument the district court rejected.

Coronavirus: which governments are bailing out big polluters?

However, they said the scale of emissions associated with the oil licences in question was too low to justify the court intervening in government policy.

“That is what we are challenging,” said Pleym.

Emissions associated with Norway’s oil and gas exports are ten times the level of domestic emissions, according to Greenpeace. The campaigners argue there is no room for any expansion of the oil industry under the global warming limits set by the Paris Agreement.

The case gains prominence at a turbulent time for oil markets. Amid the coronavirus pandemic, demand has plummeted, storage filled up and prices even briefly turned negative in the US, prompting oil majors to cancel frontier projects.

“Some of these licences might not be used because it is not economic,” said Pleym, “but the whole issue with the Norwegian oil policy is that it is not only not rational for what is best for the climate, it is increasingly not rational in economic terms.”

Four more EU nations back a green post-coronavirus recovery

Greenpeace and Nature & Youth have raised money for the legal battle through crowdfunding and received a 250,000 kroner ($23,000) donation from the Greta Thunberg Foundation.

Thunberg dedicated her share of prize money from the Fritt Ord Award, which promotes freedom of expression, to the cause.

In a statement, she said: “Science is clear that fossil fuels have to stay in the ground. As a major oil producer and exporter, Norway needs to make the transition away from polluting fossil fuels, and show the way for other fossil-dependent economies.

“I am happy that this grant will go into the fight against new oil drilling and for a safe and healthy environment for future generations.”

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The lawsuit, launched in 2016 by Greenpeace and Nature & Youth, is part of a mounting trend around the world of plaintiffs turning to the courts to combat global warming and to enforce the 2015 Paris climate agreement.

“The appeal is rejected,” the three-judge panel in the Oslo Court of Appeals ruled, upholding a lower court ruling in 2018 that approved the Conservative-led government’s permits for exploration drilling in the Barents Sea.

Greenpeace said it would appeal to the Supreme Court and said the ruling included glimmers of hope. Article 112 of Norway’s constitution speaks of a right to a healthy environment for future generations.

UK must cut land use emissions by two thirds to meet 2050 goal, advisers warn

“We are happy. It’s a big step forward for us,” head of Greenpeace Norway Frode Pleym told Climate Home News.

Pleym especially welcomed a part of the ruling that greenhouse gases from burning Norway’s fossil fuels abroad should be included in assessing any environmental damage.

That overruled the lower court’s verdict that only local emissions, from exploration and production, should be taken into account in judging harm. Norway is western Europe’s biggest oil and gas exporter.

Overall, however, the Appeals Court backed the government’s approval of exploration licenses, awarded to Equinor, Chevron, Lukoil, ConocoPhillips and others.

The judges said that courts should be cautious about intervening in decisions made by the government and parliament in line with existing laws.

They also said it was uncertain whether exploration in the Arctic would lead to any new oil or gas finds and that any emissions would be regulated by carbon markets.

Ernst Nordtveit, a law professor at Bergen University, ruling and predicted that the Supreme Court would also reach a similar conclusion if it takes up the case in coming months.

Trump criticises ‘prophets of doom’ in Davos and touts fossil fuels

“There is a high threshold for the court to intervene in political decisions in such a complex area,” he told CHN.

The environmental groups argue that any new oilfields in the Arctic would take years to develop and keep pumping for decades, undermining Norway’s pledges to slash greenhouse gases as part of the 2015 Paris Agreement.

There are now 1,143 climate lawsuits in the US s and 319 cases in other nations, according to databases maintained by the Sabin Center for Climate Change Law at Columbia Law School and Arnold & Porter.

Among the most high profile rulings, the Dutch Supreme Court in December 2019 said the government had done too little to fight climate change. It ordered the government to slash emissions by at least 25% from 1990 levels by the end of 2020.

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This is where the gas from the Nord Stream 2 pipeline will be produced. Yamal did not originally belong to Russia. The Russian Empire began the colonisation of Yamal in the 16th century.

The Russian empire was mainly interested in profiteering from the region’s fur, which it sold to Europe. One third of the Russian state’s public treasury derived from the fur trade with the West. Before that could happen, land was seized. The indigenous peoples of Yamal resisted colonisation and, in response, the colonialists brutally killed them.

The Soviets separated indigenous peoples from their children and reindeers by force. Indigenous peoples have organised the Mandalada, a movement to safeguard their traditional way of life. After fierce resistance, Mandalada participants were arrested.

The discovery of oil and gas deposits in the Yamal Peninsula, which promised the region prosperity, did not improve, but rather worsened the situation. Gazprom continues to seize the lands of the indigenous peoples of Yamal in an attempt to extract even more gas. As a result, the local population is left without grazing [land] for its reindeer. For the indigenous peoples of Yamal, little has changed since the 16th century: the empire took furs from them and sold them to the West. Now the empire is taking oil and gas from them and selling it to the West. The lion’s share of tax revenue from the sale of fossil fuels does not remain in the Yamal region, but is sent to Moscow.

Russia formally joins Paris Agreement

One of the serious climatic problems in Yamal is gas flaring. It is barbaric and wasteful. Due to procedural imperfections, the gas is simply burned and released into the atmosphere, increasing greenhouse gas emissions. According to the World Bank, Russia is the world’s biggest gas flare emitter. In 2018, Russia accounted for nearly 21.3% of global gas flaring.

In the Yamal Peninsula, there are about 1,500 such flares. Gazprom systematically pollutes the atmosphere with greenhouse gases. In 2015, the local prosecutor’s office in Yamal increased methane emissions six-fold and carbon black emissions 37-fold.

The Russian authorities are not fighting Gazprom’s environmental crimes. The fines and warnings that Yamal prosecutors impose on Gazprom don’t have any impact on the company’s behaviour.

Indigenous Finno-Ugric peoples saw their rights violated during the construction of Nord Stream 2. The gas pipeline destroyed the native Finno-Ugric lands and the Kurgalsky reserve, which is home to rare plants, mosses and bird species.

Nord Stream 2 AG, the company behind the project, has hidden the true value of the Kurgalsky reserve. The real consequences of the construction of the gas pipeline on this nature reserve were never mentioned, be it during the public hearings on the project in Russia and other countries, or in the company’s Espoo report.

Greenpeace Austria has obtained secret minutes of meetings between the Russian government, Nord Stream 2 AG and Gazprom, during which they discussed changes to environmental legislation.

Surveys began illegally, without any permits, on the Kurgalsky reserve. As a result of this intrusion into a unique ecosystem, hundreds of rare plants have been destroyed.

The fight for the world’s largest forest

Double standards are rife when it comes to carving out the routes of the gas pipeline in Germany and Russia.  In Germany, where the value of the coastal territory is lower than that of the Kurgalsky reserve, Nord Stream 2 AG considers that it is possible to use a micro-tunneling construction method. In Russia, under similar conditions and with the incomparably higher value of the Kurgalsky Reserve, the “traditional method of construction with a 85m wide open trench” has been adopted. This method has a negative impact on the ecosystem of the Kurgalsky Reserve.

Nord Stream 2 violates Russian rights. The truth is that after selling Russian gas to the West, there are not enough to meet the needs of the Russian people. Gas programmes have been reduced: 30% of Russians live in gas-free houses.

The Russian authorities fix this internal energy supply problem in the most environmentally damaging way possible: they use coal instead of gas. The operation of coal-fired power plants, which are not equipped with modern filters, leads to real environmental catastrophes. For example, in Krasnoyarsk, residents often witness the “black sky” effect caused by finely fragmented coal dust.

Thanks to the Nord Stream 2 project, Europeans will receive less polluting gas. While the Russians will choke on coal dust, the indigenous peoples of Yamal will continue to suffer from gas combustion by Gazprom and will be deprived of the best pastures, and the unique Kurgalsky reserve will suffer severely. With the proceeds from the sale of fossil fuels, Putin’s regime is able to achieve its archaic political ambitions, carry out political repression, seize the territories of neighbouring states, bribe Western politicians and produce propaganda. Obviously, without the demand for Russian gas, Putin’s plan would simply not work.

Are Europeans okay with this reality and with the price of “cheap” Russian gas?

Yevgeniya Chirikova is a Russian environmental activist who received the Goldman Prize for the Environment in 2012 for her fight to preserve the Khimki forest from the Moscow-St. Petersburg motorway.

The post What is the real cost of cheap Russian gas? appeared first on Climate Home News.

The state oil producer netted $111 billion in 2018, more than tech giants Apple and Alphabet combined, it revealed in a bond prospectus.

It is aiming to raise funds to buy petrochemical company Sabic, as part of Saudi Arabia’s strategy to diversify its economy away from crude oil.

Saudi Aramco will continue to be “significantly impacted” by the international oil price, the document noted, warning: “Climate change concerns and impacts could reduce global demand for hydrocarbons and hydrocarbon-based products and could cause the company to incur costs or invest additional capital.”

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Climate policies such as renewable energy mandates, carbon pricing and energy efficiency standards are expected to dampen demand for fossil fuels, it said. Trends in electrification of transport and clean energy prices will also be critical.

Meanwhile the company faces legal challenges over the role of its products in causing climate change. On 2 July 2018, US state Rhode Island sued oil and gas companies including Motiva, an Aramco subsidiary, for damages to coastal infrastructure. “Claims such as these could grow in number,” the note said, and “litigation could result in substantial costs”.

Peter Barnett, a climate lawyer with ClientEarth, agreed. “Climate litigation is gathering pace as citizens, cities, states and shareholders seek accountability for continued reliance on fossil fuels as the impacts of climate change are increasingly acutely felt,” he said. “As Saudi Aramco’s prospectus underscores, climate litigation is now of mainstream financial concern to fossil fuel-exposed companies and their investors.”

Saudi Aramco dismisses peak oil demand ‘hype’, touts carbon efficiency

These caveats did not stop agencies Fitch and Moody’s giving the company a solid A+/A1 credit rating, judging it a fairly safe bet for investors.

Saudi Aramco’s relatively low cost oil production makes it better placed than many competitors to weather the global transition to clean energy.

To meet the goal of the Paris Agreement to hold global warming below 2C, oil will ultimately need to be phased out. In the short term, though, climate models allow a budget for its continued role in the energy mix.

Less than 10% of Saudi Aramco’s capital spending to 2025 falls outside that 2C budget, analysts at Carbon Tracker judged in a 2018 ranking of 72 oil companies. That compares to 20-30% for Exxon Mobil, Total and Petrobas, or up to 60% for US-based Energen.

Saudi Arabia also wastes less energy in the extraction process and through gas flaring than most oil-producing countries, a 2018 study in Science found.

For all these advantages, Saudi Aramco is not immune from pressure on the sector to shift investment into renewable energy. At a conference in February, its chief Amin Nasser described a “worrying and growing belief among policy makers… and many others that we are an industry with little or no future”.

Crown prince Mohammed bin Salman in 2016 proposed floating part of the company on the stock exchange. If that ever comes to pass, it will only bring more scrutiny on its carbon and financial accounting.

Shareholder resolutions on climate change have become a regular feature of AGM season for publicly listed companies. Several oil majors have bowed to calls to disclose what the 2C warming limit means for their business. The next ask is to set emissions reduction targets in line with the Paris Agreement goal – a proposal Exxon Mobil is trying to block.

Another focus for activists is the mismatch between companies’ climate-friendly rhetoric and covert support for lobbying against climate policies. Shell revealed on Tuesday it was quitting the American Fuel & Petrochemical Manufacturers over its climate stance – but staying in the controversial American Petroleum Institute.

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Amin H Nasser described a “worrying and growing belief among policy makers… and many others that we are an industry with little or no future”.

He dismissed as “hype” projections of a rapid shift to electric vehicles and its corollary, peak oil demand, as an “exaggerated” theory, in a speech to International Petroleum Week.

The head of the world’s largest oil company had been rattled a month earlier by conversations with senior financiers at the World Economic Forum in Davos.

Nasser recalled how one had confidently predicted the demise of the industry in five years and another that half of vehicles on the road would be electric within 5-10 years.

“These views are not based on logic and facts, and are formed mostly in response to pressure and hype,” he said. “But they are sincerely held.”

To counter the sector’s reputational problem, Nasser said it needed to reduce the carbon footprint of its products, touting his company’s reductions in carbon intensity.

The idea that oil demand will peak as emissions curbs and clean technology kick in globally is gaining traction – albeit with widely varying estimates of when it might happen.

Oil major Shell has suggested the peak could come as soon as 2025, if governments meet the spirit of the Paris Agreement on climate change. Others see the tipping point after 2040.

How quickly electric vehicles take off, in combination with car-sharing clubs and self-driving technology, is seen as a key variable. Nasser cautioned that passenger vehicles only account for 20% of oil demand and in other sectors – planes, ships, trucks, petrochemicals, and lubes – alternatives to oil are less evident.

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Stopping one pipeline was hardly going to stop climate change, after all. And even the more limited goal that activists had set – stopping the exploitation of Alberta’s highly polluting tar sands – was dismissed as unrealistic. The oil would simply find another way to the market, the argument went, leading New York Magazine’s Jonathan Chait, for example, to declare “The Keystone Fight is a Huge Environmentalist Mistake”. Well, perhaps not.

“Historic Price Crash Plunges Canadian Oil Patch into Crisis,” Bloomberg reported in November 2018: “Heavy Canadian crude has been on a downward spiral since mid-May, with prices plummeting by more than 60 percent as an onslaught of new production from the oil-sands overwhelms the nation’s pipelines.”

The inability of Alberta producers to efficiently transport their oil to refiners, Bloomberg noted, had led to a substantial build-up of inventory in the region, and a correspondingly sharp discount on West Canada Select crude compared to the benchmark US oil price. In some instances, Albertan tar sands oil sold for more than $50 less than the typical US barrel, with prices sometimes dipping under $20. The financial consequences for the companies concerned were so significant, they precipitated that most ironic of oil industry behaviors: private producers calling for government-imposed supply cuts.

There is a direct line, therefore, between the Keep It In the Ground campaign and Alberta Premier Rachel Notley’s decision in December to do just that: mandate a reduction of 325,000 barrels a day of Albertan oil production, a reduction that began on 1 January this year.

“Every Albertan owns the oil in the ground,” the Alberta government website explaining the action states. “We have a responsibility to get our product to market for a fair price.” Elsewhere it notes: “It’s crucial that we match our production levels to what we can export”. Pipelines, it turns out, have more than symbolic significance.

By putting their bodies on the line to stop Keystone XL from being constructed, protesters have effectively forced the Alberta government to impose a hard ceiling on the province’s oil production, with reductions to remain in effect throughout 2019. The plan worked.

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Premier Notley’s actions are far from unprecedented. In August 1931, faced with a flooded market and an oil price that had collapsed from a dollar to 15 cents, the Governor of Texas declared martial law and used the National Guard to close wells across Texas.

Thereafter followed no less than four decades of government-imposed oil production quotas, not only in Texas but in other major oil producing states like Oklahoma, Louisiana, and New Mexico. These quotas shut in production capacity that, at its peak, kept the US producing over 4 million barrels a day less than it otherwise would have (an amount close to Canada’s entire production today).

Former George W Bush White House energy advisor Bob McNally has enthusiastically described the US state rationing system as “the most communistic, centrally planned, interventionist, heavy-handed government control of a commodity ever seen in human history”. Using government authority to keep oil in the ground, in other words, is as American as apple pie. There has never been a more urgent need to revive it.

In her video address explaining the cuts, Premier Notley states: “Our energy resources… are our natural inheritance – defended by those who came before and handed down to us in trust. We have a duty to defend these resources, protecting them for our children and our children’s children. So let me tell you how we are doing that. First, we are not letting up on our fight to build new pipelines.”

The non sequitur is really something. Alberta undoubtedly has a duty to preserve the oil in its tar sands for future generations. That duty, however, is advanced not by building more pipelines, but by capping Alberta’s oil production – permanently.

Not only are steadily increasing emissions from upstream oil and gas production a large reason for Canada’s dubious progress towards achieving its Paris Agreement target, but the pipelines necessary to further expand production create considerable environmental risks, to say nothing of their impact on indigenous sovereignty.

Lest we forget, the best-case scenario for these investments is that they become economically damaging stranded assets: bad bets on continued fossil fuel dependence at a time when the world is shifting to clean energy. The alternative – their full utilization – entails climate disaster.

What began as an emergency measure in Texas in 1931 quickly evolved, with the passage of the Texas Market Demand Act of 1932, into a system of rational government control and conservation of oil in the United States. In a sane world, events would follow the same path in Alberta this year.

In the meantime, those who truly have the interests of our children’s children at heart are gearing up to stop the Enbridge Line 3 pipeline: the next fight in the campaign to secure by direct action what should have already been done by government regulation.

Let no one say it isn’t worth it.

Michael Dobson is a PhD candidate at the New School for Social Research focused on supply-side climate policy. Follow him on twitter @michaeldobsonNZ

The post Alberta’s oil production cut shows the Keystone XL protest worked appeared first on Climate Home News.

Ineos and Cuadrilla said the rules, which require drilling to be halted for 18 hours after any tremor exceeding 0.5 on the Richter scale, are “absurd” and “unworkable”. In the US, the limit is 4 magnitude.

In principle, the Conservative administration supports shale gas exploration. Climate minister Claire Perry said in October gas had a role in a low-carbon future and it was “pragmatic” to back fracking.

However in a statement on Thursday morning, the energy ministry said: “We set these regulations in consultation with the industry and we have no plans to review them.”

Campaigners celebrated the latest obstacle to building new fossil fuel infrastructure, which they have long argued is incompatible with a safe climate future. Greenpeace UK’s Hannah Martin tweeted: “This is essentially an end to the fracking industry.”

Ok I’m now calling it. This is essentially an end to the #fracking industry. It’s going to continue to fizzle out until a new Tory leader can officially announce its ‘banned’ in an attempt to be green. https://t.co/24Y3oRGdBY

— Hannah Martin (@Hannah_RM) February 7, 2019

In the US, hydraulic fracturing transformed the oil and gas industry, opening previously untapped resources. Injecting water, sand and chemicals underground at high pressure breaks up shale rock, allowing gas to flow out.

Advocates hoped to repeat the trick in Britain, to replace dwindling North Sea reserves and reduce reliance on imports. But the country’s denser population, tricky geology and tighter regulatory environment made conditions less favourable.

A government survey in December 2018 found 35% of people opposed fracking, against 13% who supported it. The remainder did not know. Of those against fracking, 40% cited the risk of earthquakes, up from 26% just three months earlier.

Cuadrilla, the only company actively fracking in the UK, restarted operations in the northwest of England last October after a 7-year hiatus. But it admitted they had struggled to produce gas as they repeatedly recorded tremors over the allowed limit.

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So desperate was he to secure the Trans Mountain expansion, the Canadian government offered to buy out Kinder Morgan for C$4.5 billion ($3.5bn).

But on Thursday, as Kinder Morgan’s shareholders approved the deal, the federal court of appeal blocked the project. Bombshell. The Vancouver Sun has a decent explainer.

Almost immediately Rachel Notley, premier of oil producer Alberta, announced the state was pulling out of Trudeau’s federal climate plan until the pipeline got back on track.

Campaigner and academic Tzeporah Berman reminded Trudeau on Twitter he could back out of the pipeline deal for $10 million. Instead, the prime minister doubled down, assuring Notley he stood by the Trans Mountain expansion.

So….in the purchase agreement any party can walk away with a $10million penalty. This might be the time to invoke that clause @JustinTrudeau. $10 million seems a small price to pay for $10 billion mistake #StopKM #cdnpoli #bcpoli

— Tzeporah Berman (@Tzeporah) August 30, 2018

Today I spoke with Premier @RachelNotley – and reassured her that the federal government stands by the TMX expansion project and will ensure it moves forward in the right way.

— Justin Trudeau (@JustinTrudeau) August 30, 2018

Other states and provinces are already pursuing climate policies, but Alberta’s tar sands are Canada’s most significant source of pollution. As Notley put it: “Without Alberta that [federal climate] plan isn’t worth the paper it’s written on.”

There is an international dimension too: China could potentially sue the government to protect its commercial interests in tar sands.

How much longer can Trudeau hold this fragile compromise together? And what comes next?

Kicking offsets

UN Climate Change came under fire for a jokey video promoting carbon offsets this week. The advert was swiftly taken down, after viewers complained it mocked greener lifestyle choices like giving up meat and flying.

Comments mainly focused on the video’s flippant tone, but there is a deeper issue: what future is there for the Clean Development Mechanism that generates these credits?

Carbon Market Watch is launching a campaign to scrap the Kyoto-era carbon market, citing weak environmental integrity. Others see some role for it in the Paris Agreement – and UN climate chief Patricia Espinosa touted its successes in a press release on Friday. Something to watch in “Article 6” negotiations at next week’s Bangkok talks.

See you there?

Speaking of Bangkok, I will be at the talks and sending a daily newsletter out to all of you. Send tips, rumours and questions to my email or Twitter @climatemegan.

Climate conversations

• We need all sectors of society to take climate action up a level – Patricia Espinosa and Anne Hidalgo
• Heavyweight help needed at the Green Climate Fund – Niranjali Manel Amerasinghe and Joe Thwaites

Call in the cavalry

Poland is a generous host when it comes to UN climate talks, taking on the responsibility for the third time in ten years. But its coal-loving politics make climate advocates nervous.

They may be reassured to see Michał Kurtyka, top official for the next summit in Katowice, drawing on the expertise of former Cop presidents.

Kurtyka convened a meeting with France’s Laurent Fabius and Morocco’s Salaheddine Mezouar in Paris on Monday, to pick their brains on “challenges, threats and the opportunities for the international community”.

Quick hits

• Green fund woes loom over upcoming climate talks
• Australia’s new PM risks climate trade-off with EU
• Poland’s ‘last coal power plant’ depends on subsidies, say analysts
• Pakistan to apply strict green rules on Chinese coal deals – Imran Khan advisor

About those challenges…

French president Emmanuel Macron is one of the most vocal champions of the Paris Agreement. His green credibility took a hit this week when environment minister Nicolas Hulot resigned on live radio.

“I don’t want to lie to myself any more. I don’t want to give the illusion that my presence in the French government shows that we are doing what it takes to face these challenges,” he said.

The post Climate Weekly: Trudeau’s climate pact breaks down appeared first on Climate Home News.

Addressing an audience including the heads of Exxon Mobil, Eni and BP, the head of the Catholic Church said rising greenhouse gas levels were “disturbing and a cause for real concern”.

“Yet even more worrying is the continued search for new fossil fuel reserves, whereas the Paris Agreement clearly urged keeping most fossil fuels underground,” he said.

“This is why we need to talk together – industry, investors, researchers and consumers – about transition and the search for alternatives. Civilization requires energy, but energy use must not destroy civilization.”

In a similar vein to his 2015 letter to Catholics on climate change, Laudato Si’, Pope Francis called on the energy majors to show care for God’s creation.

Oil companies argue their product will be needed for decades, to lift people out of poverty. The Pope acknowledged the latent demand for energy but said it must not come at the cost of the environment.

“Our desire to ensure energy for all must not lead to the undesired effect of a spiral of extreme climate changes due to a catastrophic rise in global temperatures, harsher environments and increased levels of poverty,” he said.

Analysis: Investors have made oil majors consider safe climate limits. What next?

Comment: The Pope’s climate essay won’t convince Trump – it didn’t even work on Catholics

Analysts estimate at least two thirds of proven coal, oil and gas reserves need to stay in the ground to hold global warming below 2C, the goal of the Paris Agreement.

Neil Thorns, director of advocacy at Catholic aid agency CAFOD, welcomed the Pope “preaching to the not-yet-converted”.

“Francis reminds us in his encyclical that ‘Business is a noble vocation’, but also asks why anyone would want to be remembered for failing to act when the world’s poorest people are being pushed deeper into poverty by climate change. It’s a question fossil fuel executives would do well to ask themselves,” he said.

“If energy companies are serious about caring for our common home, they need to take the Pope’s advice and hurry up with shifting their priorities – and therefore their money – from fossil fuels to renewables.”

Research suggests the Pope’s climate message has inspired and motivated liberal Catholics but not swayed conservative Catholics in the US, a demographic sceptical of human influence on the climate.

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The Liberal administration is set to buy the Trans Mountain Pipeline for C$4.5 billion ($3.5bn) from Kinder Morgan, to push through a controversial expansion.

That is a clear fossil fuel subsidy, critics said, which goes against a G7 pledge to phase out “inefficient” support for polluting sectors by 2025. It comes the week before Canada hosts a summit of G7 leaders.

“The decision by the Canadian government to acquire the Trans Mountain pipeline from Kinder Morgan has essentially been taken because, given the risk, no other private investor would step in,” said Mark Campanale, executive director of the Carbon Tracker Initiative. “It is government subsidising a market failure.”

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As electric vehicles and battery technologies take off, dampening oil demand, he warned, it was likely “taxpayers will be left with a wasting and stranded asset”.

Shelagh Whitley, head of climate and energy at the Overseas Development Institute (ODI), expressed disappointment but not surprise at the buyout. “The petrostate was in hiding,” she told Climate Home News. “It is coming to the surface because the free market is not willing to bear this [environmental risk] any more.”

Canada has positioned itself in a global climate leadership role, last year hosting a trilateral “climate action” meeting with ministers from China and the EU and pushing to end coal power. But the pipeline “presents a critical credibility challenge for Canada”, said Greenpeace East Asia campaigner Li Shuo. “It is perverse to develop a major fossil project on one hand, while claiming to drive global climate ambition on the other.”

Report: UK and Canada announce global alliance to end coal power

Prime minister Justin Trudeau came to power in 2015 declaring “Canada is back” on climate change, after Stephen Harper’s scepticism. But from the outset his green zeal was tempered by a political bargain with oil-producing provinces. In exchange for their support to introduce carbon pricing, Trudeau promised to back a new pipeline.

The federal takeover is a last-ditch attempt to deliver on that promise, in the face of strong opposition along the pipeline route from indigenous Canadian territories and British Columbia.

It is intended to be temporary. If and when Ottawa succeeds in getting the project started, it intends to re-privatise the pipeline.

In a statement, Canada’s environment ministry said it had modelled the impact of the Trans Mountain expansion on emissions and could meet national targets while growing the oil and gas sector. “The project fits within our government’s commitment to tackle climate change, create jobs and be a leader in the transition to a low carbon economy,” a spokesperson said. The ministry did not address CHN’s question about whether the buyout conflicted with its G7 pledge on subsidies.

Whitley said the government buyout “absolutely” counted as a subsidy as it was paying to deliver something the market would not.

Supporters argue the state intervention is not a subsidy, however, as this kind of infrastructure can generate revenue. Trevor Tombe, economics professor at the University of Calgary, wrote for CBC news: “Pipelines are regulated assets, like many utilities, with their tolls set by government. So the operator is essentially guaranteed to earn a modest profit.”

Analysis: Investors have made oil majors consider safe climate limits. What next?

That assumes the pipeline will now get built, an outcome campaigners are still fighting. “Just days before Canada hosts the G7 leaders’ summit, the Trudeau government has wasted billions of dollars in Canadian taxpayer money by taking on a doomed pipeline project and all of the liabilities that come along with it,” said Alex Doukas of Oil Change International.

The climate case against the pipeline is that it will increase sales of oil from tar sands, a carbon-intensive source of production, and lock in oil dependence for decades.

Bill McKibben, writer and leader of the keep-it-in-the-ground movement, delivered a withering verdict on Trudeau in the Guardian. History would remember him “not as a dreamy progressive, but as one more pathetic employee of the richest, most reckless industry in the planet’s history”.

The ODI is due to publish a ranking of G7 countries’ progress towards phasing out fossil fuel subsidies on Monday. Previous assessments have found patchy efforts, with stealthy support mechanisms such as tax breaks for oil drilling or capacity payments to old coal generators continuing to prop up legacy industries.

Next week’s G7 summit is set to be a tense affair, as the Donald Trump’s US disagrees with the other advanced economies on more or less everything. Politico reports US officials are using “environmental resilience” as a euphemism for climate change, in a bid to salvage some common ground.

At the last such event in 2017, the US opted out of a statement reaffirming commitment to the Paris climate agreement, but stuck with previously agreed language on ending fossil fuel subsidies.

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Supermajor Exxon Mobil has published its first assessment of what holding global warming to 2C means for its business, prompted by a shareholder revolt in 2017.

Shareholder activists have moved on to target second-tier companies, winning resolutions to make Kinder Morgan and Anadarko follow suit. Several firms pre-empted a vote by agreeing to their demands.

In Europe, where most oil majors have already produced 2C scenarios, the conversation is turning from disclosure to action.

“We have seen a significant uptick in the number of reports this year,” Robert Schuwerk of Carbon Tracker told Climate Home News.

Analysing the implications of 2C, the upper warming limit in the Paris Agreement, is “becoming normalised as a concept”, he said. There is not yet a standardised approach, though, making it hard to compare companies: “I think that is going to become a focus.”

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By each choosing methods to flatter their business plans, firms are perpetuating collective denial.

Globally, the vast majority of oil and gas reserves need to stay in the ground to limit temperature rise to 2C. That implies some producers will lose out. But, as a Carbon Tracker report this week highlighted, corporate scenario analyses show everyone winning.

“The primary risk is over-investment in a resource base, bringing on a supply-demand imbalance, lower prices and therefore lower returns for shareholders,” said Schuwerk. In other words, they waste money on unburnable fuel and profits dive.

Price assumptions are key. As climate regulations and clean technology take hold, they dampen oil demand. Other things being equal, that means low prices.

The proof oil companies are taking climate risk seriously will come when they cancel expensive exploration projects, which cannot pay off in a 2C world.

French major Total was one of the earliest to grasp this, ruling out Arctic oil drilling in 2016. But most still see their role as following government policy rather than driving the shift to cleaner energy.

They emphasise the growing energy needs of the developing world and plan to meet them the traditional way – with fossil fuels.

“We will not be tied to an approach that requires us to move too quickly, or too slowly, through this transition,” was chief executive Ben van Beurden’s reaction to calls to align Shell’s portfolio with the 2C limit.

UN report: Other countries ‘highly unlikely’ to replicate US shale gas boom

Some are avoiding the conversation. Ahead of its AGM in Dallas next Wednesday, Exxon Mobil got the regulator to block a shareholder proposal to expand its renewable energy portfolio.

In an open letter, shareholder pressure group As You Sow wrote to the Exxon board: “It hurts us to see how you’re putting all your eggs in a basket with a massive hole in it, because we’re invested (literally) in your future.”

If Exxon refuses to answer these questions, they threatened, “shareholders may choose to no longer stand by you”.

Since Donald Trump made dismissal of climate risks official White House policy, investor pressure has become more important than ever, as a bulwark against US backsliding.

In a further sign the industry is feeling the heat, this week former Trump advisor George David Banks launched a counter-revolution. Under the banner Main Street Investors, Axios reported, Banks will lobby major asset managers to ease off.

In response, Blackrock and Vanguard said they backed climate resolutions for no other reason than to protect shareholder value.

The gains of the shareholder climate movement are incremental, set against the urgency of tackling climate change, but the logic is inescapable.

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Hydraulic fracturing, or “fracking”, has transformed oil and gas production in the US, allowing the industry to tap previously inaccessible reserves in shale rock.

Geographic, regulatory and financial factors are preventing the rest of the world from following suit, the report finds.

“It is highly unlikely that Europe will experience the same level of shale gas development as in the United States,” says the report. “The development of shale gas resources in other countries remains marginal.”

The role of shale gas in a clean energy transition is controversial. Advocates point out gas emits half the carbon dioxide of coal when burned. Opponents argue methane leaks in production undermine the benefits – and investment in new fossil fuel infrastructure risks locking in dependence on dirty energy.

Global shale gas resources (Photo: EIA/ARI 2015)

Global consumption of natural gas will increase from 22% in 2015 to 25% by 2040, the US Energy Information Administration (EIA) estimates.

Alexandra Laurent, author of the Unctad report, said there are four main obstacles to developing shale gas. These include gas deposit and water availability, as well as the support of the local population.

The success of the US is due to “a combination of many factors that you don’t find in Europe or any other country,” said Janvier Nkurunziza, who supervised the report. “The [US] financial system is flexible, I don’t think you will find that anywhere else.”

Laurent added the scale of infrastructure in the US is “missing in other countries.”

Mining permits in the US are relatively easy to attain, and the country benefits from a huge network of pipelines and drilling contractors. “The US has been intensively explored and drilled for more than a century,” says Jean-Baptiste Dubreil, a senior gas analyst at the International Energy Agency (IEA). “I don’t know to which extent you can replicate that.”

Several countries outside of the US are developing their shale industry, including Canada, China, the largest potential world shale gas source, and Argentina, which Dubreil sees as the most promising.

The UK has had some success drilling and exporting shale gas, but further development is stalled by “high population density in some potential areas and anti-hydraulic fracturing campaigns” according to the report. The oil and gas industry has been declining in recent years.

“Since 2000, the UK’s indigenous production of energy has fallen by 56%, and we have gone from being a big net exporter to a significant net importer of energy,” says Ken Cronin, chief executive of UK Onshore Oil and Gas (UKOOG).

“Overall, if the appraisal flow-testing is successful, 400 shale gas sites, each with 10 wells, could allow us to reduce our gas imports in half over the next 20 years.”

A majority of European gas reserves are situated in built-up urban areas. France holds about 30% of total shale gas resources in Europe, but 95% of the country’s reserves are in Paris. The country has banned fracking and suspended exploration efforts.

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The renewal of US sanctions after Donald Trump’s decision to withdraw from the Iran nuclear deal has raised questions about a number of major energy initiatives. Companies are concerned Iranian ties could incur penalties from the US.

On Friday, European commissioner for climate change and energy Miguel Arias Cañete flew to Iran. He will meet ministers from the petroleum and energy departments and well as foreign minister Mohammad Javad Zarif on a three day visit to the capital.

“The objective of my visit is to continue to strengthen energy relations with Iran, most importantly now against this new challenging background of president Trump’s announcement,” Cañete said in a statement on Friday.

The EU’s trade with Iran grew 60% between 2016 and 2017 – after the signing of the nuclear deal – said Cañete. “The European Union is fully committed to ensuring that this continues to be delivered on.”

In the past week, French company Total has announced that, unless it gets a sanctions waiver from the US, it will withdraw from the South Pars 11 oil project in Iran.

Earlier this year, the European Commission said it was looking to open talks with Iran regarding gas supply to the continent through the Southern Gas Corridor (SGC), a huge pipeline under construction.

BP is the major shareholder in the SGC, which will carry gas from Iran’s neighbouring Azerbaijan to Italy. A spokesperson for the company told Climate Home News: “We take great care to ensure we always comply with applicable sanctions.”

“There is no entry point into the SGC at present that would allow Iranian gas to enter the system. All initial flows of gas will be from the Shah Deniz field in Azerbaijan. Shah Deniz operates in full compliance with all US sanctions,” said the spokesperson.

The SGC is Europe’s largest fossil fuel project, is deeply unpopular with climate NGOs and has attracted billions of dollars in public finance. Cañete backs it as a way to diversify Europe’s gas supply away from Russia. US sanctions raise questions about the option to diversify with Iranian gas.

The talks in Tehran come a day after the European Commission president Jean-Claude Juncker deepened Europe’s war of words with the US over Donald Trump’s decision to withdraw from the Iran nuclear deal and proposed tariffs on European goods.

Speaking on Thursday, Juncker said if the US exempted the EU from import tariffs, the bloc would consider buying more liquefied natural gas from the US. Otherwise it would look elsewhere for energy supplies, he hinted, saying the commission may use a 1990s law to ban European companies from complying with US sanctions on Iran.

“The American sanctions will not be without effect. So we have the duty, the Commission and the European Union, to protect our European businesses,” said Juncker.

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They intend to appeal Oslo district court’s ruling last month that the Norwegian government may continue to award exploration licences for the Barents Sea.

If the court accepts the case, it will test whether fossil fuel exporters can be held accountable for the climate impact of burning their product overseas.

“There is already enough carbon dioxide in the atmosphere to seriously damage our future,” said Truls Gulowsen, head of Greenpeace in Norway, one of the organisations behind the lawsuit.

“By opening up these pristine areas for oil exploration Norway is effectively smuggling its emissions outside of its own borders and furthering climate change, which harms everyone, everywhere.”

Along with Nature and Youth, an affiliate of Friends of the Earth, Greenpeace is arguing that expanding oil and gas production violates Norwegians’ constitutional right to a healthy environment.

The district judges acknowledged that constitutional right, but accepted the state’s defence that adequate environmental protections were in place. Critically, they said the government was only responsible for greenhouse gas emissions on Norwegian territory, not the climate impact of its oil exports.

Report: Portuguese kids crowdfund to sue EU countries for climate inaction

Cathrine Hambro, a lawyer for the environmental groups, said they would challenge that interpretation of the law.

“It doesn’t matter where the oil is burned,” she said in a statement. “It is our view that as long as the consequences of the oil exploration effects Norwegian inhabitants’ environmental rights, it is clear from the constitution that the state is responsible for that effect.”

Norway has ambitious targets to slash its domestic emissions, backed by measures to end petrol car sales by 2025 and harness its clean hydroelectricity for transport.

At the same time, oil remains a stalwart of the economy, accounting for 14% of GDP in 2017. A rough estimate, using a US EPA average for carbon emissions per barrel of oil, indicates the carbon emissions from Norway’s 2017 oil production, when burned, would be between five and six times the country’s own annual emissions.

If Norway’s supreme court will not accept the case directly, the campaigners will seek a hearing at the appeals court. They argue that the urgency of the issue warrants fast-tracking the process.

Globally, at least two thirds of proven coal, oil and gas reserves cannot be burned under the 2C upper warming limit agreed by 197 governments in Paris. Yet energy majors continue to make bullish demand forecasts, assuming population and economic growth will outweigh emissions regulations and clean technology.

On Friday, ExxonMobil responded to shareholder pressure and published its assessment of the oil demand trajectory in a 2C world: a decline of 0.4% a year to 2040. This was separate to its energy outlook, which forecast a 20% increase in demand by 2040. Its investments are based on the latter projection.

The Arctic oil case is part of a wave of climate litigation targeting fossil fuel producers, in a bid to address that disconnect.

New York City last month followed a number of Californian cities and counties in suing oil majors over their contribution to causing climate change. The defendants argue climate policy is a matter for government and they are serving the public by meeting people’s energy needs.

A Peruvian farmer is taking German utility RWE to court in a case based on similar principles, seeking funds to protect his village from glacial lake flooding. The case was originally dismissed but a higher court agreed to hear the evidence.

While climate cases against oil majors have failed in the past, these are testing novel legal approaches. They draw on the latest science joining the dots between companies, historic emissions, global warming, sea level rise and extreme weather damage.

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Judges rejected the argument by Greenpeace and Nature and Youth that expanding oil production is incompatible with the country’s climate change obligations.

Norway is only responsible for the greenhouse gas emissions within its borders, not those caused by burning exported oil and gas, according to the verdict.

Truls Gulowsen, head of Greenpeace Nordic, expressed disappointment in the outcome. “It is terribly sad that the court did not take into account the global perspective of climate change,” he said, as reported by Norwegian publication NRK.

The green groups were ordered to pay the state’s legal costs of 580,000 kroner ($94,000). They have not decided whether to appeal, according to Gulowsen.

This decision in Norwegian #climatechange case #PeopleVsArcticOil is a step backward. The courts should not buy into the political gamble of “our/their #emissions” and protect the public from dangerous activities disrupting the #climate if there’s sufficient interest involved. https://t.co/LTqXxC1Tka

— Sam Varvastian (@SamVarvastian) January 4, 2018

Comment: Norway must put oil ventures to a ‘climate test’

The suit was a test case for the keep-it-in-the-ground movement, which calls for constraints on fossil fuel production to tackle climate change.

Analysts calculate at least two thirds of proven coal, oil and gas reserves cannot be used if global warming is to be held below 2C – the internationally agreed goal. But the Paris Agreement focuses on cutting emissions, giving no explicit guidance on which fossil fuels may be exploited within those limits.

Norway has one of the most ambitious national carbon-cutting targets in the world and is ahead of the curve in promoting clean technology like electric vehicles. At the same time, its energy exports have a substantial carbon footprint abroad.

While the Oslo judgment does not prohibit Arctic oil exploration, it is increasingly contentious politically, becoming a major theme in the 2017 general election campaign.

There are also signs of industry interest waning, following weak initial results. Only 11 companies applied for drilling rights in the Barents Sea in the latest licensing round, down from 26 in the previous offering. Shell was the sole supermajor to bid.

Depressed oil prices since a 2014 peak make the economics of operating in tough environments like the frozen north more challenging.

Norway’s $1 trillion sovereign wealth fund last year proposed to ditch oil and gas stocks to limit its exposure to price risks.

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Two new plants at Ubari in the southwest and Tobruk in the northeast are primarily designed to run on gas. But in the absence of pipelines to deliver the fuel, both will instead burn oil, emitting roughly double the greenhouse gases.

In the instability since former leader Muammar Gaddafi was toppled in 2011, the imperative to address frequent power blackouts is taking priority over environmental protection.

“It’s more a strategy of necessity than a deliberate approach to burn oil for power,” Richard Mallinson, analyst at London-based Energy Aspects told Climate Home News. “In a more stable environment they’d aim to have everything connected up when it came on stream. But they have an urgent need for power.”

The 640MW power plant at Ubari is expected to be commissioned in the coming weeks. Gas fields in the southwest are connected by pipeline to an export terminal in Mellitah, but the pipeline stops about 300km short of Ubari.

The 650MW Tobruk plant has a similar problem. Libya’s main gas pipeline runs along the Mediterranean coast between the capital Tripoli and Libya’s second city, Benghazi, but it stops about 400km short of Tobruk.

Libya bucks the global trend away from oil-fired power generation, which in most parts of the world is used as a last resort. Even oil-rich nations see more value in exporting the product than squandering it in inefficient power plants.

“Oil is gradually being phased out,” said Mallinson. “Saudi Arabia, Iran and Iraq have all had a lot of oil-fired generation, but they are trying to displace it with gas so they can sell their oil.”

Stalled gas plan

Libya’s government didn’t plan things this way. In 2007, they drew up a gas strategy that included extending the domestic gas supply network.

But most of those infrastructure projects are on hold, developers deterred by the threat from Islamic State (IS) militants. Fuel supply to existing facilities is inconsistent.

Meanwhile consumer demand is rising. The state-run General Electricity Company of Libya (Gecol) imposes rolling scheduled blackouts in an attempt to prevent the network going down completely.

Often there are unscheduled blackouts too, due to parts of the country refusing to shut down when scheduled or to attacks on power infrastructure by disgruntled local groups or political factions.

Report: Photos reveal Iraq oil fires burning behind ISIS retreat

On 12 January 2017, the Zawiya power plant in the northwest was forced to switch to diesel generation when protesters shut down gas supplies to the facility.

The subsequent fall in output caused 12-hour power outages in Tripoli and a three-day blackout across the south of the country. Had gas supplies been cut for any longer, the results would have been a “total blackout,” said Gecol at the time.

Gecol’s efforts to encourage more moderate consumption and coordinated load shedding failed to prevent further unplanned outages throughout the year. There were blackouts across the country in late June and July as summer power demand peaked. Parts of the south were without electricity for up to a week at a time.

Power production is not the only aspect of environmental protection that is suffering from the vacuum of authority at the heart of Libyan politics. Environment policy on both a national and local level is essentially non-existent.

“There’s uncollected waste in Benghazi and Tripoli, the sewerage system has collapsed, and I suspect there’s no regulation of fishing,” said Geoff Porter, head of US-based North Africa Risk Consulting. “The environmental degradation we’re seeing in Libya is a direct consequence of the complete collapse of the state.”

Poor outlook

State authority in Libya is divided several times over. The parliament in Tobruk has for almost two years refused to endorse the cabinet nominated by the internationally recognised executive in Tripoli that was formed following the Libyan Peace Agreement in December 2015.

The previous internationally recognised government, formed in 2014 and based in the eastern town of Baida, continues to exert authority over certain parts of the country. Factions from its predecessor in Tripoli also reject the 2015 peace deal.

All this is made considerably more difficult by the fragmentation of military capacity between hundreds of militias. The Libyan National Army is national only in name and is not recognised by the Tripoli government, but its leader Khalifa Haftar is keen to fashion a key role for himself in any political settlement.

Haftar’s forces have enjoyed some success in forcing IS militants from the town of Derna in the northeast and more recently from Benghazi. Militias from Tripoli and Misrata, backed by US air power and French and British military expertise, have meanwhile forced IS from its base in the town of Sirte.

But IS cells continue to threaten the security of key infrastructure and the safety of workers, particularly those from overseas. This makes it extremely difficult to rehabilitate existing infrastructure, let alone build new facilities.

The Ubari power plant was due to come on stream in November. But project partners Enka Teknik and Siemens withdrew their staff from the plant in November after three Turkish workers and a South African, all Siemens employees, were kidnapped outside Ubari airport.

In September, UN Libya envoy Ghassan Salamé published an action plan to heal political divisions and restore functional government. It is a tall order.

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A recent poll found that 44% of Norwegians believe Norway should keep oil in the ground to reduce emissions, against 42% who think not. Support for parties that want to ban new oil investments has grown significantly. Those parties will not win a majority, but could end up with the balance of power in parliament.

This is a big deal. As shown in a recent report by Oil Change International, Norway is the world’s seventh largest exporter of carbon emissions. Our current oil projections are at odds with the goals set out in the Paris climate agreement. Stopping new licenses could change that.

As an environmental campaigner who has spent most of his adult life arguing that the world has already found more fossil fuels than we can afford to burn, I would love to claim credit for this shift. But really it is the convergence of several factors, not least an increasingly strong economic case for reducing reliance on oil revenue.

Firstly, the signing of the Paris Agreement and the aim to limit global warming to 1.5C gave new life to the understanding of a definite carbon budget. If we are to stay within that limit, it is possible to calculate how much fossil fuel can be burnt. It is clear that emissions from new Norwegian oil and gas fields are incompatible with that budget. In particular, the new and upcoming Green Party has been very active in presenting this logic.

Secondly, as the oil industry has expanded further and further north in their reckless hunt for new areas to drill, it has become clear to Norwegians that continued expansion of the oil industry will impact increasingly sensitive areas. We’ve fought for years to keep the pristine and productive Lofoten Islands off limits, but also the expansion towards Bear Island and the Arctic ice edge has sparked significant concern. The oil industry’s assurances, that they always operate safely, sound more hollow than ever, especially in light of their own trend analysis that shows an increased frequency of accidents.

Report: Norway minister urged to halt Arctic oil drilling

Even in an environmentally aware nation like Norway, the carbon logic and sensitive, pristine landscapes alone, have never been enough to constitute a threat to the power of the oil lobby. What changed?

It seems that the oil price crash starting in 2014 has been pivotal. Initially, the crash led to significant layoffs in the oil industry. The government responded with massive new licensing rounds to help oil workers back to work, since they had few other employment ideas.

At the same time, another stream of thought arose: is the oil industry really a safe industry for long-term careers and income? Are really oil investments always good investments? Or is our future prosperity better served by low carbon industries?

The question marks raised behind the old oil narrative has given the conversation about the needed “green shift” more prominence with unions, politicians and activists alike.

The electric car revolution, which we as Norwegians have been at the center of with our record EV numbers, was suddenly understood as something real that may undermine oil demand on the global level, and leave us with stranded oil assets in the cold north. “Carbon risk” has become a household word.

In summary, it seems that the combined effects of increased climate awareness, concern over oil drilling in ever more sensitive areas, renewed uncertainty over the economic and jobs benefits from further oil investments and higher awareness of the ongoing renewable energy revolution has reduced the power of the oil lobby in Norway during this election campaign.

It remains to be seen how many voters will actually cast their vote for one of the small parties that are arguing for reduced oil investments, and how much power these may get in a future government coalition.

I am convinced that continued campaigning to keep oil in the ground to protect jobs and the climate will land on far more fertile ground in Norway in the coming years than it has in the past. An interesting test coming up after the elections will be Greenpeace and Nature and Youth’s landmark court case against the Norwegian state’s oil drilling in the Arctic.

Whatever the final election result, I really hope that the new Parliament will take their environmental mandate seriously, and that the clear shift in public opinion will allow this tiny oil nation to show the way towards a just and orderly transition from oil to renewables. As the rest of the world moves on from fossil fuels, I don’t want to see my own country get left behind.

Truls Gulowsen is head of Greenpeace Norway

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As Western-backed Iraqi forces re-take territory, the fundamentalists appear to be adopting scorched earth tactics, leaving a trail of environmental devastation.

Following the recapture of Mosul last month, US defence chief Jim Mattis visited Iraq on Tuesday. The next battleground is Tal Afar, some 50 kilometres to the west.

Five oil fires (photographed below in 2015 and 2017) have been blazing since August 2015 to the east of Baiji oil refinery. Several more in the Qayyarah oil field, south of Mosul, burned for eight months before firefighters extinguished them in March.

(Photo: Sentinel Hub)

The scene recalls the first Gulf War in 1991, when more than 600 oil wells in Kuwait were set alight. Subsequent analysis estimated that conflagration released 133 million tonnes of carbon dioxide into the air. That is more than a year’s worth of CO2 emissions for a medium-sized country such as the Philippines, Belgium or Nigeria.

Meanwhile sulphur dioxide emissions from Al-Mishraq sulphur mine, torched last October, were bigger than those from any volcanic eruption in 2016, according to NASA.

A fireman confronting the oil fires (Photo: Wim Zweijnenburg/Pax)

Wim Zwijnenburg from Dutch NGO Pax, who just returned from a trip to the oil fields near Mosul, warns that this environmental damage brings an untold health cost to the area’s inhabitants.

“All these people are concerned about their health because they are being covered in soot. People are complaining about a lot of respiratory issues because of the oil fires,” he told Climate Home.

“It is a warzone, so there is a lot of trauma care need for people affected by the conflict. Traditionally, environmental health risks tend to get low priority, which is to some extent understandable. But the downside is that it has never been picked up or properly researched.”

(Photo: Wim Zweijnenburg/Pax)

Zwijnenburg’s photos, shared with Climate Home, show the scale of the destruction on the ground at Qayyarah oil field.

Pax is calling for environmental remediation to be incorporated into reconstruction efforts. That means boosting governance of the oil industry as it restarts production, to crack down on polluting practices, as well as putting out fires.

The Kuwait oil fires focused international attention on how to mitigate the environmental impact of war, but it has proved a sensitive issue.

“You can’t always establish who is responsible for damage during an armed conflict,” explained Marie Jacobsson, a Swedish lawyer who until last year led the International Law Commission’s work on environmental protection in relation to armed conflicts. “The actions you may have taken as a combatant may have been perfectly legal at the time you did them, and then who is responsible for the consequences?”

Rather than try to apportion blame, the legal effort has focused on promoting cooperation to rehabilitate conflict zones. Jacobsson said: “You need solutions. States should have a responsibility to share information so they can assist each other in managing problems like this.”

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If countries are serious about the Paris Agreement aspiration of limiting the long-term world temperature rise to 1.5C, then many of the proposals to increase gas production and distribution will be unnecessary. New terminals and pipelines will never be fully used and will become stranded assets.

Conversely, if they go ahead with these investments, it risks locking in levels of fossil fuel use that will blow the climate target.

The report, Foot off the Gas, is published by Climate Action Tracker (CAT), an independent science-based assessment which tracks countries’ emission commitments and actions.

CAT’s members are Climate Analytics, Ecofys and NewClimate Institute, with the Potsdam Institute for Climate Impact Research as a collaborator.

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The report says part of the problem is that governments, guided by projections from the International Energy Agency (IEA), are overestimating the need for natural gas, both to replace coal and to act as emergency back-up when supplies from intermittent renewables falter.

IEA annual reports have consistently underestimated the speed of growth of renewables and failed to grasp the increasing role of other technologies like bio-gas, battery storage and hydrogen to even out any intermittency in supplies of electricity from solar and wind, it says.

“One example is China, where in 2016 the IEA projected renewables would rise to 7.2% of the power supply by 2020 – but by the end of 2016 they had already reached 8%. Additionally, India and the Middle East are also seeing renewables rising much faster than mainstream projections,” said Niklas Höhne from NewClimate Institute.

Changes in the way grids are organised are already happening in Europe, together with the building of long-distance connectors between countries that exchange renewable energy  when one has a surplus. These developments cut the need for generation from gas.

Report: Trump-era climate resistance, from a beachside in Rhode Island

The best-known example is hydro-electricity from Norway being used to boost wind energy supply in Denmark, and the reverse happening when there is a surplus of wind energy in Denmark and Germany.

Already many of the very expensive pipelines for transporting gas are under-utilised, and expensive ports and facilities to export liquid petroleum gas will never be used at full capacity, the report claims.

For example, utilisation rates of US natural gas infrastructure are at 54%, and are even lower in Europe, at 25%.

“This over-investment in natural gas infrastructure is likely to lead to either emissions overshooting the Paris Agreement’s 1.5C and 2C goals – or a large number of stranded assets as the shift to cheaper renewables takes place, “ said Andrzej Ancygier of Climate Analytics.

The report sees a dwindling role for natural gas towards the middle of the century because of increasing competition from renewables that continue to get cheaper.

This is contrary to the official line that gas consumption will continue to rise and is an important “bridging fuel” towards a carbon-free world.

“Natural gas is often perceived as a ‘clean’ source of energy that complements variable renewable technologies. However, there are persistent issues with fugitive emissions during gas extraction and transport that show that gas is not as ‘clean’ as often thought,” said Bill Hare of Climate Analytics.

“Natural gas will disappear from the power sector in a Paris Agreement-compatible world, where emissions need to be around zero by mid-century.”

Doubt is also cast on the possibility that gas can be used along with carbon capture and storage. Although the report says that some gains can be made, it is an expensive technology  – and even more costly if it is going to be a reliable way of reducing emissions by nearly 100%. Currently too many greenhouse gases still escape into the atmosphere at various stages of the process.

This article was produced by Climate News Network

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At ExxonMobil’s AGM in Dallas, Texas on Wednesday, 62% of shareholders voted in favour of a climate change resolution, against the board’s advice, according to a preliminary count. While detailed data is not yet available, the convincing majority suggests some major funds joined sustainable investment activists after the same proposal won 38% of the vote last year.

Coming amid reports president Donald Trump plans to withdraw the US from the Paris climate deal, it signalled that concern about climate change is stronger than ever in financial circles.

“Investors voting against management at Exxon is a powerful rebuke to the climate denialist policies of this White House,” said Raj Thamotheram, head of thinktank Preventable Surprises. “Markets are moving and corporate America would be foolish to bet so much on the protection from this regime.”

The resolution requires Exxon to disclose how the international goal to hold global warming below 2C – as agreed in Paris – could dampen future demand for its oil and gas.

Thinktank Carbon Tracker estimated in 2015 that Exxon was planning to sink $72 billion over the next decade into developing fuel reserves that would be surplus to the requirements of a 2C world.

Despite Trump’s apparent refusal to honour the Paris Agreement, advances in clean technology and policy action elsewhere have convinced some other oil majors to start adjusting their expectations.

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During the AGM, Exxon chief executive Darren Woods reiterated his company’s support for the Paris Agreement and call for a revenue-neutral carbon tax to meet climate goals. But management opposed shareholder demands for more transparency, insisting none of Exxon’s reserves would be “stranded” in the global shift to clean energy.

Woods promised to “step back and reflect” after the result was announced.

The Church of England and New York State public pension fund, which led the shareholder rebellion, described Wednesday’s victory as “historic” and “unprecedented”.

Edward Mason, head of responsible investment for Church Commissioners, said in a statement: “Despite strong opposition from the Board, the majority of Exxon’s shareholders have sent an unequivocal signal to the company that it must do much more to disclose the impact on its business of measures to combat climate change.”

“Climate change is one of the greatest long-term risks we face in our portfolio and has direct impact on the core business of ExxonMobil,” added New York State comptroller Thomas DiNapoli. “The burden is now on Exxon Mobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously.”

It piles the pressure on Exxon at the same time as it faces multiple lawsuits over allegations it deliberately cast doubt on the scientific consensus around climate change, even as its internal research confirmed it.

Grassroots campaign network 350.org has consistently argued that engaging with Exxon is futile and shareholders should take their money elsewhere.

“Exxon’s climate lies are finally catching up with them,” said Jamie Henn, strategic communications director at 350, ahead of the vote.

“Any real climate risk assessment will show that Exxon’s drill-baby-drill business plan is incompatible with a liveable planet. Despite shareholder protests, they’re still doubling down on fossil fuels when the world is moving in the opposite direction. Exxon’s refusal to adapt their business model to a carbon constrained world should send investors running for the exits.”

But institutional investors like pension funds and insurance companies typically spread their money across all economic sectors and are unlikely to flee oil and gas in bulk.

Instead, investors with an interest in sustainability see analysis of the 2C goal as a first step towards getting energy companies to diversify into clean technology or return money to shareholders.

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Shareholder activists are hopeful of securing a majority for a climate change resolution that would require the oil major to publish annual assessments of how international efforts to hold global warming below 2C – as agreed in Paris in 2015 – affect its business.

Last year, the resolution was supported by 38% of Exxon’s shareholders. A similar proposal to Occidental Petroleum passed with 67% support earlier this month, the first of its kind to succeed against board advice.

Two of the world’s largest asset managers, BlackRock and Vanguard, which between them own around 12% of Exxon, are considering voting in favour, sources told the Wall Street Journal. BlackRock was accused of hypocrisy last year for opposing the motion despite rhetorically championing stronger disclosure of climate risk. This AGM season, it sided with activists against Occidental’s management.

A coalition of investors responsible for $4 trillion in assets, led by New York State and the Church of England, declared their support from the outset. Proxy advisory firms ISS and Glass Lewis, which sway a large chunk of smaller investors, are also on board.

“All of these pieces together create tremendous momentum and really favourable circumstances for a successful vote on the 31st,” said Sue Reid, vice president of climate and energy at sustainable investor network Ceres, which is coordinating efforts.

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For investors, the concern is that if oil companies are not aligned with the Paris climate goal, they could waste capital developing resources that will be “stranded” in the shift to clean energy. The money at stake includes ordinary people’s pension pots and insurance policies.

“This is not necessarily about putting major energy companies out of business, it is about preserving value,” Reid told Climate Home. “If [investors] don’t see companies responding to these very real concerns, that will beg some very serious questions about the value of continuing to invest in those entities.”

Exxon is resistant, insisting it already analyses the 2C threshold internally and the world still needs all its oil reserves. It is among the most bullish in the industry about future demand, foreseeing continued growth through 2040.

European players, which have started publishing 2C scenarios, are more cautious.

Report: Coal and oil demand ‘could peak in 2020’

Shell predicts oil demand will peak between 2025 and 2030. At its AGM in the Hague last Tuesday, 40 minutes were devoted to a detailed presentation on climate change. There, debate has shifted to how fast electric vehicles could eat into petroleum’s market share – and whether the company should set sustainability targets (it is not there yet).

French company Total has explicitly ruled out drilling in the Arctic and cut back on tar sands extraction, on the basis such ventures are not compatible with a 2C warming limit.

None of the oil majors on either side of the Atlantic consider it likely that governments will do what is necessary to meet the 2C goal, seeing a carbon price as the clearest indicator of commitment.

Some analysts warn that clean technology could disrupt the oil sector faster than any regulation, however. The Carbon Tracker Initiative and Grantham Institute argue a 2020 oil demand peak is plausible, based on dramatic cost reductions in car battery and solar technology.

Swiss bank UBS expects the cost of owning an electric car to draw level with the traditional petrol-burning variety as soon as next year in the EU, 2023 in China and 2025 in the US. Maintenance and running costs are significantly lower, while the upfront price is declining rapidly due to advances in battery manufacturing.

US to UN: jobs come before carbon cuts

Not all signs are in the activists’ favour. The election of US president Donald Trump on a platform of maximising US fossil fuel production gave Exxon political cover. Trump even appointed former Exxon chief Rex Tillerson as his top diplomat, putting him in a position to facilitate overseas oil deals.

But that has not assuaged investor concerns, said Ceres’ Reid: “It was very difficult to predict in advance how companies across the board and investors would react to the ‘Trump effect’. What we have seen is almost increased resolve… Companies and investors for the most part have stepped up like never before.”

Indeed, Trump’s determination to open up more blocks for oil drilling could actually increase uncertainty in the sector. It was the US shale oil and gas boom that triggered a global oil price slump in 2014, rendering many higher cost ventures uneconomic. Earlier this year, Exxon wiped 3.5 billion barrels of tar sands from its books that were no longer considered viable to exploit.

It is not just a matter for individual companies. Analysts from the Carbon Tracker thinktank warn that if the industry is systemically underestimating climate risk, it could be creating a “carbon bubble” that will eventually burst, destabilising the whole financial system.

A task force for the G20 Financial Stability Board led by businessman and former New York mayor Michael Bloomberg has published guidelines for all companies to report on the financial risks associated with climate change and the solutions to it. These will be presented at the next G20 summit in July for leaders to endorse.

Report: G20 panel tells energy giants to come clean on climate risks

While the guidelines are voluntary, experts at a climate finance event run by the Financial Times in London last Tuesday expected them to be integrated into financial regulations.

“We are now in the voluntary phase,” said John Roome, climate change director at the World Bank. “In the future we may very well see standardised requirements coming from various regulatory authorities on the nature of reporting that needs to be done.”

Not if oil majors can help it. A report by analysis firm IHS Markit, supported by BP, Chevron, ConocoPhillips, and Total, criticised the proposal on the basis it would distort the market.

Antonia Bullard, IHS Markit vice president for energy-wide perspectives, said: “Singling out one type of risk for separate treatment would prevent financial markets from accurately assessing, comparing and pricing all risks and opportunities. That would undermine, not support, the goal of improving capital allocation decisions and market functioning.”

By publishing detailed assumptions about future scenarios, the report said oil companies could create “a false sense of certainty” and get sued if the world misses the 2C target and those risks do not materialise.

Report: Trump administration sued over climate change ‘censorship’

That is “completely bonkers,” according to Alice Garton, senior lawyer at Client Earth. There are multiple climate lawsuits arrayed against oil majors, not least from Client Earth, but following the industry best practice as set out by Bloomberg’s task force offers a legal defence, she said.

Companies are already obliged to disclose “material” risks to their business – that is, factors that could hit future returns. For oil majors, climate regulations and clean technology are material threats, said Garton: “The disclosure regimes that cover material risk apply equally to climate risk. The task force is a voluntary initiative but that can be used as a framework to comply with existing laws.”

Like Reid, Garton told Climate Home that if companies like Exxon do not engage with investor concerns, they could see shareholders flee to safer bets.

“The institutional investors, if they don’t start seeing real change at Exxon, there is increasing legal pressure on them to divest,” she said. “If they keep hitting their head against a brick wall, are they doing the best thing for their beneficiaries by holding the shares? Some questions need to be asked as to whether engagement is working at Exxon.”

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Despite their concerns, the €10 billion Nord Stream 2 project is taking shape, expected to break ground in 2018 and be complete by the end of 2019. In the middle of April, the pipeline’s developer, Gazprom, started the environmental impact assessment (EIA) procedure in Russia. The 1200- kilometre-long pipeline is to connect Russia and Germany under the Baltic Sea, passing through the territory of three EU countries: Finland, Sweden, and Denmark.

So far the debate has largely focused on the energy security implications of handing yet more market power to Russia – the source of 40% of EU gas imports – and limiting Gazprom’s dependency on other Eastern European transit countries, particularly Ukraine.

No less important is the threat this fossil fuel project poses to the climate. If EU member states are serious about their commitments to tackle climate change, they should use every tool in the box to stop Nord Stream 2.

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The Russians cite environmental factors, among others, as justification for the construction of the pipeline.

Alexey Miller, the deputy chairman of the Gazprom board, declared that Nord Stream 2 would contribute to carbon dioxide emission reductions. The CO2 emissions from burning gas are half those from coal combustion, thus, according to Miller, the benefits for the climate are self-evident. That is questionable.

The pipeline will be able to deliver 55 billion m3 of gas to Europe each year. Burning this gas will produce some 106 million tonnes of CO2 a year, an amount roughly equal to the greenhouse gas emissions of the Czech Republic.

Under the Paris Agreement to halt climate change, every 5 years more and more ambitious emission reduction goals will have to be established. If the EU takes its commitments seriously, its policy cannot end with closing coal-fired power plants. It will have to tackle the impact of gas. Nord Stream 2 risks locking in fossil fuel use for decades.

An assessment of the Nord Stream 2 investment project cannot fail to consider the worsening climate crisis which contributes, among other impacts, to the growing wave of refugees.

Report: New gas pipelines could face EU climate test

The Nord Stream 2 project, which is strongly promoted by Russia, also poses a threat to long-term EU climate and energy policy by undermining the cohesion of the Union. Central and Eastern European countries rightly request that the investment project be blocked, insisting that the Commission is applying double standards of environmental protection and competition.

Thousands of pages have been written to indicate the incompatibility of this investment project with the objectives of the Energy Union, which is to be based, among others, on solidarity and fair competition in the internal gas market.

At present, the European Union depends on Russia for almost 40% of its gas imports. The fact that the Commission tolerates the Russian network monopoly in the internal gas market does not bring us closer either to a competitive market or to a low-carbon economy.

The European Commission has at its disposal a whole spectrum of measures which should be used to protect the environment, climate and internal market. As any investment project which may possibly be harmful for the environment, Nord Stream 2 is also subject to very rigorous regulations on environmental impact assessments, including the so-called transboundary assessment.

In this case, the provisions of the Habitats Directive should also be considered, as, in accordance with the well-established rulings of the Luxembourg Court, they also apply to habitats in territorial waters and habitats situated within the exclusive economic zone of an EU member state. Therefore, Nord Stream 2 should be assessed from the point of view of European environmental law, as well as competition, energy and climate law.

Nord Stream 2 is one of the few projects which, simultaneously, pose a threat to both energy security and climate security of the nations of the European Union. The response to the proposed investment project will be a test for EU institutions, member states and civil society in Europe.

There are two ways to stop the investment and both depend on European solidarity: first, strong disagreement of Scandinavian countries with the project and second, The European Commission’s defence of the Energy Union and climate protection policy.

Marcin Stoczkiewicz is a senior lawyer and head of Central & Eastern Europe at ClientEarth

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With the government aiming for India’s car, scooter and motorbike fleet to be 100% electric by 2030, petroleum players do not want to be left behind.

The Indian Oil Corporation (IOC) – Asia-Pacific’s largest national oil producer and number 18 in the world – is among those researching the technology. If trials are successful, it may invest in battery production.

“In our quest for feasible and eco-friendly options for the upcoming EV market, lithium-ion batteries can be an emerging option,” NS Raman, a top research official at IOC, told Climate Home.

Under government plans, involving R140 billion (US$2bn) of public and private investment, India’s EV sector is set for explosive growth. The goal is 6-7 million EVs by 2020, up from 130,000 registered today. The idea is to become more self-sufficient in energy – India is a net oil importer – and ultimately export cleaner transport technology to China and Europe.

Globally, the electrification of transport is expected to hit demand for petrol and diesel, with potentially disruptive effect.

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India’s first experimental lithium-ion battery factory, Central Electro Chemical Research Institute (CECRI), opened in Tamil Nadu last year. It can produce 200-300 cells a day, using a flexible carbon paper developed under the same parent institute, Council of Scientific Industrial Research, to bring down costs.

“With India presently importing nearly 5-6 million lithium ion batteries from Japan, China and South Korea every month, this invention would make the country self reliant in manufacturing of lithium ion battery shortly,” said S Gopukumar, leader of the initiative.

Started as part of a project to find energy storage solutions for solar power installations, the technology can also be applied in the transport sector.

The IOC is watching these developments and doing its own research said Raman – but there is some way to go before entering commercial production: “The life cycle of the battery has to be enhanced to make it cost effective and suit the Indian market.”

There are also concerns about availability of lithium, the raw material for the battery. While India has deposits of this strategic metal, it is not considered viable for mining.

“During the next ten years, the demand for lithium in the country would be immense,” said Pratap Bhan Singh Sengar, a former scientist with Bhaba Atomic Research Centre (BARC). On a conservative estimate it is likely to go up between 20,000-25,000 tonnes a year.

Instead of going for spot purchases, it is time the country entered into long term import agreements, said Sengar, who is working on disruptive green solutions in mobility and telecoms. Supplies come from China, Australia or the “lithium triangle” of Bolivia, Argentina and Chile. “In order to develop steady manufacturing of li-ion batteries in India, import of the ore is necessary from such lithium rich countries,” he said.

With CECRI having developed indigenous technology for the manufacture of Li-ion batteries, it is for the oil and petroleum majors to provide the financial back up for their manufacture and marketing, he added.

Meanwhile, Enerrsto Solutions, a Chennai based firm, has signed an MoU with CECRI to start producing the lithium-ion batteries on a larger scale.

“In the process, we are trying to bring together various companies, that can make these battery management systems commercially viable,” said the company director GV Shankar. Automobile giant Mahindra & Mahindra, has already joined hands with Enerrsto for testing, analysis and validation of these batteries.

“Considering the company’s big dreams for EVs, we are on the lookout for home grown components and operating systems for EVs that can assure better mileage and cost effectiveness of the vehicle,” said Matthew Abraham, head of advanced technology for Mahindra Research Valley.

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