Two former heads of BP and Royal Dutch Shell have taken their old industry to task for failing to match its professed concern about climate change with the sweeping actions needed to address the problem.
Lord John Browne, BP’s former chief executive, and Sir Mark Moody-Stuart, ex-chairman of Shell and Anglo American, say there is a “significant disconnect” between the changes needed to curb global warming and current efforts by fossil fuel companies.
The two men have advised on a groundbreaking report about how the world’s largest oil, gas and coal groups can survive and profit in the face of mounting global pressure to cut the use of fossil fuels.
The study recommends companies start planning for a “radically different future” by adopting strategies such as shifting to renewable energy technologies, cutting further investment in fossil fuels and returning more profits to shareholders through dividends.
Instead of waiting for governments to fund expensive technologies such as carbon capture and storage that would allow continued use of fossil fuels, the report says companies should take the lead in developing such systems.
It points to parallels in the banking sector, where companies had to submit so-called “living wills” to regulators in the wake of the global financial crisis, showing how they would be stabilised or wound up if such failures recurred.
The assessment has been published on the eve of a UN conference in Paris that is due to finalise the first new global climate change accord in 18 years. One of the chief aims of a new agreement is ensuring global temperatures do not rise more than 2C from pre-industrial times, a step scientists say will require a drastic cut in fossil fuel pollution.
Ahead of the Paris meeting, Shell, BP and other big oil and gas companies have issued several public statements acknowledging the importance of climate change and urging governments to boost measures such as carbon pricing.
Many companies have also taken steps to reduce their own carbon emissions, and adopted internal prices of up to $80 a ton of emitted CO2 to help guide their investment planning.
But they need to carry out far more transformative strategic shifts, according to the new report, produced by Critical Resource, a London-based group that advises resources companies on sustainability issues.
That could include industry-wide emissions trading systems and developing “industry norms” defining which fuels companies can continue to develop and which should be abandoned.
The study assessed 13 of the top 25 fossil fuel companies, ranked by the carbon content of their production.
Only one of the 13 groups analysed, miner BHP Billiton, has published detailed plans on the implications of a future in which governments take tougher action to meet the internationally agreed 2°C target.
In general, companies’ internal climate planning is often “based on assumptions of a failure of government policy to restrict emissions sufficiently to reach the 2°C goal”, says the report.
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