Big oil pledge to help tackle climate change dismissed as ‘drop in ocean’

Ten fossil fuel firms announce they will each spend an extra $10m (£8m) a year over next decade on new technologies designed to cut emissions in move analyst says shows ‘no real deviation’ from their current business model

The cost of the Deepwater Horizon disaster, $61.6bn, was compared unfavourably to the amount announced to help cut emissions (Reuters)

Ten major fossil fuel companies have announced plans to spend an extra $10m (£8m) a year each on developing low-emission technologies over the next decade.

The firms, including BP, Shell, Saudi Araco, Statoil and Total, claimed the new $1bn fund would result in a “step change” in the fight against global warming.

But an energy analyst dismissed the suggestion, saying the sum was a “drop in the ocean” compared to the companies’ vast profits.

The money will be used to find ways to improve the energy efficiency of transport and industry; reduce leaks of methane, a potent greenhouse gas, from oil and gas installations; and develop a viable system of carbon-capture-and-storage, which could slash emissions for power plants to just a few per cent.

In a joint statement, the heads of the 10 companies in the Oil and Gas Climate Initiative (OGCI) said: “The creation of OGCI Climate Investments shows our collective determination to deliver technology on a large-scale that will create a step change to help tackle the climate challenge.

“We are personally committed to ensuring that by working with others our companies play a key role in reducing the emissions of greenhouse gases, while still providing the energy the world needs.”

The OGCI said the fund was the result of “an unprecedented level of oil and gas industry collaboration and resource-sharing in this space”.

“This new, additional investment will complement the companies’ existing low emissions technology programmes and will draw on the collective expertise and resources of the member companies,” it added.

However Dr Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit (ECIU), was distinctly underwhelmed by the announcement.

“Investing $1bn over 10 years averages to just $10 million per year per company involved,” he said.

“For comparison, Shell’s capex budget for 2016 alone is $25-29bn, Saudi Aramco values itself at more than $2 trillion, and the cost incurred by BP following the Deepwater Horizon spill was $61.6bn. Relative to these numbers, this figure is a drop in the ocean.

“Again, for comparison the Breakthrough Energy Coalition, comprised of philanthropists, has pledged double the oil companies’ planned clean energy investment. Bill Gates’ contribution alone matches that of the OGCI.”

Dr Marshall suggested the sum was so paltry that it could threaten the firms’ viability as the world switches to renewable energy.

“The business models of these companies are fundamentally incompatible with the commitment governments gave at the Paris climate summit to keep global warming well below 2 Celsius,” he said.

“And this announcement shows that oil and gas companies are contemplating no real deviation from their traditional business models.

“From an investor point of view, one wonders how wise this is, given for example recent International Energy Agency figures forecasting an accelerating switch to renewable energy, and the observation from Shell this week that we could see demand for oil peak within five years.”