We have an early contender for the least surprising newsflash of the year: fossil fuel companies will not, of their own volition, save us from climate breakdown. The oil and gas multinational BP revealed on Tuesday that it set a record annual profit last year, reaching a staggering US$27.7bn thanks to Vladimir Putin’s murderous ego pushing global fossil fuel prices into the stratosphere. It more than doubled its 2021 profit.
The company that once rebranded itself as “Beyond Petroleum” celebrated this news by announcing it would scale back its climate change plans. It had expected its carbon dioxide emissions would fall by 35% to 40% by 2030 compared with 2019. The chief executive, Bernard Looney, says it has now scaled that back to a 20% to 30% reduction.
Put another way, BP has increased the forecast of how much oil and gas it will be producing in 2030 by 2m barrels a day. Profit is there to be had, and it says it would be ignoring its responsibility to its millions of shareholders not to grab it.
BP is not alone in reaping the benefits of war in eastern Europe. Earlier this week Shell posted a profit of US$40bn, about a third higher than its previous record. ExxonMobil and Chevron have also set company records for windfall gains.
In Australia Woodside Energy has dramatically expanded its fossil fuel plans and emissions footprint after taking over BHP’s global petroleum development portfolio. Its oil and gas production last year was higher than forecast and 40% more than in 2021, setting up a company-record $US5.3bn profit.
It aims to increase output by at least another 15% this year and continues work on a major gas export expansion in northern Western Australia that could extend production on the Burrup peninsula until 2070.
Santos had a more difficult year – traditional owners in the Tiwi Islands won a landmark legal case against the company to stop drilling for its A$6.1bn Barossa gas project – but still managed a 65% increase in revenue. It plans other new developments, including a long-promised gas field at Narrabri, where work on a pipeline is under way. Despite some claims that mostly ignore the case for cutting emissions, whether it is needed to meet future local demand remains in dispute.
Like most of their international competitors, Woodside and Santos argue their fossil fuel expansion can be consistent with the science-based goal set at the landmark 2015 Paris climate conference of trying to keep global heating to 1.5C above pre-industrial levels.
Evidence and logic tell a different story. Woodside has set a voluntary target of cutting its direct pollution – known as scope 1 emissions – by 30% by 2030, compared with the average across recent high production years. Despite the company’s claims, it is significantly less than what scientists say is required from emitters in wealthy countries on the way to net zero by 2050.
It is unclear just how much the company plans to actually reduce emissions from its extraction sites and processing facilities. It says it is taking steps in this direction, but Woodside’s chief executive, Meg O’Neill, also last year said it had invested so heavily in carbon offsets that it had already nearly paid for enough emissions cuts elsewhere to meet its 2030 goal.
There are a few points to make on all this from organisations that have looked at the global numbers. The International Energy Agency made plain nearly two years ago that no new oil and gas fields should be opened if the world were to have a chance of keeping 1.5C in play.
And an expert group set up by the UN secretary general, António Guterres, to advise on greenwashing of net zero claims said the need to act was so great that companies should prioritise making deep cuts in absolute emissions in line with the 1.5C target by 2030, with high-quality offsets to be reserved only for cuts above and beyond that. It should be noted there remain significant doubts over which offsets qualify as high quality.
Guterres laid out his view on the implications for the fossil fuel industry in his trademark blunt fashion in a speech in New York this week in which he set out his priorities for the year.
“I have a special message for fossil fuel producers and their enablers scrambling to expand production and raking in monster profits,” he said. “If you cannot set a credible course for net zero, with 2025 and 2030 targets covering all your operations, you should not be in business. Your core product is our core problem. We need a renewables revolution not a self-destructive fossil fuel resurgence.”
These are fighting words, chosen to grab maximum attention. Guterres has said similar things before. The message back from the fossil fuel industry remains that, for all the changes some have made to claim they are part of a cleaner future, they don’t really buy it.
The reason for this seems pretty straightforward. The fallout when they fail to act, though growing, remains smaller than the rewards for pumping out more pollution. Their actions, and those of the governments and business leaders that support them, undermine the shift that is happening elsewhere as the price of solar continues to fall and other solutions become more viable.
Which bring us to the debate over the safeguard mechanism, the Coalition’s failed emissions trading scheme in all but name that will come before parliament for a revamp over the next few weeks. There will be plenty of important technical debates over its design and no shortage of political noise. But its success will ultimately come down to a couple of simple tests.
Will it drive an efficient shift away from fossil fuels, rather than prop them up?
And will it help the other industries it is applied to – including steelworks, aluminium smelters, other manufacturing and non-fossil fuel mining – change practice and survive in a low- or zero-emissions world?
Because anything else would be a waste of time.
