K oil giants Shell and BP would have to slash their production by at least a third each to ensure that the planet does not heat up by more than 1.5C, according to a report.
Carbon Tracker said that Shell would have to face production cuts of 44% and BP 33% by the 2030s.
They are part of a long list of energy majors who need to make changes, Carbon Tracker said.
It follows a recent finding from the International Energy Agency (IEA) that the world needs to stop investing in new oil and gas production if it wants to meet the climate change target, Carbon Tracker said.
BP presented a different interpretation of the report, saying: “The IEA scenario also saw upstream oil and gas investment averaging 170 billion dollars (£123 billion) per year beyond 2030 – not no investment as the Carbon Tracker report suggests – creating opportunity for a portfolio that is focused and resilient. That’s where we intend to be.”
The 170 billion dollars in the IEA’s scenario is investment in existing oil and gas fields.
At the Paris conference in 2015, countries agreed a target to limit global heating to 1.5C compared with pre-industrial temperatures.
It is an ambitious target that the world is likely to significantly overshoot, however not meeting it could have disastrous consequences for global wildlife and human habitation.
The Carbon Tracker report said it had found 18 billion dollars (£13 billion) of investment that was approved in 2020 that was not even consistent with warming reaching 1.65C.
It said that 53% of Shell’s project portfolio and 40% of BP’s would be uncompetitive in a scenario where warming is limited to 1.65C.
The oil and gas industry has faced a reckoning in recent years, with many of the world’s biggest producers saying that they recognise the need for change.
The UK’s two oil majors, BP and Shell, have both released plans to get to net zero by 2050 – a pledge which matches the Government’s ideas for the UK.
Our exploration and access spend has already fallen by around 80% from its peak and we expect that to fall further in the coming years
Much of the change came after campaigning from major long-term investors, such as pension funds, who have warned the companies could be left behind if the world decarbonises without them.
While the net zero pledges have been cautiously welcomed by environmental campaigners, they have also led to calls for other changes.
But although Carbon Tracker says Shell and BP have some way to go, it said the two companies are considerably ahead of some of their US counterparts.
ConocoPhillips would need production cuts of 69%, Chevron would need to cut by 52% and Italy’s Eni would need a 49% cut, it said.
ExxonMobil scored the same as BP with a 33% production cut needed, while TotalEnergies needs to cut by 30%.
“The IEA report reinforced our belief in our strategy and the way we are thinking about our production and exploration,” BP said.
It added: “As noted in Carbon Tracker’s report, we expect our upstream oil and gas production to reduce by around 40% from 2019 to 2030 – something that differentiates our strategy in the industry.
“Our exploration and access spend has already fallen by around 80% from its peak and we expect that to fall further in the coming years – and we’ve said we don’t intend to explore for oil and gas in any new countries.”
Shell said: “We believe the biggest contribution Shell can make to the overall energy transition is to work with our customers to grow demand for low or no-carbon products, therefore reducing emissions from the use of our products. More than 90% of our emissions come from our customers’ use of the fuels and other energy products we sell.
“But even the most ambitious scenarios tell us that as the energy system transitions, the world will continue to need oil and gas for decades to come. We are focusing our upstream activities on fewer, existing positions and we have indicated that we expect Shell’s oil production to have peaked in 2019. Our focus is on generating value over volume, to help fund both the growth of our new low-carbon growth portfolio and shareholder distributions.”
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