Oil Giants Race to Reduce Carbon Emissions

engage on June 14

A big win globally recently for climate activist and the overall reduction of carbon emission as major oil giants are facing the heat of the energy transition. Thousands of citizens joined the lawsuit charging Royal Dutch Shell, claiming that Shell’s fossil fuel investments endanger lives and violates human rights, such as ‘right to life’ and ‘undisturbed family life’.

A Dutch court ruled earlier this month that the company must reduce its greenhouse gas emissions to 45% by 2030. This is a big legal victory against the company and a historic turning point because it is the first time a judge has ordered an oil giant to comply with the Paris Climate Agreement. The suit is also supported by evidence that the corporation is liable for causing dangerous climate change. See data from the Environmental Protection Agency in Figure 1.

The main takeaway from the ruling was a new proposed goal of becoming a net-zero emissions energy business by 2030, instead of 2050, in which The Hague District Court determined Shell’s plans were not adequate.

In Netherlands, Director Donald Pols of Friends of the Earth, the world’s largest environmental network with over 2 million members said, “This is a monumental victory for our planet, for our children and a big leap towards a livable future for everyone.” This historic verdict has enormous consequences for Shell and other big polluters globally (See Figure 2).

The same day, Chevron and ExxonMobil held their annual shareholder meeting. While not under the same judicial pressure, as all its directors were re-elected, both companies are facing the weight of the energy transition. Some key takeaways are that Chevron Chairman and CEO Michael Wirth had only 30% favorable votes. In addition, the impact of Net Zero by 2020 received 47.8 percent support. Lastly, 60.7 percent of shareholders supported a proposal regarding the reduction of Scope 3 emissions. This news comes shortly after the recent study published by scientist of the United Nations Climate Change that says most fossil fuels will need to stay underground in order to stay below a maximum two degrees Celsius global average temperature rise, which is where we will start to experience the worst effects of global warming. The fossil fuel industry will not vanish by tomorrow but will slowly decline in years to come. However, the increase in the US and global energy use will continue to grow. Turning from a declining business to a growing one would prove profitable for any shareholder. Ultimately, fossil fuel companies will have to adjust and adapt to the new energy transition in order to play a part in this economic change and contribute to the environmentally sustainable economy.