Two years after objecting to being frozen out of the Cop 26 UN climate conference in Glasgow, the oil and gas industry is expecting a very different reception at this year's meeting, with host country the UAE stressing the importance of fossil fuel producers having a seat at the table. But with that seat will come increased scrutiny on the industry and how it uses the platform to stake its claim to become part of the solution in the fight against climate change.
Much has been made of the decision to select the UAE as host of Cop 28. The country is already a major oil and gas producer and is several years into a programme to expand its production. Non-governmental organisations initially warned that giving the top Cop 28 job to Sultan al-Jaber, the long-time chief executive of Abu Dhabi's state oil company Adnoc, would "hurt the UAE's credibility in the role" and "set a dangerous precedent".
The backlash was hardly unexpected. Oil and gas operations account for nearly 15pc of energy-related greenhouse gas emissions, the IEA says, while consumption of oil and gas accounts for another 40pc. Conventional wisdom says oil and gas have long been part of the problem and need to be phased out, not encouraged. It was that sentiment that informed the decision to exclude some of the industry's biggest names from taking an active role in the Glasgow Cop. Many oil companies did not attend, and those that went tried to keep a low profile.
The snub did not sit well with the industry. Opec's then secretary-general, the late Mohammed Barkindo, lamented that the sector was "ostracised" from the summit. Oil and gas producers need to be included in planning for the transition to cleaner forms of energy, Barkindo said.
Doing things differently
At last year's Cop conference, hosted by Egypt, the industry was more visible. Saudi Arabia hosted its Middle East Green Initiative (MGI) summit in Sharm el-Sheikh, just outside the UN zone, featuring TotalEnergies chief executive Patrick Pouyanne and Saudi state-controlled Aramco chief executive Amin Nasser.
But this year in Dubai, al-Jaber, who is also the chairman of the country's state-owned renewables firm Masdar, wants the oil and gas industry to have a presence in order to leverage its expertise. Cop 28 chief executive Adnan Amin says they want to bring the oil and gas sector "to the table and bring them to the framework of accountability in front of the international community", adding that he understands the "legitimate concerns" this might bring.
"We need to be at that table," one senior executive from a Mideast Gulf hydrocarbons producer says. "Oil and gas make up close to 55pc of our primary energy mix today. How can you ignore that? We can do a lot, we just need to be part of the discussion." What the industry hopes to see at Cop 28 is a shift in the general narrative around the energy transition and the actions that need to be taken, but also in the sentiment towards the industry and the role it can and should be playing in the transition towards cleaner energy. "We owe it to ourselves and our industry to show up," BP chief executive Bernard Looney says.
But what a more formal participation of the oil and gas sector will look like at Cop 28 remains unclear. The UNFCCC — the UN's climate arm — is a party-driven process, civil society organisation Oil Change International campaign manager David Tong says. "The presidency has formal and informal ways in shaping discussions, but there is no framework for a direct dialogue in formal sessions between one industry and governments," Tong says.
Oil and gas companies and organisations have so far not rushed to confirm their participation. Shell talks about having a low-key presence, to "listen to discussions and engage with key stakeholders", but others have declined to comment on the record.
"Mideast Gulf producers like the UAE, like Saudi Arabia… they want co-operation on these climate issues, not to be painted as the enemy by environmentalists," consultancy Energy Outlook Advisors managing partner Anas Alhajji says. "They accept that energy consumption is growing and that we need renewables like solar or wind… But what they say is to use those energies for the right applications, where it makes sense, alongside traditional oil and gas."
The opportunity for the industry to work in concert with governments on these issues will open more avenues to share expertise and technologies that few outside the hydrocarbons sector may be familiar with. This could include, for example, ways of integrating the use of renewables into the hydrocarbon framework. "Using wind or solar to power operations at remote oil and gas fields would work, instead of having to ship diesel long distances," Alhajji says. "Sharing information like this becomes extremely important."
The climate debate has become "too ideological", industry executives say, which has complicated their efforts to engage in a meaningful way. They hope this summit can begin to change that. A big part of this will rest with them and what they bring to the table. But for many observers, it is unlikely to be enough.
The industry's biggest players have long acknowledged that more needs to be done to deliver what the UN Intergovernmental Panel on Climate Change (IPCC) says is needed to limit global temperature rises to no more than 1.5°C compared with pre-industrial averages by the end of the century. Projected CO2 emissions from "existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5°C", the IPCC says. Many in the industry say they are open to doing more to curb their emissions, but want clear and long-term policy guidance from governments, with a "clear roadmap for investment".
Scope 3 elephant
Al-Jaber urges the entire industry to achieve net zero by or before 2050. Cop 28's Amin previously said they are also working on a 2030 target — although this could prove more difficult — and towards net zero methane emissions by 2030. This could translate into a pledge made on the sidelines of Cop 28, or even before the summit. TotalEnergies' Pouyanne said at the Opec Seminar in Vienna last month that international and national oil companies should commit to signing up to 2030 reduction targets for Scope 1 and Scope 2 emissions — those from the production, transport and processing of oil and gas.
Adnoc last month announced that it had brought forward its target to reach net zero emissions from its operations by five years to 2045. This has put "an expectation on other oil producers to follow suit", Alhajji says, to demonstrate the industry's commitment and seriousness.
But one topic notable by its absence from the industry's discussions ahead of Cop 28 is what to do about Scope 3 emissions — those from the use of oil and gas. The issue comes back to the question of who has responsibility for the emissions — the producer or the consumer? And while some companies are taking steps to counter a portion of their Scope 3 emissions, others continue to argue that customers have their part to play. Al-Jaber's ambition for industry-wide net zero by 2050 appears to only cover Scope 1 and 2 emissions.
A deal that excludes the industry's Scope 3 emissions would "lack credibility", Tong says. If Adnoc can step up and bring to the table other national oil companies, and they can show that they are starting to grapple with the need to transition from oil and gas, this could be "powerful" — but this is unlikely, according to Tong.
| Majors' stated emissions goals | |||
| Company | Scope 1 and 2 | Scope 3 | Net zero by 2050? |
| BP* | 20% reduction by 2025, 50% by 2030 | 10-15% reduction by 2025, 20-30% by 2030 | Y |
| Chevron† | 5% reduction by 2028, net zero by 2050 | 5% reduction by 2028 | N |
| ExxonMobil‡ | 30% reduction within upstream operation by 2030, 20% across entire company by 2030, net zero by 2050 | - | N |
| Shell‡ | 50% reduction by 2030 | 9-13% reduction by 2025 | Y |
| TotalEnergies# | 40% reduction by 2030 | 30% reduction by 2025, 40% by 2030 | Y |
| — Company data | |||
| *2019 baseline. Scope 3 targets lowered in early 2023 from 20% by 2025 and 35-40pc by 2030 | |||
| †2016 baseline. Chevron uses a portfolio carbon intensity target that includes Scope 1, 2 and 3 | |||
| ‡2016 baseline | |||
| #2015 baseline | |||
