Tool for tracking climate progress finds fossil fuel producers come up short
By Colton Poore
Following the international Paris Agreement to limit global temperature increases, companies have rushed to make pledges to cut their carbon emissions. But are those companies following through on their commitments to being “Paris compliant”?
Researchers from The University of Queensland, Oxford University, Princeton University, and the Climate Accountability Institute have developed a method to track fossil fuel producers’ progress against several emissions reduction pathways, finding that under some scenarios, over 60% of the top 142 oil, gas, and coal companies are not aligned with targets to limit global warming to within 1.5 degrees Celsius. The details of their methodology were published on August 14 in Nature Climate Change.
“Phrases like Paris aligned and Paris compliant are being thrown around everywhere right now,” said Saphira Rekker, assistant professor of sustainable finance at The University of Queensland and the study’s first author. “But if we don’t have a robust and reliable way of assessing progress, what do those phrases actually mean?”
The new methodology utilizes publicly available production data to track the climate progress of companies against a number of possible pathways that are consistent with the aims of the Paris Agreement — regardless of whether a company has actually made a public commitment. The researchers also developed an accompanying website with the company ratings and assessment tools that can be accessed by policymakers, shareholders, members of the public, and companies themselves to evaluate how well their actions align with the global movement to tackle the climate crisis.
Without a serious course correction, the researchers found that collectively, the 142 companies they studied could exceed their production budgets for oil, gas, and coal by up to 42%, 53%, and 68%, respectively, by 2050 if their recent growth trends continue.
“We were concerned that the global effort on tackling climate change was heavy on ambitious announcements and light on robust plans and actionable solutions,” said co-author Chris Greig, the Theodora D. ’78 and William H. Walton III ’74 Senior Research Scientist at the Andlinger Center for Energy and the Environment. “And from our work, it’s clear that the paths being taken by several companies fall short of their pledges.”
‘The rules are quite simple’
The methodology expands on an approach first published in Nature Communications, in which the researchers defined conditions and requirements for assessing Paris compliance using a strict science-based approach. The research team adapted the original framework to make it suitable for assessing fossil fuel producers using only publicly available data.
“Assessing fossil fuel companies requires a different approach from most other industries, because it’s the end-use of their products that is responsible for the bulk of a company’s emissions,” Rekker said. “With our expanded framework, we can now capture that distinction.”
First, the researchers gathered publicly available historical production data from each fossil fuel producer to calculate its share of global production from 2010 to 2014. The researchers then calculated the global annual and total production budgets for oil, gas, and coal for each year until 2050 under a number of potential pathways that achieve the goals of the Paris Agreement. Because each pathway makes different assumptions about the relative roles of fossil fuels and clean energy technologies in the future energy system, as well as the importance of technologies like carbon capture and storage, each pathway permits different amounts of oil, gas, and coal production in 2050.
By dividing the total fossil fuel production budget across each company based on its historical (2010-2014) share of production, the researchers could allocate a production budget from 2015 onwards for each producer for every year until 2050. They could then compare each company’s allocated production budget with their recent production trends to gauge whether a producer was on track to be Paris compliant. The tool could also predict the year in which the company would use up its allotted production budget and by how much it would exceed its budget by the year 2050.
“With our approach, anyone and everyone can evaluate fossil fuel companies for their Paris compliance,” said Matthew Ives, study co-author and research associate at the Institute for New Economic Thinking at the Martin School, University of Oxford.
Ives said their approach has advantages over existing frameworks because it utilizes widely available production data and employs straightforward calculations. Other approaches use metrics like carbon intensity that rely on granular data that is difficult to obtain from the fossil fuel industry and that are misleading if production continues to grow. Still other approaches permit companies to choose their own reference year for tracking progress, which allows them to continually wipe out unflattering historical emissions, thereby disadvantaging companies that have already made efforts to decarbonize.
“It is much more difficult to get away with greenwashing with our methodology. Regardless of whether the economy is growing rapidly or not, you are either reducing your absolute emissions in line with Paris pledges, or you are not,” said Ives. “The rules are quite simple.”
A tool for every stakeholder
As the researchers noted, there is a “potpourri of pathways” consistent with the aims of the Paris Agreement. Thus, they said they see the methodology as being less about telling companies the right and wrong ways to operate and more about helping them understand the underlying assumptions and risks inherent with different pathways to Paris compliance.
“I don’t see us as challenging individual companies or sectors that we might have chosen to study,” Rekker said. “The ultimate goal here is to help stakeholders and society as a whole understand what the underlying assumptions are when companies set a climate target, so they can make a gut-check to gauge whether they believe in that plan.”
The researchers admitted that even their methodology has tradeoffs. While using publicly available production data is a useful and accessible proxy for measuring progress, they said that using only production does not account for other important variables, such as fossil fuel reserve levels, geopolitical settings, and socioeconomic equity concerns, all of which have important bearings on overall fossil fuel consumption.
However, the tool is useful for illustrating broad-scale trends across sectors and providing guidance for stakeholders trying to evaluate how the various plans and actions of companies align with the goals of the Paris Agreement. By calculating the overshoot predicted for each company, the researchers said the tool also gives executives and other stakeholders a sense of the transition and reputational risks they may face if they do not course correct.
“We have got to get past the practice of simply announcing climate targets and moving on with business as usual,” Greig said. “When you announce a commitment, you really should have a credible plan to deliver. You must always be thinking about the future, even when it lies beyond the likely tenure of executives and directors.”
The results of the studies and the tool for applying their methodology can be accessed on www.areyoupariscompliant.com.
The paper, “Evaluating fossil fuel companies’ alignment with 1.5°C climate pathways,” was published Aug. 14, 2023 in Nature Climate Change. In addition to Rekker, Greig, and Ives, co-authors include Guangwu Chen and Belinda Wade of The University of Queensland, as well as Richard Heede of the Climate Accountability Institute.
The previous paper mentioned, “Measuring corporate Paris Compliance using a strict science-based approach,” was published Aug. 20, 2022 in Nature Communications. In addition to Rekker, Greig, and Ives, co-authors include Belinda Wade and Lachlan Webb of The University of Queensland.