Fresh Investments in Fossil Fuels Are Overseen by Equinor, Shell, and BP
In the ongoing battle against climate change, Shell has taken a significant step forward, as a record number of institutional shareholders backed a resolution pushing for a carbon reduction strategy at the company's Annual General Meeting (AGM). However, this positive move is overshadowed by the continued drive towards new oil and gas exploration, particularly in emerging markets.
China, Russia, and Mexico are leading the charge, with these countries set to license the biggest volumes of oil and gas in the second half of 2024. This trend is concerning, as the International Energy Agency (IEA) has warned that no further oil and gas exploration is required to meet the 1.5°C global warming limit.
The drive towards fossil fuel exploration is not limited to emerging markets. Rich countries, including the United States, Canada, Australia, Norway, and the UK, have issued two-thirds of the global number of oil and gas licences since 2020.
Energy companies have not shied away from investing in new fossil fuel extraction. Equinor, Shell, and BP are among the largest corporate investors in this area across developed markets. Despite the push for carbon reduction, Shell's new energy transition strategy does not foresee any cuts to oil production within this decade, and no specific climate reduction strategy was mentioned in the plan.
This lack of action has not gone unnoticed. Pressure has been mounting on Shell and Exxon from investors, following the lack of action at BP's AGM. BP's AGM this year did not face any climate resolutions, but investors are awaiting the next steps from newly appointed CEO Murray Auchincloss.
At BP's AGM, no cuts to oil production were proposed, unlike at Shell's AGM where shareholders backed the energy transition strategy. However, at Equinor's AGM, shareholders rejected a resolution calling for alignment with climate targets.
The push for carbon reduction has not been entirely futile. Earlier this month, the new UK government confirmed that it would cease to issue new licences for oil exploration in the North Sea. This decision is a positive step towards reducing the UK's carbon footprint.
Despite these efforts, the continued investment in oil and gas exploration is a cause for concern. In the past 12 months, energy companies have invested £26.2bn in oil and gas exploration. This investment could unleash up to 12 billion tonnes of CO2, further exacerbating the climate crisis.
As the battle against climate change continues, the pressure on energy companies to implement credible short-term carbon reduction strategies will undoubtedly increase. Climate-conscious investors will continue to push for change, and it remains to be seen how companies like Shell, Exxon, BP, and Equinor will respond.
