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Illustration: Sarah Grillo/Axios

The world's biggest publicly traded oil and natural gas companies would have to cut production by roughly a third on average by 2040 to meet the goals of the Paris climate deal, according to a new report.

The big picture: The opposite is occurring. Most oil and gas producers are expanding production in response to growing demand and the fact that the world is not on track to meet the Paris ambitions.

Driving the news: ConocoPhillips would have to cut production more than any other energy producer (85%), while Royal Dutch Shell would have to the least (10%), according to the report by London-based financial think tank Carbon Tracker.

  • The main reason: Conoco's production, heavily dependent on U.S. shale oil and gas, would decline faster than Shell’s, and it then wouldn't have low-cost projects to replace it with, according to co-author Andrew Grant.
  • Cuts others would have to make: ExxonMobil (55%), Chevron (35%) and BP (25%).

How it works: The group, whose funding comes in part from philanthropic foundations, analyzed different types of oil and gas projects, such as carbon-heavy oil sands or relatively clean natural gas operations, to reach these conclusions.

  • It uses the concept of a "carbon budget," indicating there is only so much more room to emit greenhouse gases if the world is to meet the goals of the Paris deal.
  • That 2015 accord calls for a rapid reduction in emissions to keep Earth's temperature rise below 2°C within this century.

Between the lines: The report finds that coal is by far the worst culprit for climate change, but Carbon Tracker focuses more on oil and gas because of its larger role in the economy and financial markets.

  • Rystad Energy, an independent research firm whose data Carbon Tracker used for this analysis, says the drastic decline in coal in the U.S. and eventually elsewhere is favorable to big oil and gas companies.
  • "Thanks to the U.S. shale gas boom, coal is now being rapidly phased out globally," said Per Magus Nysveen, Rystad's co-founder. "This rapid relocation of carbon budgets among the various fuel types is favorable for the supermajors."

Reality check: Much of this is predicated on a big if: if — or, more accurately, to what degree — the world meets the goals of the Paris deal. When planning future production strategies, oil and gas companies weigh the likelihood of that happening (unlikely, given the path society is on now), versus it not happening (more likely) and plan accordingly despite those two potential futures requiring vastly different amounts of oil and gas.

For the record: In response to requests for comments, company spokespeople referred to their current strategies and/or recent moves on climate change.

Go deeper: Fossil fuels play crude game of musical chairs

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