Dec 3, 2019

Making sense of an oil giant's net-zero carbon pledge

Illustration: Rebecca Zisser/Axios

Oil-and-gas giant Repsol yesterday pledged to achieve net-zero carbon emissions by 2050 — becoming the first oil major to make a specific net-zero commitment (albeit a non-binding one).

Why it matters: Bloomberg notes that it's the "most ambitious attempt yet by an oil major to align itself with the Paris climate goals."

The big question: Will they be a trendsetter or outlier?

Driving the news: The company outlined plans that include adopting interim targets to reduce carbon intensity, moving more deeply into renewable power, and utilizing methods such as carbon capture tech, forest offsets, and EV charging at service stations.

  • One key thing, noted by both Bloomberg and the Financial Times, is that the emissions targets include not just Repsol's direct operations, but the larger CO2 levels produced from use of its products in the economy.
  • That's important because pledging this type of "scope 3" emission cuts is relatively uncommon for oil majors.

The intrigue: Repsol said it's taking a $5.3 billion "impairment charge" to the value of its assets. That reflects the lower value of fossil fuel holdings in a business model consistent with the Paris Agreement's goals.

What we're watching: Whether any other oil majors, including the ones that have recently increased their climate pledges, will match the step.

  • Repsol is much smaller than giants like ExxonMobil, Chevron and Shell.
  • Its project portfolio is also heavily tilted toward natural gas, so it's got something of a head start.

What they're saying: Andrew Logan of the sustainable investment group Ceres called it a "gauntlet thrown." Logan, who carefully tracks Big Oil's climate moves, told Axios:

"One aspect of the Repsol commitment that I think hasn't gotten enough attention is the ~$5B write-down on its existing oil and gas assets."
"This has implications across the sector, and will raise questions among investors about whether other companies should be writing down the value of their assets as well."

The bottom line: This "could be the beginning of a major realignment in the sector," Logan said.

Go deeper: Big names begin bipartisan push to build support for carbon cuts

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The message behind Chevron's $10 billion write-down

Photo: Smith Collection/Gado/Getty Images

Chevron announced a $10 billion to $11 billion write-down on several natural gas assets and one of its oil projects in the Gulf of Mexico.

Driving the news: The company said yesterday that the downward revision in its long-term price outlook means that it will "reduce funding to various gas-related opportunities."

Go deeperArrowDec 11, 2019

America blows past the world in oil and natural gas

Data: Oil Change International and the Global Gas and Oil Network, with data from Rystad Energy; Chart: Danielle Alberti/Axios

America is poised to produce far more oil and natural gas over the next five years than any other country in the world, according to a new report.

Why it matters: It shows how America, already the world’s largest oil and gas producer, is poised to cement that position, with pivotal implications for geopolitics and climate change.

Go deeperArrowDec 10, 2019

Mike Bloomberg releases his first domestic climate plan

Photo: Justin Sullivan/Getty Images

Democratic White House hopeful Mike Bloomberg would aim to cut economy-wide U.S. greenhouse gas emissions in half by 2030 and implement policies that would make 80% of power generation zero-carbon by 2028.

Why it matters: Those are two key targets in broadly worded plans unveiled Friday that mark the first detailed domestic climate proposals from the billionaire's campaign, and follow his years of advocacy on the topic.

Go deeperArrowDec 13, 2019