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Oil and Gas Companies Lag Far Behind Other Firms on Emissions Cuts

Eight of the 11 domestic energy companies on the Fortune 100 haven't set greenhouse gas reduction or renewable energy goals, a report finds.

Jan 3, 2013
(Page 2 of 3 )
Valero is one of the U.S. oil companies that hasn't set internal greenhouse gas

In 2001 Chevron established an Action Plan on Climate Change that set annual greenhouse gas reduction targets for their internal operations. Although the company has missed some of its annual targets in the past due to expanded production, it met its 2011 goal, according to the company's website. Its 2012 goal is a 0.7 percent reduction compared to 2011 levels, which would mean reducing their emissions to 60.5 million metric tons of carbon dioxide equivalent.

Chevron is also investing $2.2 billion between 2011 and 2013 on renewable energy, and has raised its energy efficiency by 34 percent over the last 20 years.

ExxonMobil, meanwhile, has set out to reduce its greenhouse gas intensity by 20 percent this year, relative to 2002 levels. And Hess aims to cut the carbon intensity of its emissions by 20 percent by 2013 relative to its 2008 levels.

Some energy companies, including ConocoPhillips and Marathon Petroleum, have set internal goals, but without defined targets. ConocoPhillips, for example, says on its website that each of its business units is required to develop its own climate change action plan.

Ceres has tried for years to persuade oil and gas companies to set their own goals, by reaching out to company shareholders and boards.

But Logan, with the Ceres oil and gas program, said the organization has had little success, most likely because the industry has a "short-term mindset" and is "blinded by just how profitable it is to be an oil company at the moment."

"There actually was movement five or so years ago, but it just hasn't been replicated," Logan said.

As energy companies target increasingly unconventional fuel sources in offshore areas or through hydraulic fracturing, the emissions associated with extraction are expected to rise. ExxonMobil said in a shareholder resolution that its emissions rose 3 percent between 2009 and 2010, in large part because "significant investments in deepwater, shale oil and fracking plays ... contribute significant GHGs emissions.

"They're locking in a high-carbon future," Logan said. "A lot more has to be done to push them toward a different trajectory, whether that's investor engagement or policy."

Policy Solutions

The energy sector could take a cue from the chemical industry, where many companies began regulating themselves in response to the negative publicity generated by the EPA's Toxic Release Inventory. The inventory, established in 1986 under the Emergency Planning and Community Right-To-Know Act, forced large companies that use potentially toxic chemicals to publicly disclose which chemicals they use and where they are released. That information is then posted on the EPA's website.

Today, chemical companies are considered among the leaders in terms of cleaning up their production, despite the relative carbon intensity of their products. But there is no policy equivalent of the TRI for the energy industry.

Most companies participate in programs where they voluntarily register their greenhouse gas emissions, such as the California Climate Action Registry or the Carbon Disclosure Project. The EPA collects greenhouse gas emissions data from large facilities and industries—including refineries—to better inform future policy, although individual data is not released.

The American Petroleum Institute, the lobbying arm of the industry, also collects emissions and energy use data from its member companies.

But voluntary efforts haven't been very successful, Logan said. And he sees no sign that the federal government is planning to enact anything that could move them along.

"The lack of any threat of policy is an obstacle," Logan said. "There's not even a framework of a policy."

Logan said it will take either a targeted policy like the Toxic Release Inventory that focuses on oil and gas company emissions or a broader climate change policy to make the energy industry reduce its carbon footprint. One thing that might work, he said, is a low-carbon fuel standard like the one established in California, which takes into account the full life-cycle emissions of fuel.

California requires oil refineries and distributors to cut the carbon intensity of transportation fuels sold in the state by 10 percent by 2020. The standard considers "well-to-wheels" emissions, including those associated with extracting and transporting the fuels. The program remains tangled in legal battles.

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