When the “Oil Supermajors” BP, Chevron, ConocoPhilips, Eni, ExxonMobil, Shell, and TotalEnergies—sell off upstream fossil fuel assets, they offload greenhouse gas emissions, making it appear as though they are helping climate efforts by rapidly decarbonizing.
Overall emissions associated with those assets may actually increase once the ownership has changed, leading to worsening climate outcomes. That’s why we need to track and monitor fossil fuel asset sales and the emissions attributable to those assets even after they are sold.
The transfer of emissions through asset sales may become increasingly common as the supermajors come under increasing scrutiny and investors apply more pressure on them to reduce emissions.
The Columbia Center on Sustainable Investment (CCSI) and the Sabin Center for Climate Change Law have prepared a report calling for increased transparency and regulation of fossil fuel asset sales by oil and gas companies.
Transferred Emissions Are Still Emissions: Why Fossil Fuel Asset Sales Need Enhanced Transparency and Carbon Accounting reaches six key conclusions:
Existing corporate disclosure standards in the EU, the UK, and the US are not enough to track fossil fuel asset sales by the supermajors.
Fossil fuel asset sales are common and have led to the offloading of significant emissions by the supermajors.
Fossil fuel asset sales by the oil supermajors do not just shift emissions but may increase them.
Fossil fuel assets sold by the supermajors may move to companies with worse track records in environmental and other matters.
Regulatory reforms based on existing carbon emissions accounting frameworks can substantially enhance transparency around fossil fuel asset sales.
Tracking asset- and jurisdiction-specific emissions and including upstream fossil fuel assets in existing greenhouse gas inventories may be more effective than tweaking emissions accounting frameworks.
Our report assesses the regulatory landscape governing the corporate disclosure of fossil fuel asset sales, outlines the scale of fossil fuel asset sales by the supermajors, and proposes regulatory reforms to enhance transparency around fossil fuel asset sales by oil and gas companies to disincentivize asset sales and emissions transfers as a primary decarbonization strategy.
Read the Report Here
Emissions transparency is not an end in itself, and emissions accounting alone cannot halt climate change. Our report shows that transparency, subject to continual improvement, is a necessary tool for the goal of limiting global warming to 1.5°C above pre-industrial levels.
Policymakers and regulators can mandate adjustments to corporate emissions accounting practices, or, preferably, the tracking of asset- and jurisdiction-specific emissions and the inclusion of upstream fossil fuel assets in existing greenhouse gas inventories.
Our recommendations can address known limitations of traditional corporate carbon footprinting approaches, close the gaps in corporate emissions disclosures frameworks and practices, and create incentives for oil and gas companies to redirect efforts towards real global emissions reductions, including through asset retirement.
We hope you’ll take the time to read the report and share it with your colleagues.
