While much of the global pressure for decarbonization has been directed at private and exploited oil supermajors like BP, ExxonMobil and Shell, a new report from The Economist suggests that much of that pressure and blame is wrong. It’s not that Big Oil doesn’t need to change its focus, strategy and commitments in order to reduce greenhouse gas emissions quickly and significantly enough to avoid the worst impacts of climate change – c is the case. The fact is that the emissions of private oil companies pale in comparison to the enormity of public oil companies, which produce most of the oil, emit most of the greenhouse gases, earn most of the profits and get far less Warning. In fact, The Economist article, titled “State oil giants will make or break the energy transitionsays that compared to big oil companies, National Oil Companies (NOCs) are “huge oil.” Together, NOCs account for three-fifths of the world’s crude oil production, half of the world’s natural gas production and two-thirds of the world’s proven oil and gas reserves. “Four – Adnoc of the United Arab Emirates (UAE), Saudi Aramco, pdvsa of Venezuela and QatarEnergy – have enough hydrocarbons to continue producing at the current rate for more than four decades.”
Given the sheer scale of the NOCs’ productive power, this makes the global attention to the climate actions (or rather non-actions) of these institutions particularly stark and ominous. Especially when you look at how bad the track record of most NOCs is when it comes to going green. To be clear, Big Oil’s track record isn’t stellar either, especially west of the Atlantic, but most supermajors’ greenhouse gas emissions have already leveled off or peaked. On the other hand, only two NOCs can say the same thing: the Brazilian Petrobras and the Colombian Ecopetrol.
So why don’t we go after the big fish? The answer, of course, is complicated. Decarbonization is political no matter how you slice it, but pressuring governments themselves to divest themselves of the very industry that keeps their state economies and politicians in power afloat is tricky business. and source of division. Many countries with state oil companies are unstable nations with monopolized economies and no contingency plan should oil go down the dodo path. Moreover, too often petrostates make oil autocrats with itchy trigger fingers. “No matter how you define a petrostate – whether you look at a state’s oil-derived wealth, its dependence on oil revenues, or its exports and relative importance in world markets – there is strong evidence that petrostates are more likely than other countries to start wars”, foreign policy reported last month.
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Not all NOCs are created equal, of course. They are as diverse as the nations that house them. Unsurprisingly, wealthier countries tend to have better run and more environmentally responsible outfits. They also often happen to have more geologically advantageous oil reserves – part of what made them rich in the first place. In contrast, many NOCs in poor countries are poorly managed, with tendencies toward inefficient and dirty practices. “Algerian and Venezuelan companies emit three to four times more carbon in oil production than the best run and geologically best managed companies such as [the United Arab Emirates’] Adnoc and Saudi Aramco, and burn seven to ten times more methane, another potent greenhouse gas, per barrel than QatarEnergy,” reports The Economist.
Ultimately, the “easy” tactics of boycott, protest, denunciation and humiliation that have some impact in the private sphere are actually ineffective strategies when it comes to state oil companies. Again, many of the NOCs with the dirtiest operations operate in some of the poorest countries in the world, and no amount of public pressure will change their economic reality. Ultimately, it’s about climate finance and holding the world’s wealthiest nations accountable to their promises to financially support the costly decarbonization efforts of the world’s poorest countries – a promise that has up to here turned out to be empty.
By Haley Zaremba for Oilprice.com
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