‘Net zero’ emissions standard paused as Shell quits

Shell and other leading energy groups have abandoned a six-year-long attempt to define a “net zero” emissions strategy after being told that such a standard would require them to stop developing new oil and gasfields, according to documents seen by the Financial Times.

Shell, Norway’s Aker BP and Canada’s Enbridge have all quit the expert advisory group of the global corporate climate standard-setting body, the Science Based Targets initiative, since late last year.

This followed the circulation of draft standards seen by the FT stipulating that companies should not develop “new oil and gasfields” once they had submitted a climate plan to the SBTi, or the end of 2027, whichever was sooner. It also said that production of oil and gas should fall significantly.

The body has now “paused” work on the oil and gas standard citing “capacity considerations”, but denied this was linked to the oil and gas industry departures, saying there was “no basis in reality for these claims”.

The SBTi has also weakened separate guidance to financial institutions due this week about ending financing arrangements or insurance for companies engaged in new oil and gas production. The deadline for this had been pushed back to 2030, people familiar with the matter told the FT. 

The decision to give participating banks and asset managers five more years to invest in oil and gas was taken after new SBTi chief executive David Kennedy took up the job in March, and was carried out with the explicit backing of the former EY partner, according to two people who worked on the standard.

The SBTi said it had been “stringent” in its processes by including input from the public, financial institutions, non-profit organisations, academics and industry in trying to develop a “credible” plan for the sector.

The Science Based Targets initiative is an influential voluntary body; a wide range of companies from Apple to AstraZeneca have sought its stamp of approval for their climate change strategies.

The burning of fossil fuels is the main driver of global warming since the start of the industrial era. Scientists and economists have said that staying within a 1.5C temperature rise over the long term would avoid further irreversible harm to ecosystems, limit deaths and hits to the economy from extreme weather events.

Shell has worked on-and-off with the expert advisory group and SBTi to develop a standard since 2019. While it weakened its 2030 climate goals and scrapped a 2035 target last year, the oil and gas group has said it remains committed to reaching “net zero” emissions by 2050.

Shell said its expert had withdrawn after seeing a draft standard that “did not reflect the industry view in any substantive way”. It said the standard should reflect society in a “realistic” way “while providing companies with sufficient flexibility” to become net zero by 2050.

Aker BP said it had left the advisory panel after finding its “ability to influence” the standard “limited”. The decision “in no way reflects a lack of commitment to climate action”, it said. Enbridge echoed these statements, saying it remained “actively engaged in practical and pragmatic conversations.”

SBTi staff members had told advisory group representatives after the departures that it would “deprioritise” work on the oil and gas standard. It had previously said the standard was a “top priority”, according to communications seen by the FT. 

“The more we delay, the more cover we are providing to big oil,” said a person who worked on both the oil and gas and financing standards.