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DAILY BRIEFING Big Oil hit by record losses from pandemic and clean fuel
Big Oil hit by record losses from pandemic and clean fuel


Big Oil hit by record losses from pandemic and clean fuel
Financial Times Read Article

Following a “brutal” 12 months for the oil industry, some of the world’s largest energy companies have reported record annual losses, according to the Financial Times. It adds that ExxonMobil made losses of more than $20bn in 2020, the first annual loss in its history, while BP’s reached $5.7bn, its first annual loss since the Deepwater Horizon disaster more than a decade ago. On top of the “devastation” to their revenue resulting from the Covid-19 pandemic and last year’s associated price crash, “investors and environmental activists have also assailed the sector with demands that it step up efforts to reduce carbon emissions”, the article notes. The New York Times says such years are likely to become “more commonplace” for the industry, amidst growing concerns about climate change and the rise of electric vehicles, with General Motors “rais[ing] the stakes” last week by declaring it aimed to sell only electric cars by 2035. According to the newspaper, European oil companies are investing “considerable resources” in offshore wind and solar energy, while their American counterparts have been slower to begin moving away from fossil fuels. Even the oil companies that are making the transition are unlikely to see their investments pay off “for years”, it notes. Despite the news, the fossil fuel majors have taken an optimistic tone, with BP chief executive Bernard Looney – who last year made a commitment to achieving net-zero emissions by 2050 – telling staff that following a successful vaccine rollout his company “will be ready to really take off”, the Times reports. The Financial Times’ Lex column asks why Looney’s strategy has not yet received approval from the market, noting that since announcing the net-zero goal “the stock market has given him little credit” and “BP’s share price has trailed its rivals in Europe for the past year”.

Meanwhile, according to the Financial Times, there is currently a sustained campaign by “activist investors” at Exxon for the company to “cuts costs and overhaul a strategy that is focused on increasing oil and gas supply”. BusinessGreen reports that as the company faces this “barrage” of criticism, it has pledged to invest $3bn into carbon capture and other “lower emission” energy projects over the next five years. There is another Financial Times Lex column looking at Exxon, which says that, while you could blame its significant losses on last year’s recession, the “reality is that 2020 was a milestone year for action on climate change”. It says efforts so far “have not been enough to repel climate-focused activist investors who want more radical action”. Finally, DeSmog UK has an “exclusive” story reporting that the fossil fuel giant “may be understating the financial damage to its assets”, according to a former Exxon employee turned whistleblower. Franklin Bennett has accused the oil major of overvaluing its assets in a practice he describes as “fraudulent and defiant behaviour” in a 31 January supplement to a whistleblower complaint he filed with the US Securities and Exchange Commission, DeSmog UK reports.

Chinese inspectors slam energy authority over coal expansion spree
Climate Home News Read Article

Government inspectors have criticised China’s National Energy Administration for failing to apply environmental standards on “rampant coal power expansion”, in what analysts say is a notable move that reflects Chinese leader Xi Jinping’s desire for climate ambition, Climate Home News reports. The “unusually critical inspection” has been interpreted as a warning to civil servants that energy planning decisions must take climate issues into account, the news website adds. According to the article, the report in question criticises the construction of coal power plants in regions with bad air pollution, coal mines producing more than they were supposed to and policy coordination around renewable energy consumption. The piece quotes several regional experts who welcomed the move as a “groundbreaking” step forward.

Meanwhile, Reuters reports that, according to a report by a pair of international thinktanks, China put 38.4 gigawatts (GW) of new coal capacity into operation in 2020, more than three times the amount built elsewhere around the world. Despite the nation’s pledge to achieve carbon neutrality by 2060, the newswire notes that the construction of new coal infrastructure could undermine China’s short-term climate goals. A piece in the South China Morning Post reports that China has 34,273km of oil and gas transmission pipelines under construction or at the planning stage and quotes Ted Nace, executive director of thinktank Global Energy Monitor, saying this is “utterly incompatible” with the 2060 net-zero target.

Separately, Reuters reports on new figures from the China Electricity Council showing the nation is expected to add 140GW of renewable capacity this year, which would, combined with exciting capacity, would represent 47.3% of China’s energy mix. The piece notes that last year, with the nation now “scrambling” to hit its new carbon neutrality target, it doubled its new wind and solar power plants from a year earlier. An analysis piece in China Dialogue looks at how China could benefit from an even more ambitious 2030 solar and wind target than the one announced by Xi in December. Finally, Politico has a piece looking at how different nations are dealing with China diplomatically when it comes to climate, noting that the EU and the US “take different approaches to linking human rights and climate with China”, with the latter opting for a more “hardball” approach.

US cities are under-counting their CO2 pollution by almost 20%
Bloomberg Read Article

At least 48 US cities are underestimating their CO2 emissions by nearly 20%, according to a new study published in Nature Communications that compares local disclosures against a national database, Bloomberg reports. The piece notes that three-quarters of fossil-fuel CO2 pollution comes from cities and says the new results could create confusion about emissions cuts required “at a time of increased attention to climate change from the White House, state capitals,and city officials”. Reuters says that the study makes use of the Vulcan CO2 emissions data product, a tool developed by the lead author that tracks emissions using an array of national public databases. It notes a particularly big outlier was Los Angeles, whose self-reported emissions were roughly 50% below the Vulcan readings.

Meanwhile, Bloomberg reports that car manufacturers have “abandoned” their legal fight for a Trump-era rule blocking California from setting emissions standards, in what they called “a gesture of good faith” meant to help “find a constructive path forward”. The move coms as the industry pushes the new president Joe Biden to “accept a compromise” with weaker fuel economy requirements than the ones Biden helped develop as vice president back in 2012. The New York Times says that while the move was widely expected, it “may help the Biden administration move quickly to reinstate national fuel-efficiency standards that would control planet-warming auto pollution, this time with support from industry giants that fought such regulations for years”.

Warning that climate progress will run out of steam as emissions fall 3% in 2019
Press Association via Belfast Telegraph Read Article

The latest UK official figures for greenhouse gas emissions show a fall of 3% in 2019 from the previous year, meaning they are down 44% on 1990 levels, the Press Association reports. However, campaigners have warned that progress on emissions will “run out of steam” without serious action to cut emissions from transport and homes, it notes.

Meanwhile, Bloomberg reports on a Nuclear Industry Association report that finds regions of the UK powered by a combination of nuclear and wind “are already hitting 2030 climate targets”. The findings come at an “unsettled time for the nuclear industry in Britain” with developers at the Wylfa site in Wales giving up finding a partner for the project and Hinkley Point C facing cost overruns and six months of delays, the piece notes.


Time to clean up climate reporting standards
Editorial, Financial Times Read Article

An editorial in the Financial Times looks at the issue of how companies report on climate risks and the distance between “corporate rhetoric” and reality on the subject. It notes that while climate change has been an “unlikely winner” during the coronavirus pandemic, with an “explosion in the number of companies promoting their environmental, social and governance standards”, there is still a “significant gap” in how firms account for climate risks. The editorial states that unless companies make the potential impact on their earnings clear, investment in carbon-intensive activities will likely continue. It notes that the accounting profession has “woken up to the challenge”, with the Big Four auditors announcing a new set of metrics aimed at creating a “comprehensive corporate reporting system”. “Accounting standards that accurately reflect what risks companies are taking have a vital role to play in speeding up the transition to cleaner energy,” it concludes.

A “Lex in-depth” piece for the Financial Times titled, “how carbon prices will transform industry”, examines the potential for a high cost on emission to “supercharge” green investment and “cripple businesses that cannot adapt”. It describes carbon pricing as “essential” because it creates incentives for decarbonisation and notes that the expected level of carbon prices is going up, with energy giant BP and central banks planning for a price of $100 a tonne of CO2 by 2030. This would be more than four times the average figure employed internally by companies using carbon pricing, it notes. The “big read” piece then proceeds to explore a series of questions that arise from such a high carbon price, including: “What is the best way to arrive at a good estimate of a carbon price? How should governments go about implementing a price on carbon? What will the impact be on competitiveness? And which companies and sectors are likely to be most affected?”

California needs to spend big now to make its zero-emission-car future a reality
Editorial, Los Angeles Times Read Article

The Los Angeles Times has an editorial warning that “if California is going to live up to its clean-car ambitions, the state has to dramatically increase the sales of electric vehicles and the installation of charging stations. Starting now.” In September, governor Gavin Newsom signed an executive order requiring that all new cars and light trucks sold in the state must be zero-emission vehicles by 2035. Only 8% of vehicles sold in California in 2019 were electric or plug-in hybrid models, “so there’s a lot of catching up to do”, the editorial says. There is also a need to significantly ramp up investment in charging infrastructure, it continues. Yet despite this need, there has been pushback from state lawmakers over plans to spend on these goals, with arguments that they should focus on relief for small businesses and unemployed workers during the pandemic. “That’s myopic. California’s leaders can attend to short- and long-term needs at the same time, and it’s a lot easier this year when the state has a surplus. We can provide much-needed relief for those hit hardest by the pandemic and invest in programs to fight the existential threat of climate change,” the editorial continues. It points to the impacts of climate change already playing out across California in the form of fires, droughts and floods. “So Newsom is right to spend big now to get the essential infrastructure in place to support this growing segment of the vehicle market. There’s no time to lose.”

The Guardian view on Europe by train: virtue signalling
Editorial, The Guardian Read Article

An editorial in the Guardian says a European “rail renaissance” could play a vital part in the continent’s goals to achieve net-zero emissions in the coming decades. A revival of the Trans Europe Express is being proposed as part of a wider target to raise the number of Europeans making journeys by train from the current low level of 8%. “The European commission has declared 2021 the European Year of Rail, hoping trains can help the EU achieve carbon neutrality by 2050,” the editorial notes, adding: “The environmental argument for getting more people off the roads, out of planes and into trains is unanswerable. Before the pandemic destroyed demand, more than 3,000 people flew every day between Paris and Berlin. Each flight produces six times the carbon emissions of an equivalent train journey.”


The transient sensitivity of sea level rise
Ocean Science Read Article

Sea level rise through this century could be faster than previously thought, new research warns. Recent Intergovernmental Panel on Climate Change (IPCC) assessments conclude that global average sea level is unlikely to rise by more than 1.1m this century, the authors note, although some studies say that faster sea level rise could be seen. In this study, researchers calculate the “transient sea level sensitivity” – the sea level rise caused by each degree of additional warming. The study concludes that “the likely upper level of sea level projections in recent IPCC reports would be too low.”

Under-reporting of greenhouse gas emissions in US cities
Nature Communications Read Article

US cities are under-reporting their greenhouse gas emissions, according to a new study. The research compares self-reported emissions inventories from 48 US cities with independent estimates that are consistent with atmospheric measurements. It finds that on average, cities under-report their emissions by 18% – a difference “which if extrapolated to all US cities, exceeds California’s total emissions by 23.5%”, the authors say. This is mainly due to the omission of particular fuel and source types, and differences in estimating emissions from transport, the study notes.


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Get a Daily or Weekly round-up of all the important articles and papers selected by Carbon Brief by email. By entering your email address you agree for your data to be handled in accordance with our Privacy Policy.