According to Carbon Tracker (a non-profit think tank), the world’s largest oil producers are spending billions on fossil fuel projects. These will be required if the world fails to meet key climate goals.
According to a report from London and New York, companies invested $58 billion in oil-and-gas projects between 2021 and 2022. This will only happen if the demand for fossil fuels rises to a point at which scientists predict a “climate disaster,” said the London-based researcher. According to the report “Paris Maligned”, they may make another $23 billion in investments next year, which would increase the planet’s temperature by more than 2.5 degrees Celsius above its preindustrial level.
Big Oil’s capital expenditure on new projects has been a critical balancing act. Investing in long-term infrastructure projects increases energy security at a time when Russia and other state producers have demonstrated a willingness to arm themselves with weapons. However, it can also lock in emissions for decades ahead, increasing the risk of climate change.
Even climate-friendly Democrats like President Joe Biden are calling for more oil production in this year’s market, as prices rose following the invasion of Ukraine by Russia. Chevron Corp. Chief executive Officer Mike Wirth criticised the whiplash caused by being told to stop production and restart it. Wirth said such policies hinder long-term investment.
“Investors should scrutinize company spending plans, as investments in many oil and gas projects will lock in future emissions that would be incompatible with Paris,” Mike Coffin, co-author of the report, stated in a press release referring to the Paris Agreement on Climate Change.
Since the pandemic, most international oil companies have reduced their long-term capital expenditure plans and now focus more on returning cash to investors than new production.
Exxon will publish next year’s capital budget on Thursday. Chevron Corp. announced Wednesday that it will add $2 billion to capital expenditures next year, at $17 billion.
