Norwegian oil major Equinor sharply stepped up its climate ambitions on the first day in office of new chief executive Anders Opedal, widening a net-zero emissions pledge to include greenhouse gases produced by consumers of its fossil products as part of a wider shift to renewables and lower oil & gas production.
Putting so-called 'Scope 3' emissions – those that result from actual end-use of its production such as heating homes or fueling transport – into its 2050 decarbonisation plans marks a major broadening of its existing ambition by Equinor, but one that will require a successful energy transition by society as a whole if it is to become a reality.
Equinor also said it will establish renewables as a separate financial reporting segment from the first quarter of next year. It plans to expand its acquisition of wind acreage and reduce production of oil and gas from today's level, as demand for fossil products is seen declining from 2030 onwards.
“Equinor is committed to being a leader in the energy transition. It is a sound business strategy to ensure long-term competitiveness during a period of profound changes in the energy systems as society moves towards net zero,” Opedal said as he took over from former CEO Eldar Sætre.
“Over the coming months, we will update our strategy to continue to create value for our shareholders and to realise this ambition.”
Rise of renewables
To develop into a broad energy company (from a mere oil & gas firm), Equinor reaffirmed its goal to reach a renewables base of 4-6GW by 2026, and 12-16GW by 2035.
The company expects to present an updated strategy that reflects its new net-zero plans at a capital markets day in June 2021.
Equinor earlier this year had already pledged to reduce its emissions from domestic Norwegian oil and gas operations by 40% by 2030, and to ‘near zero’ by 2050.
But the emissions reduction target did not cover the company’s vast oil & gas exploration operations outside Norway, or emissions from the actual use of using fossil fuels in transport, heating or industry – leading to accusations of green-washing.
The company, majority-owned by the Norwegian government, has now addressed that.
Its 2050 net-zero pledge covers emissions from global activities where Equinor is the lead operator as well as those deriving from energy purchased by the company (called scope 1 and 2), and indirect emissions from customers’ use of Equinor’s equity production volumes (scope 3).
Widening the net zero pledge to scope 3 emissions is the boldest step in Equinor’s new climate pledge, as the use of products such as gasoline or natural gas for heating are estimated to make up more than 90% of all emissions throughout the oil & gas value chain.
As far as upstream oil & gas operations are concerned, the oil major aims to reduce emissions to less than 8 kilogrammes of CO2 per billion of oil equivalent (boe) by 2025, and to reach carbon neutral global operations by 2030. In Norway, the company even wants to reduce emissions from operated offshore fields and onshore plants towards ‘near zero’ without offsets (for example through carbon sinks).
CCS and natural sinks
To reach global net-zero emissions, the company is betting heavily on a well-functioning market for carbon capture and storage (CCS) and natural sinks (ie. through reforestation), as well as the development of competitive technologies for hydrogen.
Equinor and partners are developing CCS technologies at the Northern Lights project, which aims to store CO2 from industrial sites across Europe, and hopes for a big role of so-called ‘blue hydrogen’ produced from natural gas with most emissions stored through CCS. Both blue hydrogen and CCS are controversial in Europe, though, especially in the EU, with which non-member Norway has close economic links.
“Climate change is a shared challenge. The combined efforts of governments, industries, investors and consumers are crucial to reaching net-zero emissions, for Equinor and for society,” Opedal said.
“Together, we can overcome technological and commercial challenges, cut emissions, and develop CCS and zero-emission value chains for a net-zero future.”