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Western oil companies are facing increasing pressure from investors as well as climate activists to set stringent targets in reducing fossil fuel production. The argument is that fossil fuels have to be phased out if climate change goals like reducing carbon emissions is to be met. Dutch oil major Shell at its shareholder meeting in London and the French oil major, Total Energies, at its shareholder meeting in Paris were surrounded by climate change protestors. And inside the shareholder meetings, there was investor pressure to cut down the share of fossil fuels. Shell and Total Energies have said they are committed to cut down fossil fuel production and increase investment in renewable energy sources. The companies feel that it would be difficult to shoot down fossil fuel operations completely. In the Shell shareholder meeting, Follow This, an activist group, moved resolution for more ambitious cuts in greenhouse gas emission, and it won the support of a fifth of the shareholders. A similar resolution was moved last year, and the support too was the same. It shows that the sentiment is growing among the shareholders as well as climate protestors that there is a need to move away from fossil fuels. A Dutch court also ruled that Shell should ramp up its targets for reducing greenhouse gas emissions, but Shell has appealed against the ruling.
This is easier said than done. Shell’s chief executive Wael Sawan said after the meeting, “The silent majority is very clear with us as to their expectations…(to) find a balanced transition.” It means that of setting up realistic goals of achieving net zero carbon emissions, moving to cleaner energy sources and phasing down fossil fuels. This is seen as a delaying tactic of the oil majors by the climate activists. Follow This has moved a more stringent resolution at the Total Energies shareholders’ meeting with the support of 17 other institutional investors with 1.1 trillion euros investments. The resolution proposes that Total Energies reduce its greenhouse gas emissions by 2030. But the board is opposing it while the company is focused on “intensity targets” which implies increasing renewable energy assets. The resolution also demands that that there should be reduction in emissions by the end-users of Total Energies product, that is Total Energies supplies being used up in cars and planes and contributing to greenhouse gas emissions. The deadline is 2030. The French oil major is committed to reducing emissions at its own production facilities.
There is an acceptance that fossil fuels need to be phased as part of the strategy to reduce carbon emissions. But the debate is about the pace of the reduction plan. The climate activists demand that the reduction goals should be accomplished faster than planned by the oil companies. Total Energies has its own internal climate plan which includes modest carbon emission targets. Many people, including scientists, seem to feel that the change has to achieved on a war footing and that there is no time for gradual transition. But the realists among the oil companies as well as oil producing countries are of the view that fossil fuels cannot be wished away with a magic wand, and that there are no feasible alternatives to keep the global economy running. The realistic solution seems to be to reduce the share of fossil fuels and increase that of the clean energy. The battle between the two groups will continue. The effects of climate change through depletion of natural resources, extreme weather events like floods and heat waves all over the world, which affect man and beast, are too evident to be ignored. This does not however mean that climate change can be rolled back by drastic decisions like doing away with fossil fuels instantaneously.
