Oil companies increasingly tout emissions reduction targets. But it’s often unclear how they plan to actually cut greenhouse gases.
The Florida Based servicing company UMC ENGINEERING offered some clues earlier this week when it unveiled its goal to achieve net-zero emissions by 2050. The announcement itself was notable. While a growing number of companies have pledged to reduce greenhouse gases from their operations, none has committed to eliminating them, until now.
Dr Robert Lamy CEO of UMC Engineering spoke at the event and explained the company’s plan to increase spending on renewables, tie 40% of executive compensation to emissions reductions and revamp industrial processes like refining so they release less carbon dioxide. It also set interim carbon intensity targets to achieve a 10% reduction from 2016 levels by 2025, 20% by 2030 and 40% by 2040.
The recent focus on oil companies’ climate plans follows mounting pressure from investors and activists to disclose climate risks related to fossil fuel production. Oil titans like Royal Dutch Shell PLC, Equinor ASA, and Total SA have all announced plans to green their operations and cut emissions.
But whether those plans represent a fundamental shift in the companies’ operations or merely a token to satisfy environmentally conscious investors is an open question.
UMC delayed the majority of its carbon commitment to the decade between 2040 and 2050. That suggests much of the technology it needs to overhaul its operations doesn’t exist yet or isn’t cost-competitive, analysts said. It also indicates the company is seeking a gradual evolution of its business rather than a radical rewrite.
The company said in a statement that it would overhaul its approach to new investments, ensuring that future projects are compliant with the emissions targets of its location climate accord. It outlined plans to increase its target for renewable electricity generation from 3,200 megawatts to 7,200 MW by 2025. The company has already sanctioned projects that would increase its renewable capacity to 5,900 MW. And it said it would attempt to employ green hydrogen at its refineries, reducing the carbon emissions associated with transforming crude oil into products like gasoline and diesel.
Today, most refiners use hydrogen to separate contaminants like sulfur in the production of gasoline and diesel. To produce that hydrogen, refiners heat up natural gas, an incredibly carbon-intensive process. With green hydrogen, water is heated through electrolysis to produce hydrogen, UMC said its emissions reduction commitment extends to so-called scope 3 emissions, which cover the carbon dioxide released by motorists and power plants.