Repsol, Energean Pledge Zero Emissions by 2050
Two European oil and gas players, Spain’s Repsol and Greece’s Energean Oil & Gas, have pledged to become net zero emissions companies by 2050, they said in statements on December 2.
Oil and gas producers are under increasing pressure to curb their carbon footprint, with shareholders cutting ties with some companies seen as failing to adequately address climate change. Investors are also diverting more money into funds that take into account companies’ green credentials, rewarding those ahead of the curve.
Repsol hailed its move as an industry first, stating it would fully align its business with Paris Agreement goals aimed at capping global temperature rise at 2oC. A recent report by the Transition Pathway Initiative (TPI) already highlighted the Spanish firm as a frontrunner among oil companies in tackling pollution.
Repsol aims to reduce its carbon intensity by 10% by 2025, versus a 2016 baseline, 20% by 2030 and 40% by 2040, in preparation for meeting its zero emissions goal by 2050. The company said its new commitments would be reflected in its 2021-2025 strategic plan, due to be presented to investors in the first half of 2020. Basing the value of its assets on an oil and gas price scenario under the Paris Agreement, Repsol warned it would book a post-tax impairment charge of €4.8bn ($5.3bn) in 2019, but that the hit would not affect cash flow or shareholder remuneration.
Repsol said it could implement up to 70% of these cuts using technologies already or soon to be developed, such as carbon capture, use and storage, and possibly reforestation and other natural carbon sinks. Repsol will encourage its managers and leaders to strive towards goals by linking at least 40% of their long-term variable pay to the targets being met.
“We are convinced that we must set more ambitious objectives to fight climate change. We believe now it is the right time for Repsol. We do it with the utmost confidence that we invest for the future,” Repsol CEO Josu Jon Imaz commented. “Addressing the significant challenges that lie ahead with strategic clarity is what will allow us to turn them into opportunities. We are convinced that this strengthens our project that is sustainable, attractive and profitable for all our stakeholders.”
Announcing its zero emissions plan, Energean said it would align itself with the UN’s objective of limiting temperature rise at 1.5oC of pre-industrial levels.
“We are creating the leading independent, gas-focused, sustainable E&P company in the east Med which is committed to reducing our emissions and to the sustainability agenda,” CEO Mathios Rigas said.