Understanding the Emissions Challenge
An assessment of integrated oils' efforts to reduce greenhouse gas intensity.
Integrated oil companies are increasingly coming under pressure from investors and regulators to reduce emissions. Although their continued investment in oil and gas resources is being criticized, we find they are taking steps, to varying degrees, to address the emissions intensity of their portfolios because investors increasingly request they do so. Repsol (REP), Shell (RDS.A)/(RDS.B), and Total (TOT) lead on this front. The issue is increasingly one of competitiveness as well. As the global community reaches agreement that reducing emissions should be a common goal, so the probability of carbon taxes rises.
In this case, reducing emissions is equivalent to reducing costs, and those with the lowest emissions will therefore be the lowest-cost operators, a coveted position for a commodity producer. We have examined integrated oils’ main efforts to reduce the intensity of emissions and how effective they might be. Our analysis suggests that investments in renewable power generation are most impactful for reducing full-cycle emissions, followed by increasing natural gas production. Reducing flaring and methane emissions is important for reducing operated emissions intensity and typically makes economic sense. Investments in electric vehicle charging and biofuels are unlikely to have a material impact financially or on emissions intensity.
Allen Good does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.