Oil giants including BP and Shell have been pilloried by climate campaigners after disclosing their annual contributions to a much-hyped new green investment fund would be less than BP chief Bob Dudley earned last year.
Mr Dudley and Royal Dutch Shell chief executive Ben van Beurden were among industry heavyweights who appeared at an event in London to announce plans by the Oil and Gas Climate Initiative (OGCI) to invest $1bn in “innovative low emissions technologies” over the next ten years.
Rather than investing in renewables, the fund’s initial focus will be on action to reduce methane emissions from gas production and on technologies to capture and either use or store carbon emissions, they said.
Environmental group Greenpeace pointed out the funding equated to just $10m (£8m) a year for each of the OGCI’s ten members, compared with Mr Dudley’s controversial 2015 pay package of almost £14m.
Charlie Kronick, climate adviser at Greenpeace UK, said it was a “pathetic offering” that would do nothing to combat climate change and “even fails as an effective example of PR spin”.
The OGCI, whose members also include Saudi Aramco, Statoil and Total, represents companies that together account for one-fifth of the world’s oil and gas production.
Mr Dudley stressed that the joint fund was just “a start” and was not the sum total of the companies’ efforts on green energy, which he said together amounted to “billions”.
“This is happening alongside all of the work we are doing individually as companies on the transition to a lower emissions world,” he said, adding: “Don’t worry, we’ve got it.”
The new fund could invest in start-up companies and also fund research and development programmes at universities, Patrick Pouyanne of Total said.
The fund could also then look at industrial energy efficiency and cutting emissions in the transport sector, but does not plan to invest in renewables like solar or wind.
“The energy mix of the world will evolve. We take it very seriously,” Mr Pouyanne said.
The companies wanted to “make real progress on these technologies because we need them”, he said. “It’s a matter for us of being able to maintain our business in the future and to develop it.”
Mr Dudley said that the investments were “the right thing to do” but that they would also make economic sense for the companies.
“We all absolutely realise the world will move to a low-carbon world, emissions will be an issue. Some places there will be prices on carbon,” he said.
Reducing methane emissions was “an essential licence for us to be able to advocate for natural gas”.
Dr Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit, said the planned investment was a “drop in the ocean”.
“Shell’s capex budget for 2016 alone is $25-29bn, Saudi Aramco values itself at more than $2 trillion, and the cost incurred by BP following the Deepwater Horizon spill was $61.6bn,” he said.
Big Oil’s critics suggest that their business model is fundamentally incompatible with tackling climate change because climate science suggests much of the world’s existing fossil fuel reserves must be left in the ground is to avoid dangerous extremes of global warming.
But Mr van Beurden said their valuations were driven by proved reserves that would last about a decade and that it was therefore “rather unlikely” that they would not be produced.
“If you take a longer-term view, we cannot burn all the hydrocarbons on the planet in an unmitigated way,” he said. “But there is no alternative to using some of the hydrocarbons for a very long time to come.”