Creating a Coalition: Building an Alliance of National Oil Companies

Oil and gas companies have a major role to play in cutting greenhouse gas emissions. And while large public companies like ExxonMobil are working to reduce emissions, state-run oil companies have been less receptive. At this year’s United Nations Climate Change Conference (COP28), Sultan Ahmed al-Jaber, CEO of Abu Dhabi National Oil Co. (ADNOC) aims to change that. At the conference, which starts November 30 in Dubai, al-Jaber will attempt to get national oil companies to sign a pledge to reduce their greenhouse gas emissions. This goal is outside of the conference’s aims to have the 197 participating nations reach agreements on climate goals and review progress toward the Paris Agreement authored during COP21 in 2015.

The aim of the pledge is to create a coalition of oil and gas companies called the Global Decarbonization Alliance (GDA). Companies signing on to the GDA would commit to investing in renewable energy and technologies intended to combat greenhouse gas emissions like carbon capture. The eventual goal for GDA members would be reaching net zero carbon emissions by 2050 at the latest, reaching zero methane emissions, and eliminating routine flaring by 2030. Detecting and mitigating methane emissions, such as those from equipment, pipelines, and wells, including abandoned wells, will be crucial for meeting climate goals as methane is 86 times more effective than carbon dioxide at trapping heat in the atmosphere.

The GDA also aims to improve transparency among national oil and gas companies. Public companies are often subject to international and public pressure to reform their business practices that national companies rarely face. In 2021, just over one-third of national oil companies published production data that could be independently verified. GDA members will be required to measure, monitor, and report emissions with independent verification. However, no steps for doing so are outlined in the agreement.

Climate Criticism: Environmentalists Skeptical of Agreement

Although not yet implemented, environmental advocacy groups are dismissive of the GDA. For instance, some see the targets set by the GDA as being insufficient, with some companies already having more ambitious goals. Environmentalists also note that the GDA duplicates existing agreements that have stricter reporting requirements. However, the companies that would sign the GDA pledge are not typically part of those frameworks. Some also note that al-Jaber’s role as ADNOC CEO could be considered a conflict of interest and are largely critical of oil and gas companies participating in COP28.

A Step Forward: Companies Expanding Production and Renewables

The framework established in the GDA pledge promises a way to influence oil and gas companies in new ways. Additionally, emissions reporting requirements could motivate companies to reform their production practices and further embrace renewable energies. Al-Jaber has previously stated that the world using fewer fossil fuels is inevitable. As such he has implemented green initiatives in the company, setting emissions targets within the company and expanding investments in renewable energy. Al-Jaber also served as the chairman of Masdar, a renewable energy firm.

Al-Jaber’s apparent commitment to emissions reduction in the oil and gas industry and adoption of renewable energy highlight the role energy companies are uniquely qualified to play in reaching climate goals. Even with reduced fossil fuel consumption, there will still be a need to address methane emissions from pipelines, equipment, and abandoned wells. Voluntary agreements such as GDA could also be more palatable and easier to implement than other frameworks. The GDA pledge, if successful, could lead to further agreements among national oil companies that would drive emissions reductions, development of renewables, and greater efforts to adapt to a changing climate.