Chevron, like other U.S. oil and gas majors such as Exxon Mobil, has committed to reducing greenhouse gas emissions from its operations across oil and gas fields, refineries, and pipelines.
But that goal is short of the promises from European oil producers Shell, Equinor, and most recently BP, which have vowed to offset emissions caused by use of their fuels.
Top Chevron officials in charge of clean energy investments and strategy say the company is focused inward on actions it can easily control that carry a short-term impact rather than chasing faraway “aspirations” that they say are unachievable without changes in government policy.
“We are trying to deliver action right now to a lower-carbon future,” Daniel Droog, vice president energy transition at Chevron, told the Washington Examiner.
But environmentalists say Chevron is insufficiently committed to addressing climate change. They say that it is investing in low-carbon technologies and reducing its emissions only in areas that complement its core oil and gas business.
“It’s a very risky move to play chicken with investors in the 2020s on climate action, but that is what Chevron appears to be doing,” said Ben Ratner, a senior director at the Environmental Defense Fund who leads the group’s business energy transition team.
Droog and his counterpart Barbara Burger, the president of Chevron Technology Ventures, insist the company’s pivot to clean energy is real and here to stay even as an oil price crash from the coronavirus forces companies to cut spending.
“We are a long-ball player,” Burger told the Washington Examiner. “I don’t see a pullback.”
But unlike some competitors, Chevron has chosen not to spend directly on renewables, which generate lower returns and don’t augment its oil and gas business. Instead, it has focused narrowly on powering its operations with more wind and solar, such as serving its electricity needs at refiners and its steam operations in oil fields.
“We know that the future requires a variety of solutions, including solutions that will be provided by others, but for us, we want to focus on places we think we have particular leverage or strength or a challenge we are situated to meet,” Droog said.
Chevron’s approach is best exemplified by its status as the operator of the world’s largest carbon capture and storage project.
Chevron’s Gorgon project in Australia, launched in August 2019, captures carbon from an underwater natural gas field and injects it into a deep reservoir under an island — capturing up to 4 million tons of carbon a year.
Julio Friedmann, a senior research scholar at Columbia University’s Center for Global Energy Policy, said Chevron was smart to focus on carbon capture, an expensive technology that scientists say must be deployed on a large scale to avoid the worst consequences of climate change. Friedmann says oil and gas majors have the budgets, engineering, and project management expertise to expand carbon capture use.
“Carbon capture and storage is something oil and gas companies can do extremely well that nobody else can do,” said Friedmann, who was the principal deputy assistant of the Energy Department’s Office of Fossil Energy in the Obama administration.
Chevron has also dipped into other clean energy ventures, investing in companies such as ChargePoint, an electric vehicle charging company, and Carbon Engineering, a startup developing technology to swipe carbon directly out of the atmosphere.
“We take the approach of investing in a number of different sectors, learning from innovation, helping to scale, and identifying what the problems are so we are able to pivot as discoveries are made,” Burger said. “History is littered with companies getting ahead of their skis and trying to scale before it’s ready.”
Environmentalists say Chevron’s European competitors such as Shell and Total are doing a better job of investing in technologies outside their core business that are cost-competitive today, such as battery storage and solar.
“Everything Chevron is doing suggests they think we have a long time to make the transition,” said Andrew Logan, senior director of oil and gas at Ceres, a nonprofit organization that pressures companies to combat climate change. “That is really what divides the industry in the U.S. and Europe. The sense of urgency or lack thereof.”
Chevron, though, is among the top performers when it comes to containing methane emissions from its oil and gas operations in the Permian Basin straddling West Texas and New Mexico.
While Chevron has taken advantage of the fracking boom to become the second-largest producer in the Permian, increasing its production 71% in 2018, it has also worked to control its venting and flaring, or burning, of methane. Methane, the main component of natural gas, is a short-lived greenhouse gas but is far more potent than carbon.
An analysis of New Mexico’s top 15 oil and gas producers by S&P Global Market Intelligence showed that Chevron in 2018 had a flaring intensity of 0.1%, a measure of the total amount of oil and gas vented and flared per day over the amount of oil and gas produced each day. The worst performer, Marathon Oil, had a 5.8% flaring intensity. Chevron claims it has reduced flaring associated with its methane emissions by 22% since 2013.
Chevron also supports the goals of the Paris climate agreement that President Trump rejected and has set short-term emissions-cutting targets that are tied to employee compensation.
The company aims to cut the emissions intensity of its oil production by 5%-10% by 2023, compared with 2016 levels. It plans to reduce the emissions intensity of its gas production by 2%-5% in that time frame while lowering methane 20%-25%.
Environmentalists have praised Chevron for setting its targets on an equity basis, meaning the company includes oil and gas acreage it operates itself along with assets it has an ownership stake in but doesn’t operate.
But they say Chevron falls short by focusing on emissions intensity, the amount of emissions per unit of energy, rather than overall reductions.
Ratner shared an analysis the Environmental Defense Fund conducted using public Chevron reports that showed the company’s emissions per unit of production decreased by 8% from 2014 to 2018, but absolute emissions increased by 5%.
Ratner criticized Chevron for not publicly opposing the Trump administration’s move to weaken direct federal regulation of methane from oil and gas operations despite the protests of competitors such as BP and Exxon.
Critics say the company’s stance is representative of the oil and gas industry’s unwillingness to lobby for policies that could help lower the cost of clean energy. While Chevron, like most other large companies, says it supports a carbon tax, the company has refused to challenge trade groups that it belongs to that oppose carbon pricing. European companies, by contrast, have decided to quit such trade groups, such as the refining group American Fuel and Petrochemical Manufacturers.
Droog said environmental performance goes beyond what’s required by current regulations and that Chevron can better project its influence by remaining in lobbying groups.
“Our views may not always align completely with certain positions taken by industry groups or with other companies within those groups, but it is important for us to be part of the dialogue,” Droog said.
Friedmann said Chevron must do a better job of striving for “full decarbonization” across its supply chain. But he said it’s unrealistic to expect oil and gas majors to depart significantly from their business models as long as global consumers continue to use their main products.
“I have a certain amount of sympathy,” Friedmann said. “We have not asked ourselves what we expect of oil and gas companies during the energy transition chiefly because we continue to buy oil in very large volumes. We still have demand.”
