Shareholder revolts at Exxon and Chevron, and a courtroom upset for Shell, have dared campaigners to dream that we are approaching peak oil
The oil industry is having a torrid year, and climate campaigners are delighted. For the first time, there is a palpable sense that the sands are shifting for a sector whose business model is incompatible with climate targets. Support for big oil appears to be dripping away.
The cancellation last week of the Canada-US Keystone XL pipeline was the latest in a series of turning points for the sector. The $8bn (£5.7bn) project was due to pump 830,000 barrels of crude oil a day from Alberta’s tar sands to Nebraska. However, the firm behind it, TC Energy Corp, canned the project last week after President Biden – acting in January – revoked the permit for it to cross the US border.
The controversial pipeline had been the subject of a 13-year David and Goliath battle between indigenous communities, whose land it would have gone through, and big oil. It was deemed critical for the future of Alberta’s oil industry. Now it is no more.
“This is a major victory that would not have been possible without the leadership of the indigenous communities,” said Greenpeace.
But it’s not just activists who are forcing the oil industry to give up bad habits. In May, a Dutch court ordered Shell to slash emissions by 45 per cent by 2030, in a landmark case that could have global implications.
Roger Cox, lawyer for Friends of the Earth Netherlands, which brought the case, described the verdict as “a turning point in history”, adding: “This ruling may have major consequences for other big polluters.”
Earlier this year, Shell had pledged to cut emissions by 20 per cent by 2030, with a view to becoming carbon neutral by 2050. It was considered one of the oil industry’s more ambitious targets. However, the court in The Hague said that it wasn’t ambitious enough and ordered the firm to go further.
Shell is expected to appeal the decision, but attitudes appear to be hardening within oil firms themselves. In May, ExxonMobil succumbed to a coup launched by dissident hedge fund activists from Engine No. 1, a sustainable investment firm. The group replaced three Exxon board members with its own candidates in a bid to try and steer the oil giant towards a greener future.
“For the first time in history, responsible shareholders have breached the walls protecting recalcitrant boards of directors,” said Eli Kasargod-Staub, executive director of Majority Action, which empowers shareholders to hold boards to account. “The ExxonMobil board challenge is only the beginning of a reckoning for board directors who fail to make measurable progress towards decarbonisation.”
Separately, Chevron shareholders rebelled against the firm’s board by voting in favour of an activist proposal – launched by the Dutch campaign group Follow This – to force the group to slash emissions.
The verdict is a turning point in history. This ruling may have major consequences for other big polluters
On the back of those mutinies, the credit rating agency Moody’s warned that the financial risk for major oil producers had increased. Stricter climate targets, the rise of electric vehicles and divestment from fossil fuels among pension funds is set to increase that risk further.
After the Shell ruling, Friends of the Earth’s Rachel Kennerley, bullishly declared that “big oil is over”. Such declarations may be a tad premature, but not by much. A recent study by the law firm CMS predicted that the world could reach peak oil by 2030.
In the meantime, the International Energy Agency expects global oil production to reach pre-pandemic levels by the end of 2022 – a sign that the transition to renewables will be anything but slick.
Main image: Donald Pols, director of Friends of the Earth Netherlands, reacts to the Shell verdict outside a court in The Hague on 26 May. Credit: Remko De Waal/Getty