Topics in this section: - Navigating CO2 transition risk in oil & gas: BI Carbon scores - European majors lead on BI Carbon scores - CO2 Forecast score highlights alignment with 2-Degree scenario - Current performance score identifies leaders on CO2 intensity - Pairing CO2 goals, low C02 business models: BBG Transition score
These analyses are by Bloomberg Intelligence Senior ESG Analyst Eric Kane.
Understanding carbon-transition risks and reduction strategies is a challenge because the data and commitments made take many forms. BI's new Carbon scores bring clarity to past and future performance for 39 oil and gas companies by assessing reduction trends, intensity, planned reductions, future intensity and positioning relative to a temperature-aligned benchmark.
European majors lead on BI Carbon scores
Equinor and Total earned top overall BI Carbon scores. Our analysis of 39 oil and gas companies suggests that these two have the best combination of current and forecasted carbon performance. Current performance measures reductions in operational carbon intensity -- million metric tons CO2e/invested capital plus depreciation/$ billion -- over the latest five-year period and existing carbon intensity. Forecasts based on publicly reported greenhouse gas-reduction strategies measure future reduction, intensity and distance from the International Energy Agency's Sustainable Development Scenario.
European integrated oil peers Galp, BP and Eni also earned top scores. Indian Oil, Gazprom Neft and Oil & Natural Gas trailed, given they've yet to set greenhouse gas emission-reduction strategies.
CO2 forecast score highlights alignment with 2-Degree scenario
BI's Carbon Forecast score provides a relative ranking of future carbon reduction and operational carbon intensity in 2030 relative to peers and to a 2-degree Celsius-aligned benchmark. Companies, including Eni, Equinor and Total, which have set greenhouse gas-reduction targets that meet or surpass the International Energy Agency's Sustainable Development Scenario earned top scores. According to the IEA's scenario, which is aligned with limiting warming to well below 2 degrees Celsius, oil and gas companies must reduce operational Scope 1 and 2 greenhouse-gas emissions intensity 44% by 2030 from 2018. Equinor's goal of carbon-neutral operations by 2030 suggests it will reduce emissions by 100% from 2019-30.
The Carbon Forecast score makes up 75% of the overall BI Carbon score.
Current performance score identifies leaders on CO2 intensity
BI's Current Carbon Performance score brings clarity as to which oil and gas companies have reduced operational carbon intensity the most in the latest five-year period and how they stand relative to each other on current carbon intensity. Equinor, Total and Galp earned top scores, with each company reducing its intensity by more than 20% and having current carbon levels well below the peer-set average of 0.29 (million tonnes CO2e/$ billion). Chevron, which hasn't announced a comprehensive greenhouse gas-reduction strategy, scored well with the sixth-lowest current carbon intensity.
The Current Performance score accounts for 25% of the overall BI Carbon score.
Pairing CO2 goals, low C02 business models: BBG Transition score
In a peer set of 39 oil and gas companies, Total earned the highest Bloomberg Transition score, which combines our Carbon and BNEF's Business Model scores to give investors an assessment as to which companies are best prepared for a low-carbon world. BNEF's model analyzes a company's existing operation and reveals whether companies are taking action to transition to low carbon output. It uses several factors for consideration, including new technologies, fossil-fuel expansion and climate disclosure and governance.
The Bloomberg Transition score is an equally weighted composite of BI's Carbon score and BNEF's Business Model score.
