What is Energy Transition?

What is energy transition, and why does Equinor’s energy transition plan fall short? 

Energy transition is the move away from fossil fuels and towards clean, renewable energy. Equinor has set forth an energy transition plan which aims to cut emissions and reduce its net carbon intensity. Carbon intensity refers to the greenhouse gas emissions per unity of energy delivered. However, its energy transition plan lacks information on how the company plans to meet these carbon intensity targets by 2030, 2035, and 2050.

It is unclear whether Equinor plans to meet its targets by reducing oil and gas production, increasing investments in renewable energy, or buying carbon offsets. The transition plan fails to be aligned with the Paris agreement, among other factors lacking targets for reducing so-called scope 3 emissions, the emissions that stems from the combustion of their oil and gas. In 2023, a large group of institutional investors criticized Equinor energy transition plan for not being aligned with the paris agreement.

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Equinor’s energy transition plan is not sufficient to realise climate targets. As a Norwegian state-owned company, Equinor has to adhere to the white-paper

on state-ownership which requires all state-owned companies to act in line with the Paris Agreement. The UN and the International Energy Agency (IEA) have concluded that there is no room for any new oil, gas or coal infrastructure if we are to keep global temperature increase within 1.5 degree, the safest target we have left. Equinor’s energy transition plan goes against climate science and Norway’s climate commitments. 

Let us explore what an energy transition is, how it should be planned strategically, and, importantly, how Equinor plans to execute on its energy transition plan. 

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What is energy transition?

Energy transition is the move towards sustainable energy, mostly renewable energy, to tackle climate change and limit the consequences of global warming. The global energy sector is shifting from fossil fuel-based systems to renewable energy sources. In other words, energy transition is the overhaul of the structural mechanisms behind supply and consumption in the energy system, which in essence entails a plan for limiting greenhouse gas emissions. By moving away from producing and consuming oil, gas, and coal and towards renewable energy such as solar and wind energy, one can reduce greenhouse gases. 

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Efforts and initiatives in the industry to realise an energy transition 

As explained, an energy transition plan sets forth a strategy to reduce greenhouse gases through phasing out fossil fuels and replacing them with greener alternatives. The introduction of renewable energy into the energy supply mix is naturally the most relevant option. Energy companies also underline the potential of electrification and energy storage as key drivers of the energy transition. There are disagreements between climate organisations and the industry surrounding these initiatives. However, an even more pressing matter is the disconnect between the fossil fuel industry’s reliance on false solutions like electrification and CCS to continue to make new oil and gas investments, and what climate science tells us about the need to rapidly phase out fossil fuels.  

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Equinor’s energy transition strategy 

Equinor has stated that it expects to produce oil and gas at the same levels in 2030 as in 2022, and continues to explore new oil and gas fields. This does not comply with the global community’s commitment to achieve net zero emissions by 2050. Parallel to this is Equinor’s ambition to achieve net zero emissions by 2050, while still delivering energy to society. The current trajectory towards an energy transition is defined in Equinor’s strategy. Equinor will increase its investments in renewable energy and low-carbon solutions, which it aims to make up 30% of the company’s gross investments by 2025. By 2030, 50% of its investments should be in renewable and low-carbon solutions.² Despite the ambitious goals, the majority of Equinors actual production are still in fossil fuels with less than 1 percent of their energy production coming from renewable sources.  

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Equinor’s Energy Transition Plan 

The Energy Transition Plan aims to reduce its net carbon intensity by 20% within 2030, by 40% within 2035, and to be a «climate-neutral» company by 2050. 

It is, however, not clear how Equinor plans to achieve these goals. A reduction in its net carbon intensity can be achieved by different approaches, for instance by increasing production of renewable energy or compensating the emissions by registering carbon capture or purchasing CO₂ quotas through the EU ETS system. 

Let us dive into what these entail: 

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Missed opportunities in the energy transition investments 

How are they cutting greenhouse gas emissions?  

Equinor claims to cut emissions by investing in low-carbon solutions and finding new opportunities for investments. Carbon offsetting is a method for companies like Equinor to wipe their hands of emissions while also strengthening the production of oil and gas that fuel the climate crisis. Equinor’s emission reduction targets mostly relate to direct emissions from building or operating an oil or gas field rather than the downstream emissions that occur when the oil and gas is burned. Production-related emissions only account for about 4.4 percent of the total emissions. Hence, any reduction in these emissions is only a fragment of the total emissions caused by Equinor’s activities.  

Greenwashing and carbon offsetting – Equinor is hiding behind a mask 

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False solutions like carbon capture and storage (CCS) 

Low-carbon solutions are at the center of Equinor’s transition plan, but these don’t contribute to unlocking the potential of renewable energy and instead slows down the energy transition. Carbon capture and storage (CCS) aims to store CO₂ in old oil and gas reservoirs. However, none of the current CCS projects comes close to capturing 100% of emissions, and projects frequently fail and remain unproven at the scales imagined by big oil because it is extremely costly and energy-intensive. 

Is blue hydrogen green?

Blue hydrogen is produced converting fossil gas to hydrogen, and store the CO₂ from the fossil gas, while green hydrogen is produced by using renewable energy to split water molecules into hydrogen and oxygen gas. Blue hydrogen still has greenhouse gas emissions because no CCS project comes close to capturing all emissions, there are large potential methane leaks in production, and hydrogen is itself an indirect greenhouse gas, by increasing the lifetime of other gases, including methane, in the atmosphere. It also ties up investments in fossil fuels infrastructure that could have been used on renewable energy and the energy transition. 

Prediction suggests green hydrogen will soon outstrip blue in cost-efficiency. In any case, the necessity for blue hydrogen remains limited, with renewables proving more cost-effective and cleaner. This means that there will likely never be a large hydrogen export market. Equinor is pushing these unrealistic ‘climate solutions’ to hide the fact that they want to extend the fossil fuel age instead of transitioning to cheaper, cleaner, more efficient renewables.

Investments in renewable energy 

Instead of investing fully in renewable energy sources, Equinor is exploring new oil and gas fields globally with promises of local economic boosts. However, Equinor is hiding behind false claims of how lucrative its oil and gas projects will be for the local population. Take the UK as an example where Equinor is pursuing the controversial Rosebank oil field. Due to the investment allowance for new oil and gas developments, Rosebank’s owners Equinor and Ithaca Energy will receive total tax relief of £3.75 billion to develop Rosebank. Rather than contributing to improving energy security or lowering people’s energy bills, Britain is set to make a loss of £750 million pounds over the lifetime of the project.

Equinor should invest in nature-friendly renewable energy projects rather than tying capital up in fossil fuel projects. 

Fossil fuels belong in the past – read about the promise of renewable energy 

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Equinor’s energy transition strategy hurts Norway’s reputation 

The Norwegian government is the majority stakeholder in Equinor and Equinor’s actions directly impact Norway’s global reputation. Equinor’s global projects and its wide expansion fuels the climate crisis, and leaves more and more societies and people dependent on fossil fuel, while halting renewable energy investments. 

Additionally, the Norwegian government has updated its expectations to state-owned companies, asking them to set targets and implement measures to reach the goals set by the Paris Agreement.³ Equinor does not meet these expectations. 

Many of Equinor’s projects are controversial because they are located in frontier areas and ecologically vulnerable territories. This includes explorations in the Argentine Sea, the Wisting oil field in the Arctic, and the Bay du Nord project in Canada. 

Equinor can easily disregard its energy transition plan 

An important disclaimer is attached to Equinor’s Energy Transition Plan, which states that Equinor’s ability to meet its net zero and net carbon intensity ambitions is only possible if society’s demands and technological innovation shift. This disclaimer makes it possible for Equinor to escape its ambitions simply by arguing that the government or the industry are not doing enough to facilitate realistic prerequisites for a renewable energy transition. 

Equinor must take responsibility for its historic contribution to the climate crisis and its role in prolonging the fossil fuel era. It must change its transition plan to include absolute reduction of emissions in line with climate science, Norway’s nature and climate commitments, and the white-paper on state-ownership. Equinor has the opportunity and moral obligation to be a forerunner in the transition to a renewable future but are instead choosing to prolong the fossil fuel era. It’s not too late for Equinor to change direction and deliver on its climate commitments, but this requires immediate and ambitious action.

People are rising up against Equinor’s fossil fuel expansion

Equinor’s aggressive pursuit of new oil and gas projects are being met by public, political and legal resistance around the world. We are seeing growing resistance against the UK oil field Rosebank and the Bacalhau project in Brazil. Fossil fuel exploration in the Argentine Sea and the Bay du Nord project in Canada have also been heavily opposed. Bay du Nord has been paused, as has the Wisting oil field in the Arctic, building on the wins against Equinor’s involvement in Canadian tar sands and proposed drilling in the Australian Bight.

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List of references: 

1. Greenpeace Nordic (2023) The truth about Equinor’s global projects, page 4 
2. WWF (2023) Equinor’s energy transition plan and profitability in a 1.5-degree world, page 7
3. WWF (2023) Equinor’s energy transition plan and profitability in a 1.5-degree world, page