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What is Paris alignment, and what’s it got to do with the Paris Agreement?
The Paris Agreement established targets to keep the global temperature rise well below 2 degrees Celsius, ideally limiting it to 1.5 degrees Celsius. Achieving these targets requires countries and businesses to reduce their greenhouse gas emissions and adapt their business models to align with the agreement's goals.
Alignment with the Paris Agreement will vary across industries. For international oil companies (IOCs), this might involve phasing out fossil fuel production and increasing investments in renewable energy. For an investment fund, Paris alignment could mean shifting investments from high-emission industries to low-carbon alternatives.
What is the Paris Agreement?
The Paris Climate Agreement is a global accord involving most of the world's nations, aimed at combating climate change. Following years of negotiations, this landmark treaty represents the first all-encompassing effort to address climate issues on an international scale. Despite its shortcomings, it is considered a significant step forward in global efforts to mitigate climate change.
The primary objective of the Paris Agreement is to limit the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels, with an aspiration to restrict it to 1.5 degrees Celsius. Achieving this target is crucial to avoid the most severe consequences of climate change, although substantial harm is still expected, particularly to those who have contributed the least to the problem. Currently, the global trajectory is falling short of meeting this goal.
Nearly every country in the world has committed to the Paris Agreement, with notable exceptions including Iran, Turkey, Eritrea, Iraq, South Sudan, Libya, and Yemen.
Interested in more information about the Paris Agreement? Read more about it on the Greenpeace UK website.
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We are far behind in terms of Paris alignment
At the United Nations Climate Change Conference (COP28) in Dubai in December 2023, the world’s nations reported back on their progress towards delivering on the targets in the Paris Agreement. Though the world is far behind where it needs to be in terms of Paris alignment, COP28 did succeed in securing an historic agreement on fossil fuel phase out. This sent a clear message to IOCs and countries still producing fossil fuels and has been described as the “beginning of the end” of the fossil fuel era1. The agreement is laying the ground for a “swift, just and equitable transition, underpinned by the deep emission cuts and scaled-up finance”. For companies looking for how to approach the Paris agreement, the statement is a clear signal that becoming aligned with the Paris agreement means phasing out fossil fuels.
How can companies approach the Paris Agreement?
Companies can approach the Paris Agreement by setting goals that reflect the agreements’s targets, implement measures to reduce emissions, invest in or transition to renewable energy sources, reduce energy consumption, and adopt other strategies to transform their business model.
Goals should reflect the scope of emissions
When setting goals, companies should consider their scope 1, 2 and 3 emissions. These are categories defined by the Greenhouse Gas (GHG) protocol to help organizations measure and manage their greenhouse gas emissions2.
Scope 1: Direct emissions from company operations.
Scope 2: Indirect emissions from energy use, such as electricity.
Scope 3: Emission from the end of of the produced product. For an oil company, Scope 3 emissions are emissions from when the oil they produce are burned by the consumer.
Many companies focus on their scope 1 and 2 emissions, as they are easier to mitigate, especially for oil and gas companies where scope 3 are by far the highest3. For most IOCs, reducing scope 3 emissions would entail phasing out fossil fuel production in favor of low carbon alternatives.
Some companies, like Equinor, have set net carbon intensity goals, aiming to reduce emission per produced unit. A carbon intensity goal allows the company to continue producing oil and gas while ramping up renewable production4. It also opens for the use of carbon offsets. Such a strategy can give the appearance of progress without significantly reducing overall emissions.
To achieve Paris alignment, companies should focus on absolute emission reduction targets measuring a reduction in the companies scope 1, 2 and 3 emissions.
What are Paris-aligned targets?
There is no universally accepted definition of what constitutes Paris-aligned targets. However, many organizations use the International Energy Agency’s (IEA) Net Zero Emissions by 2050 scenario as a benchmark. This scenario outlines more than 400 milestones on what needs to be achieved to decarbonise the global economy within three decades5. Key elements includes halting new oil and gas fields and a massive upscale of renewable energy6.
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How does Equinor align with the goals set in the Paris Agreement?
Using the IEA’s Net Zero Emissions by 2050 scenario as baseline, Equinor is not aligned with the Paris Agreement7. Despite the scenario indicating no room for new conventional oil and gas developments, Equinor is making plans for new production and estimates that their production in 2030 will be on the same level as in 2022. This means that there is a misalignment between Equinor’s production plans and the 1.5°C goal in the Paris Agreement8.
By 2030, Equinor forecasts to spend 50% of their capital expenditure (CAPEX) on renewable energy and low carbon solutions9. However, the company still plans to spend 20-30% of their CAPEX on new oil and gas projects in the coming years. In 2023, Equinor allocated 80% of their CAPEX on oil and gas. This means that their investment plans are not aligned with the 1.5°C goal in the Paris Agreement10.
Equinor does not have an absolute target for emission reductions for scope 3 emission, but relies on a carbon intensity target11. A carbon intensity target opens for the use of carbon offsets to reduce emissions. It also means that Equinor can increase the share of renewable energy without reducing the production of oil and gas to reach its targets. Equinor should therefore set explicit carbon reduction targets to become aligned with the 1.5°C target in the Paris Agreement.
How is Equinor performing in their energy transition? The move to renewable energy and progress in implementing their energy transition plan are not Paris aligned.
Equinor is still developing new oil fields
Despite new oil and gas projects not being compatible with the Paris Agreement, Equinor is actively exploring for, and opening new oil and gas fields worldwide. Currently the company is planning for new and controversial oil and gas fields such as the Rosebank field in the UK, Bay du Nord in Canada and exploring for new oil and gas offshore Argentina. These projects are causing strong opposition from affected people locally. In Argentina thousands of people marched in the streets against Equinors projects in the region.
In Norway, Equinor recently started production on its Breidablikk oil field in the North Sea. The field is in a legal dispute as proper climate assessment was not carried out before opening the field. Norwegian climate activists challenged the approval of the field over failing to include scope 3 emission in its environmental impact assessments. The Oslo district court ruled in favor of the activists putting a ban on further development of the field.
Equinor AGM has on several occasions been visited by climate activists who are affected by Equinors global portfolio of oil and gas projects. At the AGM in May 2024, several activists and investors confronted the company over its lack of transition away from fossil fuels.
Equinors global portfolio is neither Paris aligned or creating value
Equinor has operated oil and gas production in 16 countries, and is currently present in around 30 countries worldwide. Despite its extensive investments and global presence, the company's international oil and gas ventures have not yielded sufficient value. Since 2001, Equinor has spent over $94 billion on international projects, which are anticipated to result in a negative net present value (NPV) of -$3.5 billion12. The unprofitability of Equinor's global portfolio highlights the pressing need for the company to reassess its international operations and shift towards more sustainable and financially sound initiatives.
Among the major unapproved international oil projects are the Roncandor expansion and Bacalhau in Brazil and Bay du Nord and Bay du Nord core in Canada. None of these projects are aligned with the Paris Agreement according to the Australasian Centre for Corporate Responsibility (ACCR)’s least cost methodology13. If the projects are realized, they will also produce oil and gas long after 2050 taking the world deeper into the climate emergency.
Read the report: Equinors challenge, which way to Paris?
What steps can Equinor take to become Paris aligned?
Being in line with the IEA Net Zero by 2050 pathway means that no new oil and gas fields can be approved after 2021. However, between 2018 and 2023, Equinor spent $8.3 billion on exploring for new oil and gas worldwide14. This prioritization not only increases reserves of oil and gas that the world cannot afford to burn but also diverts funds that could have been used to support the transition away from fossil fuels.
For Equinor to be aligned with the Paris Agreement, it must cease approving new oil and gas projects and halt exploration activities globally. Additionally, the company needs to ensure an equitable and just transition of its portfolio, moving away from fossil fuels and investing in sustainable, low-carbon activities.
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Oil rigs lined up in a fjord in Norway Christian Åslund / Greenpeace
Benchmark of climate alignment in the oil and gas industry
Since world leaders adopted the Paris Agreement and its pledge to limit global temperature rise, oil companies have made a series of climate pledges, ambitions and plans on how to align their business with the goals of the agreement. However, their actual transition away from fossil fuel is yet to happen.
Oil Change International has developed ten criteria to assess oil companies climate plans presented in their “Big Oil Reality Check Report”15. These criteria serve as a minimum, not necessarily as a sufficient baseline for Paris alignment16. Analyzing the plans of 8 major oil and gas companies, they concluded that none of the companies plans aligned with the Paris Agreement. They find that all of the companies’ plans are Insufficient or Grossly Insufficient against most of the criteria. These companies' plans alone, if unchanged, e will consume more than 30% of the world’s carbon budget for limiting global warming to 1.5 degrees.
Taking a close look at Equinor, the report concludes that the company’s climate pledges and plans are “Grossly Insufficient” on eight out of the ten criteria and “Insufficient” on the remaining two17. Ranking seventh among all European-based companies for its historical climate emissions, and pledging to drill for more oil and gas, Equinor remains far from achieving Paris alignment. Despite its efforts to portray itself as “broad energy company”, its energy production remains fossil based, with more than 99% of its energy production coming from oil and gas18.
1: UNFCCC 2023. press release. https://unfccc.int/news/cop28-agreement-signals-beginning-of-the-end-of-the-fossil-fuel-era
2: GHG protocol. https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
3: Greenpeace Netherlands. 2023. Todays Emissoins, Tomorrows Deaths: Greenpeace Netherlands. Pg 10. https://www.greenpeace.org/static/planet4-netherlands-stateless/2023/12/885ced20-layout-cdt-1.pdf
4: ACCR, (2024): Equinor's challenge: which way to Paris?. Pg 28. https://www.accr.org.au/research/equinor%E2%80%99s-challenge-which-way-to-paris/
5: IEA, 2021, Net Zero by 2050. https://www.iea.org/reports/net-zero-by-2050
6: IEA, 2021, Net Zero by 2050. https://www.iea.org/reports/net-zero-by-2050
7: 2024, February. Carbontracker company profile pg 7.
8: 2024, February. Carbontracker company profile pg 7.
9: Equinor, 2023, Energy Transition Plan. https://www.equinor.com/sustainability/energy-transition-plan
10: 2024, February. Carbontracker company profile. pg 8.
11: WWF 2023, Equinor's energy transition plan and profitability in a 1.5-degree world. Pg 4. https://media.wwf.no/assets/attachments/Equinors-energy-transition-plan-and-profitability-in-a-1.5-degree-word-WWF-NORWAY.pdf
12: ACCR, (2024): Equinor's challenge: which way to Paris?. Pg. 15. https://www.accr.org.au/downloads/20240409_accr_equinorschallenge.pdf
13: ACCR, (2024): Equinor's challenge: which way to Paris?. Pg. 9. https://www.accr.org.au/downloads/20240409_accr_equinorschallenge.pdf
14: ACCR, (2024): Equinor's challenge: which way to Paris?. Pg, 6. https://www.accr.org.au/downloads/20240409_accr_equinorschallenge.pdf
15: Oil Change International, 2024. Press release. https://priceofoil.org/2024/05/21/press-release-big-oil-reality-check-oil-and-gas-companies-failing-on-climate/
16: Oil Change International, 2024. Press release. https://priceofoil.org/2024/05/21/press-release-big-oil-reality-check-oil-and-gas-companies-failing-on-climate/
17: Oil change International, 2024, Big oil reality check. https://www.oilchange.org/borc-equinor/
18: Equinor, 2024, Annual report 2023, pg 17: https://cdn.equinor. com/files/h61q9gi9/global/a2c8355cfbd95a967441e33e0f77a1ce950e188f.pdf?2023-annual-report-equinor.pdf