(Bloomberg) -- Some of the world’s biggest oil companies will invest $1 billion over the next 10 years to develop technologies to capture and store emissions of greenhouse gases and improve energy efficiency.
The investment, announced in a joint statement on Friday from 10 companies including Saudi Arabian Oil Co., Royal Dutch Shell Plc, Total SA, BP Plc, Eni SpA, Statoil ASA and Repsol SA, aims to deploy low-carbon technologies on a large scale. Those energy producers, which together plan more than $90 billion of capital expenditure this year, are part of the Oil and Gas Climate Initiative, which is seeking ways the industry can support a global deal to tackle climate change while continuing to produce their hydrocarbon reserves.
“The creation of OGCI Climate Investments shows our collective determination to deliver technology on a large scale that will create a step change to help tackle the climate challenge,” according to the statement. “By working with others our companies play a key role in reducing the emissions of greenhouse gases.”
The investment comes as last year’s Paris climate accord enters into force, and three days before delegates from almost 200 countries gather in Marrakesh, Morocco for the latest round of talks to flesh out the deal. The companies, which together account for about a fifth of the world’s oil and gas output, last year backed policies consistent with limiting the increase in average global temperatures to within 2 degrees Celsius (3.6 degrees Fahrenheit).
“It is encouraging that the 10 companies have seen the need to act on the day the Paris Agreement comes into force, but they are committing just $10 million a year each for ten years,” said Jeremy Leggett, chairman of the Carbon Tracker Initiative, founder of Solar Century Holdings and author of four of books on climate change and energy. “Given that the world has to mobilize trillions of dollars a year for clean energy within that timeframe if the Paris goal is to be realized, this is quite simply nowhere near good enough.”
The $1 billion investment is just the beginning and focuses on the companies’ core businesses, Repsol’s CEO Josu Jon Imaz told reporters in London. The money is in addition to what each company is already spending on clean technology, he said.
To give the world a 50 percent chance of limiting the temperature increase to below 2 degrees Celsius, about one third of oil reserves, half of natural gas and 80 percent of coal must remain unburned, according to the Energy & Climate Intelligence Unit, a London-based researcher.
Oil companies will continue to make decisions on producing from their reserves based on economics, Shell’s boss Ben Van Beurden said. While it’s clear the world can’t burn all the hydrocarbon reserves in the ground, there will still be long-term demand for energy, he said.
The world needs to focus on ways to capture greenhouse gas emissions, not think about keeping oil in the ground, former Saudi Arabian Oil Minister Ali Al-Naimi said at an event in London Friday. "There’s absolutely nothing wrong with fossil fuels," he said.
The OGCI said it has identified two initial focus areas: accelerating the deployment of carbon capture and storage and reducing methane emissions from the oil and gas industry, which also warm the planet.
The group, which was formed in 2014, also includes China National Petroleum Corp., Petroleos Mexicanos and India’s Reliance Industries Ltd. They have reduced greenhouse gas emissions from their own operations by 20 percent since 2005, according to the initiative’s website. No U.S.-based companies are part of the group.
Even after the Paris climate deal agreed last year, the world still remains on track for as much as 3.4 degrees of warming, according to the United Nations. Countries must make further pledges to cut at least 12 gigatons of carbon dioxide in order to meet the Paris goals, it said in a report Thursday. That’s the same as taking all of Europe’s cars off the roads for 12 years.