Energy Giants Abandon Global Net Zero Group Over Oil and Gas Clampdown

Net Zero equals deindustrialization and fiscal decline

Net Zero equals deindustrialization and fiscal decline is a proven fact, and there is absolutely no evidence that the trillions spent on Net Zero policy have actually made a difference.

The real question is the definition of pollution, and as we approach the Trump Administration redefining the Obama-era ruling that CO2 is a pollutant, significant changes will likely occur thereafter. Let’s not lose sight of the fact that we need to deliver the lowest kWh to everyone on the planet with the least impact on the environment. Let’s target true pollutants, such as particulate matter and carbon fibers from wind blades.

In a significant blow to global efforts aimed at achieving net-zero emissions, several major energy companies have withdrawn from a key advisory group tied to the Science-Based Targets initiative (SBTi), citing overly restrictive proposals on oil and gas production.

This move highlights the increasing tension between the fossil fuel industry and climate standard-setters, as companies resist measures they perceive as unrealistic and detrimental to their operations. The departures highlight broader industry frustrations with accelerating clampdowns on hydrocarbon activities, even as governments and regulators ramp up net-zero mandates.

The Exits and the Backdrop

Shell, Norway's Aker BP, and Canada's Enbridge have all exited the expert advisory group of the SBTi, a prominent organization that sets science-based climate targets for corporations worldwide. The SBTi is widely recognized for validating companies' emission reduction plans, with thousands of firms seeking its approval to align with the Paris Agreement goals.

However, the group's draft standards for the oil and gas sector proved contentious, proposing a ban on new projects after 2027 or upon submission of a climate plan—whichever comes first—and demanding sharp reductions in fossil fuel output.

Shell described the draft as failing to "reflect the industry view in any substantive way," advocating instead for "sufficient flexibility" and a "realistic" pathway that accounts for societal energy needs. Aker BP echoed this sentiment, noting its influence on the standard was "limited" but affirming no change in its own climate ambitions. Enbridge's departure aligns with this pattern, as the companies collectively argue that the proposals ignore practical realities of energy transition.

The SBTi has since paused work on the oil and gas standard, attributing the delay to "capacity considerations" rather than industry pressure. Additionally, related guidance for financial institutions has been postponed, shifting the deadline for ceasing finance or insurance for new oil and gas production from 2025 to 2030. Critics within the climate community have expressed dismay, with one source lamenting, "The more we delay, the more cover we are providing to big oil."

This development comes amid broader scrutiny of net-zero frameworks, where energy giants are increasingly vocal about the economic burdens imposed by aggressive decarbonization timelines.

Industry Pushback and Implications

The clampdown on oil and gas reflects a pivotal shift in global climate policy, where bodies like the SBTi aim to curb emissions from high-polluting sectors. Yet, for energy companies, these restrictions threaten their core business models, which rely on continued exploration and production. Shell, for instance, has invested heavily in renewables but maintains that fossil fuels will remain essential for decades. The exits could signal a broader industry retreat from voluntary net-zero commitments, potentially slowing progress toward global targets, such as limiting warming to 1.5°C.

This isn't an isolated incident. Big Oil has long navigated a delicate balance between green pledges and profitability, with similar tensions arising in forums like the Oil and Gas Climate Initiative. As regulators in the EU, US, and elsewhere tighten rules—such as the EU's Corporate Sustainability Reporting Directive (CSRD) and the US SEC's climate disclosure mandates—these departures may embolden other firms to resist. Analysts warn that without industry buy-in, net-zero goals risk becoming unattainable, exacerbating divides between environmental advocates and energy providers.

The Financial Toll of Net Zero Pursuits

Beyond the policy debates, the pursuit of net zero is imposing substantial financial burdens across the energy sector and beyond. Based on recent data, global spending on key net-zero mechanisms—including carbon taxes/pricing, carbon capture and storage (CCS), and scope 3 emissions reporting—amounts to hundreds of billions annually. These costs represent investments, compliance expenses, and revenues redirected toward decarbonization, but they also highlight the economic strain on industries like oil and gas.

• Carbon Taxes and Pricing Revenues: Carbon pricing mechanisms, which include taxes and emissions trading systems (ETS), generated approximately $100-104 billion globally in 2023 and 2024. These figures represent the costs borne by emitters (e.g., energy companies paying for their carbon output) and revenues collected by governments, often funneled back into green initiatives. For context, this marks a record high, with coverage now extending to 28% of global emissions. Projections suggest further growth; for instance, a proposed global carbon tax on aviation and shipping alone could raise up to $200 billion annually by 2035, thereby accelerating net-zero efforts in hard-to-abate sectors.

• Investments in Carbon Capture and Storage (CCS): Global investments in CCS surged to over $11 billion in 2023, nearly doubling from the previous year, driven by climate goals and government incentives like the US's $1.7 billion allocation for capture projects. This funding supports technology to trap and store CO2 emissions from industrial sources, with capacity expected to quadruple by 2030. Cumulative commitments are approaching $80 billion, underscoring CCS's role in net-zero strategies despite criticisms over its scalability and cost-effectiveness.

• Costs of Scope 3 Carbon Reporting Requirements: Scope 3 emissions—those from a company's value chain, often comprising 70-95% of total footprints—entail significant reporting costs as regulations roll out globally. Per-company expenses average $533,000 to $677,000 annually for climate-related disclosures, with GHG analysis (including scope 3) accounting for about $237,000 of that. For the US alone, SEC rules could raise total compliance costs to $10.2 billion yearly across affected firms. Extrapolating globally, where regulations like the EU's CSRD impact over 50,000 companies and similar mandates cover thousands more, annual costs likely exceed $10-15 billion, based on an estimated 20,000-30,000 large reporting entities worldwide.

To arrive at a rough total annual spend on these net-zero elements, sum the estimates: carbon pricing costs/revenues ($102 billion) + CCS investments ($11 billion) + scope 3 reporting (~$12 billion) = approximately $125 billion globally per year. This calculation uses recent reported figures for carbon pricing and CCS, while scope 3 is derived by multiplying average per-company costs ($600,000) by a conservative estimate of 20,000 affected global companies (20,000 × $600,000 = $12 billion). Note that these are interconnected—e.g., carbon taxes incentivize CCS adoption—and actual totals may vary based on regulatory expansion and inflation.

Looking Ahead: Balancing Ambition and Reality

The departure of energy giants like Shell from the SBTi advisory group signals a critical juncture for net-zero initiatives. While clampdowns on oil and gas are essential for curbing emissions, they must contend with economic realities, including the trillions needed for full transition (global net zero by 2050 could require $9.2 trillion annually in investments).

I have always said that Regimes Change when energy prices are too high. This morning, I published the article 'If Alberta Referendum to Become the 51st State Gains Traction, What Would the Financial Reality Look Like?' on the Energy News Beat website. Regime change can involve the removal from one country to another, and this raises the issue of the new world order of trading blocs. The Net-Zero left-leaning group of the EU, the UK, and the Canadian federal government is poised to trade with China and the rest of the world into a new chapter of prosperity.

As costs continue to mount, industry leaders are calling for pragmatic policies that support innovation without stifling growth. For the energy sector, this episode may accelerate diversification into renewables, but it also risks deepening rifts in the global climate fight.

Stay tuned to Energy News Beat for updates on how these dynamics unfold.

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