Report maps steps for Paris-alignment

Equinor can become Paris aligned by changing its portfolio and strategy, according to a new report from the Australasian Center for Corporate Responsibility (ACCR).

July 1, 2024
Report maps steps for Paris-alignment
Table of content

The authors conclude that a first step should be to stop new exploration for oil and gas worldwide and halting projects that have not yet been approved, as these projects are not in line with the goals in the Paris-agreement and come with high financial risk.

The Norwegian government, as majority shareholder, has a clear expectation to Equinor that the company “sets targets and implements measures to reduce greenhouse gas emissions in both the short and long term in line with the Paris agreement”’1. Still, Equinor has not aligned its portfolio to the goals in the Paris agreement, according to the report. 

Key findings

The report finds that Equinor can take material steps towards Paris alignment without diluting shareholder value, and avoid 67% of potential emissions from unapproved projects by: 

  • Stopping exploration of new oil and gas reserves worldwide.
  • Halting development of pre-Final Investment Decision (FID) fossil fuels projects outside of the Norwegian Continental Shelf (NCS).

To become fully Paris-aligned, Equinor also have to: 

  • Stop developing Norwegian fossil fuel projects
  • Develop a strategy around winding down operation assets

Mapping Equinor's oil and gas exploration, the report also finds that Equinors current strategy will direct resources away from the energy transition, produce a surplus of oil and gas beyond the requirement for a Paris-aligned world and unnecessarily lock in fossil fuel dependence beyond 2050. 

Energy transition plan fall short

The report adds to the building pressure against Equinor´s energy transition plan and how this falls short of aligning Equinor with the goals in the Paris agreement. Recently, several investors including Sarasin and Partners LLP, have called for a stronger Paris-alignment by the company in a shareholder resolution to their annual general meeting

Sierra Club Canada, Mixed Coast Collective, Council of Canadians, Newfoundland & Labrador Social Justice Co-operative at St. Johns, Newfoundland. Protesting the Bay du Nord oil field.

Equinors global portfolio is eroding value

Equinor has produced oil and gas in 16 countries worldwide. Despite significant investments and presence, their international oil and gas production has failed to generate adequate value. Spending more than $94 billion in capital expenditures on international projects since 2001, the projects are expected to deliver a negative net present value (NPV) return of -$3.5 billion2

Source: Rystad energy, ACCR modeling (ACCR, 2024)2

The lack of profitability in Equinors global portfolio underscores the urgency for Equinor to reevaluate its international operations and realign them with more sustainable and financially viable endeavors. 

The Bay du Nord project in Canada is yet another example of a project with uncertain profitability in Equinors portfolio. Investors reportedly downgraded Equinors stock partly due to news over Equinor attempting to reshape the project. Shortly after the pessimism proved to be valid, as Equinor’s share had its worst day in almost four years after the release of its financial report for 2023.

The report uses the Net Zero Emissions by 2050 scenario by the International Energy Agency (IEA) as the benchmark for Paris alignment. There is no room for new exploration licenses nor conventional long-lead time projects within that scenario. 

Read the full report on the Australasian Center for Corporate Accountability website

1: Minutes from Equinor Annual General meeting, 2023

2: ACCR, (2024): Equinors challenge. Page 15

3: ACCR, (2024): Equinors challenge. Page 16