Why oil companies aren’t prioritizing the most urgent emissions reductions

Corporate emissions tracking and reporting has recently gone mainstream. C-suites and shareholders are now used to reviewing sustainability statistics alongside financial performance metrics. Many large corporations, including major energy companies, have set emission reduction or net-zero targets and are working through waterfall graphs of annual emission reductions. This is good.

But what kind of figures are they looking at? Various greenhouse gas (GHG) emissions are measured, calculated, or estimated in metric tons to make up an organization’s emissions inventory. To create a single headline figure (and, ideally, an emission reduction road map to go with it), these different numbers are then converted to the familiar “carbon dioxide equivalence (CO2-eq)” figure and combined to form a single GHG footprint.

Metric tons of CO2-eq are the global currency of emissions accounting. The US dollar of emissions economics. It runs through everything from emissions intensity to abatement cost figures. Its role in how we view the costs and benefits of individual climate actions cannot be underestimated. But, as most people working on and with emissions data know, it’s fundamentally flawed.

Calculating equivalence: The concern with Global Warming Potential

CO2-eq is calculated using a simple formula: Metric tons of a GHG multiplied by its “Global Warming Potential” (GWP). A GHG’s Global Warming Potential is an attempt to express the differences in the warming effect of each gas—how much heat it traps while it’s in the atmosphere. Crucially, it does this over a specific time frame. The most used time frame is 100 years (GWP100).

The problem is that different GHGs have different life spans in the atmosphere, so the time frame chosen really matters. Methane, for example, has a heat-trapping effect that is around 120 times as much as CO2, but it only lasts in the atmosphere for about 12 years. Looking at it through a 100-year lens means the 88 years of no effect softens the 12 years of extreme effect. That is why GWP20 is sometimes used to show the impact of shorter-lived gases. The issue is that all major guidance for corporate emissions accounting (e.g., from the Intergovernmental Panel on Climate Change and GHG Protocol) has converged around GWP100. And it’s obscuring urgent opportunities to slow global heating.