Post-AGM decryption ↓

On the 11th of May, Eni held its 2022 Annual General Meeting. Unlike its peers, the Italian oil and gas major chose not to consult its investors on its climate plan which, despite recent improvements, still blows up the carbon budget. The oil and gas major’s decarbonization targets are still not aligned with what climate science requires to stay on a 1.5°C pathway: by 2050, our calculations based on the company’s data show it will overshoot by 14% its 1.5°C carbon budget by 2050. More worrying is the fact that the company will have used up more than 70% of its budget as soon as 2030. While the Intergovernmental Panel on Climate Change (IPCC) report made clear short-term action is key to mitigating climate change, Eni is still planning to develop new oil and gas resources and lacks short-term ambitious enough decarbonization targets. It’s critical that shareholders require the company to immediately stop oil and gas expansion plans.

Eni’s decarbonization targets: recent progress should not hide critical shortcomings

In March 2022, at its Capital Market Day (1), Eni announced improved decarbonization targets, aiming now to cut its emissions from scope 1, 2 and 3 by 35% by 2030, 55% by 2035 and 80% by 2040 (against 2018 levels), before reaching Net Zero in 2050. However, committing to distant targets is not enough. The group’s short-to-medium term strategic and operational orientations are not consistent with staying within a 1.5°C carbon budget by 2050 and the IPCC report has stressed over and over again the need for short-term action:

  • Eni still does not have a 2025 mitigation target for its scope 3 emissions, despite the fact that they accounted for 92% of its total reported emissions in 2018.
  • By 2030, the group’s 2030 emission reduction target falls short of the needed 41% reduction required by the International Energy Agency (IEA) (2).
  • As a consequence, on average until 2035, its carbon intensity will still be more than 20% higher than what is prescribed by the IEA Net Zero scenario, and each unit of energy the group will produce will consistently emit too much Greenhouse Gas (GHG).

This lack of short-to-medium term ambition will lead the oil and gas company to burn more than 70% of its remaining 2050 carbon budget as soon as 2030 (3).

To achieve its targets, Eni also relies inadequately on offsets. By 2030, so-called nature-based solutions (NBS) and Carbon Capture and Storage (CCS) will make up for 14% of its emission reductions. Its CCS aims would require the group to increase by 25% the number of operating CCUS units worldwide. (4)

Eni is still developing new oil and gas 

Eni announced in its Capital Market Day 2022 that its production would grow “at average of 3% per year to a plateau of around 1.9Mboe/d in 2025”, which would represent a 9.6% increase (against 2020 levels). This growth in production is supported by climate-inconsistent plans for new oil and gas development. In the short-term, the group plans to add 1894 mmboe of resources to its producing portfolio, enough to increase the latter by 17%. Of this development, more than 40% will take place in ultra deepwater, a risky sector to operate in and prone to environmental disasters. (5)

The group’s heavy focus on oil and gas is also reflected in its CAPEX allocation strategy. Eni plans to dedicate 25% of its total investments to “growth opportunities”, covering activities including but not limited to renewable energy development, the complement 75% going to its traditional oil and gas activities. As a result of this ongoing strong focus on oil and gas, the group plans to develop a mere 15 GW of renewable power capacity by 2030. If Eni were to meet this target, and maintain its 1.9Mboe/d plateau of upstream production up to 2030, renewable energy would then account for no more than 6% of its energy mix at that time.

Eni’s shareholders must request the company to stop any new oil and gas plans, incompatible with the remaining 1.5°C carbon budget, and focus on reducing oil and gas production.

Notes :

  1. Capital Market Day presentation by Eni
  2. The IEA Net Zero scenario requires a 41% reduction of GHG emissions by 2030 against 2019 levels. Against 2019 levels, Eni’s 2030 target leads to a 35.3% reduction.
  3. Is Eni on track for 1.5°C? Analysis by Reclaim Finance, ReCommon and Greenpeace Italy, released in March.
  4. Carbon Tracker Initiative report, Oil companies should hedge their bets on offsetting and CCUS
  5. BP cost-cutting blamed for ‘avoidable’ Deepwater Horizon oil spill, The Guardian

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