Engagement with fossil fuel companies – “supply-side” engagement – has been a cornerstone of EOS’s climate change engagement over the last decade. In this time, oil and gas majors have committed to ambitious methane reduction targets, a greater consensus on coal phase-outs has been established, and at COP28 there was an unprecedented reference to transitioning away from all fossil fuels in the agreement text. Many oil and gas companies now have a transition narrative, with several European majors planning to invest between 20% and 35% of their capital expenditure on low carbon technologies by 2025.
However, with oil and gas prices providing strong and resilient commercial incentives, various indicators suggest that oil and gas majors’ strategies are not yet fully aligned with 1.5°C and the Paris Agreement. Engaging across a universe of companies, we are using our supply-side insights to strengthen our engagement efforts on the demand-side of the price equation. We encourage companies to imagine a net-zero future, to assess the viability of the solutions needed to get there, and to deliver the demand-led signal that 1.5°C can happen.
The demand for renewable electricity provides a case study for this engagement approach. In requesting that companies set 1.5°C-aligned targets and identify key actions to reduce their emissions accordingly, many companies in our engagement programme have increased their emphasis on renewable power purchase agreements (PPAs).
This has contributed to a dramatic increase in these contracts to a record high of 46GW globally in 2023. Elevated prices for PPAs, which provide a fixed contract insulated from fossil fuel price shocks, have contributed to the rapid build-out of renewables, delivering the decarbonisation of the electricity supply through a demand-side lever.
Read the full article in our Q2 2024 Public Engagement Report.
Engaging on demand-side climate solutions
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