Over the past few decades, concerns about the impact of carbon emissions on the environment and human health have led to a global push towards decarbonizing the energy sector. While this has been a slow and difficult process, there are some signs of progress.
Although communities around the world emitted more carbon dioxide in 2022 than in any other year on records dating to 1900, growth of energy-related emissions rose less than originally feared, decreasing to below 1% in 2022 according to IEA analysis. This has been driven by a combination of policy interventions, technological advances, and changing consumer behaviour. However, there is still much more work to be done if we are to meet the ambitious targets set by the Paris Agreement and avoid the worst effects of climate change.
But who is responsible for this work yet to be done? The energy industries that produce energy to meet the demand from users or the users themselves? The answer is both. While users (mainly consumers – for heat, air conditioning, light and personal transport, industrial processes, and transport) may be able to restrict their use of energy, their capacity to switch to renewable sources depends largely (though not entirely) on the efforts made by energy industries to switch to renewables. There are exceptions of course. Direct users of fossil fuels (such as in transport) can switch to sources of energy which may be renewable (such as electricity), but whether the net effect is to boost the renewable proportion depends on what the energy industries do.
The current situation
There are of course some parts of the energy industry that have little choice. Energy production companies, such as oil and gas extraction and coal mining, will always be complicit in producing emissions as long as users demand their products. ExxonMobil seems to have admitted this, but it still engages in greenwashing and is one of the most cited greenwashing examples in the industry. The same seems to be true of Shell and Chevron. While these companies may make investments in renewables, so long as power generation (whether in power plants, in industrial processes or in transport modes – land, sea or air) depends upon fossil fuels, these companies will be complicit in carbon dioxide emission. They may invest in renewable power production, but so can any industry.
Still, these energy production companies should be under pressure to help the global effort to switch to renewables, because they are very large companies with big resources, and because they understand and are used to working with the economics of energy production and use. Their work on biofuels, for example, is very important. Though it is important to recognise that even here, the actual burning of the fuel does generate carbon dioxide, which is recaptured by the plants from which biofuels are created, so if existing plants are used, the net effect is not to reduce emissions in the short term (and this does not take account of the many other ways in which cultivating biofuels generates emissions).
And so begins the greenwashing
This is where part of the energy greenwashing story starts. Energy production companies are under pressure to invest in renewables, and so produce advertising that promotes their clean energy initiatives. We believe that this is a distraction. It is not surprising that energy production companies – the oil and gas extraction and coal mining companies – feel the pressure to look green, but frankly their claims (even if false) don’t make much difference to green energy use.
We believe that energy distribution companies – those who make energy in all its forms available to energy users – have a bigger responsibility, because it is their decisions which make renewable energy available more easily and cheaply to users and whose statements about their own greenness can affect users’ choices. These include power distribution utilities, transport and industrial fuel distributors. It is they whose declarations about their environmental compliance have most impact on users’ decisions. Here, any greenwashing must be stamped out, because it leads to users making what they think are environmentally good decisions when they are not – for example, users switching to electricity which is claimed to be from renewable sources when it is not.
Greenwashing examples in the energy sector
In pursuit to portray a better public image, many oil and gas companies have recently dedicated extensive resources to making sustainability pledges and goals, highlighting their investment in renewable energies. This is however overshadowed by the numerous environmental damage cases and lawsuits that these companies have racked-up over the past decades. Instead of addressing these cases and taking ownership of their past indiscretions, these companies have to date focused their attention on sustainability campaigns and pledges. Below we explore case studies of some of the major oil and gas companies which critics believe are a more realistic indication of their true intentions.
Chevron
Chevron has been publicly criticised for promoting itself as a leader in the development of alternative energy sources, such as biofuels and wind power, while continuing to invest heavily in the exploration and production of fossil fuels.
The company has continually come under fire for running advertising campaigns highlighting its efforts to reduce emissions and promote sustainability which are misleading in that their company actions do not match its rhetoric. Meanwhile, their corporate sustainability reports highlight the company’s purported efforts to reduce its environmental impact. However many have critisized these for being vague and lacking in detail on examination.
Despite its efforts to present a green image, Chevron has faced several lawsuits related to environmental damage and pollution caused by its operations. In 2018, Chevron was prosecuted for violating the Clean Air Act (USA) aimed at preventing the release of hazardous chemicals that could pose risks for public health and the environment. Chevron U.S.A. settled to pay $2.95 million civil penalties. In 2022, Chevron Phillips was further ordered to pay $3.4 million in civil penalties for violating the Clean Air Act and state air pollution control laws.
In 2021, Global Witness, Greenpeace and Earthworks petitioned that the FTC should enforce their green guidelines against Chevron’s adverts (“Human Energy” and “We Agree”) touting their investment in renewables, as the company spent only 0.2% of its capital expenditures, roughly $26 million a year of its $13 billion average annual capital expenditure on lower-carbon energy sources.
One of the more infamous examples is the lawsuit filed by the indigenous communities in the Ecuadorian Amazon, who accused Chevron of dumping billions of gallons of toxic waste into their rivers and soil, causing widespread environmental damage and health problems. In 2011, a court in Ecuador ordered Chevron to pay $18 billion in damages, but the company refused to pay and instead filed a lawsuit against the Ecuadorian government. In 2015 an U.S. court however found that the Ecuadorian judgement was obtained through bribery and fraud and that it should not be enforced in the United States. Many people however, still sympathise with the plaintiffs and believe that Chevron’s victory might only be due to their exhaustive bank account and large legal team.
Chevron has also been publicly accused of funding climate denial campaigns and lobbying against climate action. In 2021, the company faced criticism for its lobbying efforts against the European Union’s proposed climate policies. The company has come under fire for funding politicians and political groups that oppose climate action. Action like this combined with several lawsuits against leads many to suggest that Chevron is doing little to address their environmental impact, and that what they are doing is only to portray a better public image.
Chevron’s response and mitigation efforts
Chevron has made statements and advertising campaigns that promote their efforts to reduce emissions and promote sustainability, positioning themselves as an environmentally friendly company. Their website’s sustainability section describes their commitment to reducing emissions, investing in renewable energy and promoting energy efficiency. Meanwhile, they have also released several reports on their sustainability performance, outlining their progress towards reducing emissions and promoting sustainable practices.
BP
BP had received several complaints for making several misleading advertising claims about its commitment to reducing greenhouse gas emissions that are not supported by its actions. Additionally, BP has been publicly denounced for its environmental impact in relation to oil spills, deforestation, and other environmental issues. Despite this, BP has announced plans to transition to cleaner energy, such as investing in renewable energy, electric charging and hydrogen. However, some critics argue that these steps are not enough to mitigate the impact of the company’s past and ongoing fossil fuel extraction.
In 2019, ClientEarth filed a complaint against BP alleging that their global ‘Keep Advancing’ and ‘Possibilities Everywhere’ advert campaigns were misleading to the public. The complaint claimed that BP was promoting their low-carbon energy products, despite over 96% of their annual spend being on oil and gas. The UK National Contact Point (NCP) conducted an initial assessment of the complaint, but it will not proceed further since BP has already withdrawn the campaign in question.
BP’s response and mitigation efforts
BP launched their “Reimagining Energy” campaign in February 2020. This campaign aims to highlight the company’s efforts to transition to a low-carbon future and promote its renewable energy projects. BP has also announced plans to become a net-zero company by 2050 or sooner, and to invest $5 billion over the next decade in low-carbon initiatives.
Given the 2019 controversies regarding BP’s advertisement campaigns, their acknowledgment that they need to transition away from fossil fuels and reduce its carbon footprint is thought to have a low credibility tied to it.
ExxonMobil
Similar to the above mentioned companies, ExxonMobil has been accused of greenwashing and climate change denial because of its past efforts to downplay the reality of global warming and its potential impacts. The company has been criticised for funding climate denial organisations and misleading the public and policymakers about the role that burning fossil fuels plays in causing climate change.
Critics argue that ExxonMobil knew about the risks of climate change for decades, but actively worked to spread doubt about the issue and delay action to reduce greenhouse gas emissions.
In 2016, the company was subsequently investigated by the U.S. Securities and Exchange Commission, but the commission decided to not proceed with their investigation after a 2 year investigation. This does however not mean that ExxonMobil has been exonerated or that no action may ultimately result from the investigation. In 2019, a lawsuit was also brought against ExxonMobil by Attorney General Maura Healey, alleging that the company knew its products were contributing to dangerous changes in the climate yet hid that information from Massachusetts consumers and investors. This case is still ongoing and currently in the discovery phase.
It’s worth noting that in recent years, Exxon Mobil has acknowledged the reality of climate change and pledged to take action to reduce its own emissions and support the transition to a low-carbon energy future. However, many remain sceptical of these claims, given the company’s history on the issue.
In 2017, the EPA, the U.S. Department of Justice, and the Louisiana Department of Environmental Quality agreed on a settlement with ExxonMobil after allegations that they violated the Clean Air Act. ExxonMobil was accused of producing excess emissions of harmful air pollutants. ExxonMobil settled to pay a civil penalty of $2.5 million.
The ExxonMobil algae-biofuel campaign has been criticised by many as the company also indulging in greenwashing tactics. These adverts show ExxonMobil’s high-tech algae farms, and describe how the company is unlocking an abundant, clean new source of energy which can one day reduce transport emissions. These adverts further note that by 2025 ExxonMobil could be producing 10,000 barrels of this biofuel a day. While this appears promising, this would only equate to 0.2 percent of the company’s current refinery capacity, and therefore will almost have no effect on reducing emissions.
ExxonMobil’s response and mitigation efforts
ExxonMobil has responded to the allegations of greenwashing and climate change denial by stating that it has always taken climate change seriously and has been working for many years to develop and deploy technologies to reduce greenhouse gas emissions. The company has also pointed to its investments in renewable energy and low-carbon technologies, such as carbon capture and storage, as evidence of its commitment to addressing climate change.
Regarding the allegations that it funded climate denial organisations, ExxonMobil has stated that it has supported a range of organisations that conduct research and advocacy on energy and environmental issues, and that it has always been transparent about its support for these groups. The company has also pointed out that it has publicly acknowledged the reality of climate change and the need to address it, and that it has supported policies and regulations to reduce greenhouse gas emissions.
In response to the allegations of false advertising related to its algae-biofuel campaign, ExxonMobil has stated that it believes its advertising is accurate and truthful, and that it is committed to developing and producing low-carbon biofuels as part of its efforts to address climate change. The company has also stated that it is transparent about the scale and potential impact of its biofuel production, and that it is committed to continued investment in research and development to improve the efficiency and sustainability of its biofuels.
Shell
Like many other fossil fuel companies, Shell has made significant investments in alternative energy sources, such as wind and solar power. However, some have argued that these investments are relatively small compared to the company’s investments in oil and gas, and that they are an attempt to greenwash its image and deflect criticism for its role in contributing to climate change. Just recently despite these bold claims, they have now scaled back their climate goals and pledges to cut back its oil and gas production by 40%, despite seeing annual profits that more than doubled to $28bn in 2022.
Despite Shell running advertising campaigns that highlight its efforts to reduce emissions and promote sustainability, Shell has been criticised frequently misleading the public with their advertisement campaigns to their true environmental impact. This all against a long history of environmental controversies, including oil spills, air and water pollution, and deforestation. One such example was in 2015, when Shell settled for a $55 million settlement with the U.S. EPA for the clean-up of contaminated soil and groundwater at the Del Amo Superfund site in Los Angeles, Calif.
The following advertisement campaigns were also all ruled to be environmentally misleading to the public.
In 2007 the ASA censured a press advert that showed refinery chimneys emitting flowers. The advert mentioned that “We [Shell] use our waste CO2 to grow flowers”, but the ASA ruled that this is environmentally misleading as most readers will interpret the ad, as Shell using all or ,ost of their waste CO2 to grow flowers, whereas in actuality only a small amount is used for these practices.
In 2007 the ASA deemed an advert by Shell in the Financial Times to mislead the public into thinking their oil sands project in Alberta, Canada was a sustainable energy source. The advert claimed that “We [Shell] invest today’s profits in tomorrow’s solutions”, which the ASA deemed to suggest that the project will be sustainable but that the terminology used was too vague and misleading to readers.
A 2019 radio advert by Shell was banned by the ASA as it was deemed to be misleading. The advert stated: “Although you might not be able to see it, your small actions can have a real impact with Shell. Drive carbon-neutral by filling up and using Shell Go+ today. Make the change. Drive carbon-neutral.”
Shell Go+ was a loyalty program that allowed customers to offset the carbon emissions associated with their fuel purchases by signing up and presenting their membership card when making a purchase. However, the ASA found that a radio advert promoting the scheme did not adequately explain how the offsetting worked, and that the claim “Drive carbon-neutral” was therefore misleading.
Shell’s response and mitigation efforts
Regarding the 2007 Financial Times advertisement, Shell asserted that the definition of “sustainable development” that they used was widely accepted. This definition emphasised the need to meet the present generation’s needs without jeopardising the ability of future generations to meet their own needs. Shell maintained that this definition supported the pursuit of strong economic and social development over time and recognised the significance of affordable and accessible energy in accomplishing this goal.
Shell has further responded to the criticisms by stating that they are committed to addressing climate change and reducing their carbon footprint. They have stated that they are investing in alternative energy sources, such as wind and solar power, and have set a target to become a net-zero emissions energy company by 2050 or sooner. In 2021, they announced a reduction of 18% of their carbon emissions (Scope emissions not specified) and plan to reduce scope 1 & 2 emissions by 50% by 2030.
Where does this leave us?
As we have pointed out in a previous blogs, the number one opportunity for the world to reduce emissions is to switch to forms of energy production which are clearly, directly and immediately renewable – wind, tidal, solar, and hydro, improved energy efficiency, clean hydrogen (and its derivatives), and improved carbon capture and storage which is slowly happening. As consumers’ and investors’ support for more sustainable business practices increase so does the incentive for oil & gas companies to engage in more greenwashing as prevalent in the above mentioned cases. Since there has been no indication that greenwashing is decreasing governmental agencies will have to step up and increase their regulations regarding these matters.
In the UK some of these regulations are starting to creep in as the CAP and BCAP have released updated guidelines on misleading claims and social responsibility in advertising specifically aimed at addressing false net-zero claims. The EU is also currently in the process of passing an anti-greenwashing regulation aimed at increasing disclosures surrounding environmental claims made about products.
Research has shown in the UK that the majority of electricity users would switch to green tariffs if it meant supporting transition to a clean energy system. However, many energy suppliers have fake green tariffs, meaning that they do not match energy sold as green with their buying of green energy. This is thus another regulatory matter, even, it could be argued, simply fraud. Similar bad practice is visible virtually everywhere in the energy supply chain. However, with the right data such as that supplied by Permutable, such practices can be identified by governments, regulators and users, and users’ decisions altered accordingly.
