The recent surge in oil prices has given the state-owned energy giant an excellent reason to pump more oil. In the short run that will cause Aramco’s emissions to spike. Longer term, it could undermine Saudi Arabia’s broader pledge to reach net-zero emissions by 2060.
Aramco has backed the Paris Agreement and helped to launch the Oil and Gas Climate Initiative, which seeks to limit global warming to well below 2 degrees Celsius and possibly even to 1.5°C. But the Saudi company’s latest emissions trajectory is at odds with science-based targets that require oil majors, including Aramco, to sharply cut emissions much sooner in order to hit targets set for 2050. That’s especially crucial if the 1.5°C goal is to remain viable.
“It’s hard to see how any company that supports the Paris Agreement does not need to substantially cut absolute emissions by 2035,” said Mike Coffin, head of oil, gas and mining at Carbon Tracker, an energy think tank.
The anomaly shows up in Aramco’s first dedicated sustainability report published last week, where it noted that absolute emissions in 2035 will be almost the same as the level recorded in 2021. In that period, Aramco expects to increase oil production by 1 million barrels a day by 2027 and boost gas production by 50% by the end of this decade. While that means its emissions per unit of fossil fuels extracted may fall, it’s not enough to meet the Paris climate goals.
Other oil companies are planning to cut emissions much quicker. British oil giant BP Plc, for example, aims to reduce total emissions by more than 20% by the end of the decade. The company expects there will be less demand for its core product in the coming years, with its energy outlook published earlier this year forecasting that global oil consumption will probably fall 25% by 2035 if the world continues to strive to reach net-zero emissions by 2050.
“Many scenarios show that demand for energy and petrochemicals will increase, as the global economy grows and living standards in developing countries improve,” Aramco said in response to questions. “We have a critical role to play in meeting that rising demand by providing secure, reliable and affordable energy — particularly as a low-cost producer with one of the lowest upstream carbon intensities in the industry.”
Aramco began disclosing its emissions in 2019, when it listed on the Saudi stock exchange. But those disclosures do not follow practices used by most international oil companies, leaving out vast amounts of emissions that ought to be on Aramco’s carbon ledger.
The world’s most valuable company by market capitalization only discloses Scope 1 and 2 emissions. These direct emissions are generated either by a company’s own assets, such as burning gasoline in company cars, or on behalf of its energy use, such as from oil-powered utilities. In 2021, those disclosures totaled 68 million metric tons and are expected to reach 67 million tons in 2035. Aramco’s net zero by 2050 target announced last year is also limited to only Scope 1 and 2 emissions.
As Aramco increases oil and gas production, the company’s emissions will inevitably rise. The process of extraction involves energy-intensive steps like drilling, pumping and transporting. That energy is typically derived from burning a small portion of the very fossil fuels it extracts. Despite that, Aramco expects emissions in 2035 to remain at 2021 levels through measures such as building plants that capture and bury carbon emissions. Currently, the company has facilities that can store away 800,000 tons of CO₂ and expects to have the capacity to bury 11 million tons by 2035.
Aramco leaves out Scope 3 emissions from its disclosures and climate targets. Those are generated when customers burn the oil and gas extracted by the company. Most international oil companies reveal this data and it’s crucial because it often makes up more than 80% of their total emissions. Aramco’s Scope 3 emissions are likely to exceed 1.6 billion tons, according to a Bloomberg Opinion estimate. If correct, that’s more than 3% of global annual greenhouse gas emissions.
“Our focus is on the measurement, reporting and management of those emissions within our control,” Aramco said in response to questions. “But we recognize that we have an important role to play in working with our suppliers and customers to reduce emissions along the entire value chain of our products.”
Aramco’s disclosures have improved following greater scrutiny. In 2021, a Bloomberg Green report found that the company was only reporting emissions from wholly owned assets in Saudi Arabia. Soon after, Aramco began including fully owned assets around the world.
The company still leaves out emissions from assets in which it shares ownership. For example, the company now includes emissions from the Motiva refinery in Texas that it fully owns, but it does not include the emissions from the Satorp refinery of which it controls only 62.5%. The rest is held by French giant TotalEnergies SE, which includes the facility’s emissions as a portion of its equity share in its full emissions count.
Using such a limited definition leaves out emissions from many chemicals and refining plants — some of them among the world’s largest — that potentially add up to tens of millions of metric tons of CO₂-equivalent in Scope 1 and 2 emissions, according to Bloomberg calculations.
“Companies profiting from assets ought to take responsibility for their share of emissions from those assets,” said Coffin.