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Oxy’s plans for “net-zero oil” and carbon removal offsets spell trouble for the climate – report

The net-zero strategy of Occidental Petroleum (Oxy) relies heavily on unproven carbon removal technologies to camouflage its fossil fuel emissions and those of its customers while expanding its oil and gas production, a new investigation reveals.

Released on 2 May 2024, to coincide with Oxy’s annual general meeting, the Carbon Market Watch report, ‘Net-zero oil company: climate action or oxymoron?’, takes a deep dive into Oxy’s climate strategy. We assess the oil and gas corporation’s publicly available climate documents, pronouncements and projects.

The in-depth analysis reveals that not only does Oxy’s net-zero strategy conflict with the Paris Agreement’s goal of limiting global warming to 1.5°C, it also underplays the significance of indirect emissions and focuses far too much on experimental technologies, such as direct air capture (DAC), instead of committing to deep and rapid emissions reductions through winding down fossil fuel production. In fact, the company intends to use carbon removals as a licence to expand its oil and gas output.

“Oxy’s net-zero strategy fuels the climate crisis. The oil major’s massive investments in oil production and offsetting with unproven technologies are clearly intended to perpetuate the fossil fuel age. Plucking carbon out of the air is no substitute for keeping it in the ground,” says Wijnand Stoefs, CMW’s lead expert on carbon removals and co-author of the report.

Airy tales

Diagram: Noemí Rodrigo, Carbon Market Watch

A central pillar of Oxy’s climate plans is to invest heavily – including using taxpayers’ money – in energy-guzzling and unproven-at-scale direct air capture technology. Its flagship STRATOS facility was initially meant to suck a million metric tonnes of carbon dioxide out of the atmosphere, but this advertised capacity has been slashed by half and we will have to wait and see what the final capacity will be when it comes online in 2025.

Moreover, when the lifecycle emissions associated with the plant are factored in, STRATOS’s net removal capacity plummets to a mere 195,000 tonnes.

The doubts surrounding the plant’s real capacity have not stopped Oxy from selling DAC carbon credits to its customers (including AT&T, TD Bank and Trafigura) to enable them to offset their emissions. More worryingly still, it has not stopped Oxy from indicating that it intends to use captured carbon to pump more petrol out of the ground through a process known as enhanced oil recovery, to market “net-zero oil” products and even potentially to offset Occidental’s own colossal emissions.

These plans are extremely far-fetched, to put it mildly. Even if Oxy were able to construct the 135 DAC plants it intends to build by 2030 and use them to offset its own emissions, this would only cover 11% of its carbon footprint, if the plants have the same capacity as the flagship STRATOS plant.

“Oxy’s misguided climate strategy is not only damaging to the climate, it is also ultimately harmful to its bottom line,” concludes Marlène Ramón Hernández, CMW expert on carbon removals and co-author of the report.  “The company, its investors and customers are all at risk of being left with stranded assets and fending off greenwashing lawsuits. ‘Net zero oil’ doesn’t exist.”

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