Equinor is a fully integrated oil and gas company headquartered in Norway, with majority state ownership. In 2020, it had USD 45.77 billion in revenue and a reported 21,245 employees*. Equinor primarily operates in Norway, the UK, Brazil and the USA. Although it has detailed plans to develop low-carbon businesses, these are undermined by its continued investment in new oil and gas fields.
Equinor has conducted detailed climate scenario analysis and published information on value-at-risk from climate-related risks. The scenario analysis primarily uses the International Energy Agency’s (IEA) scenarios, including its Stated Policies Scenario and Sustainable Development Scenario. The impact of these scenarios and their different oil and carbon prices on Equinor’s portfolio are expressed in terms of impact on net present value (NPV). The Sustainable Development Scenario lowers the NPV of the company’s portfolio by 22%. The company should complete further scenario testing against the IEA’s Net Zero Emissions by 2050 Scenario.
Equinor is focusing on reducing emissions in the maritime sector, which accounts for 65% of its supply chain emissions. It has set a target to halve maritime emissions in Norway by 2030 in line with the Norwegian government’s target, and to halve maritime emissions globally by 2050, in line with the less ambitious International Maritime Organisation (IMO) target.
Equinor is using its purchasing power to drive maritime emissions down, requiring all its supply vessels to have hybrid battery power and providing incentives for fuel-efficient operations. It is also aiming to increase production and use of low-carbon fuels by 2030 and is collaborating with suppliers to develop the world’s first ammonia-powered fuel cell on a vessel.
Equinor has set out time-bound plans with deployment schedules to develop three low-carbon business areas: renewables, CCS and hydrogen. It is aiming to increase its renewables capacity from 0.6 gigawatts (GW) to 4-6 GW by 2026 and 12-16 GW by 2030, with a focus on offshore wind farms. For CCS, it is focusing on transport and storage of captured carbon and post-combustion capture. It aims for 15-30 million tonnes per annum of CO2 transport and storage capacity by 2035, equivalent to 25% of the European market share. Equinor also aims to supply clean hydrogen to 3-5 major industrial clusters by 2035, equivalent to 10% of the European market share.
Equinor has set a target to reduce its upstream scope 1 and 2 emissions intensity from 9.5 kg CO2 per barrel of oil to 6 kg by 2030. This target is aligned with the company’s 1.5°C pathway for its upstream activities, as the company already reports low scope 1 emissions. However, this target excludes scope 2 and methane emissions, though methane only accounted for about 3% of Equinor’s upstream emissions in 2019. Equinor has also set a target to keep its methane emissions intensity near zero by 2030.
Equinor can improve further by establishing a scope 1 and 2 emissions reduction target that covers its midstream activities such as refining, which accounted for nearly 32% of its total scope 1 and 2 emissions in 2019.
Equinor’s locked-in scope 3 emissions from its upstream activities are expected to exceed its corresponding 1.5°C carbon budget by 24% between 2019 and 2050. This does not account for development of new, unapproved oil and gas fields. According to the IEA, no new oil and gas fields can be approved for development under a 1.5°C scenario. Despite this, Equinor intends to spend USD 0.9 billion on exploration activities in 2021.
Equinor is increasing the proportion of its capital expenditure (CapEx) in low-carbon projects and technologies to mitigate climate change. Equinor invested 3% of its CapEx in low-carbon solutions in 2019 and increased this to 4% in 2020. The company expects to invest significantly more of its CapEx in renewables and low-carbon solutions in the coming years: 12% in 2021, more than 30% by 2025 and more than 50% by 2030. However, given that oil and gas companies need to dedicate 77% of their CapEx to low-carbon technologies to align with a 1.5°C scenario, an even more rapid reallocation of capital would help Equinor become a leader in its low-carbon business activities.
Equinor receives a trend score of =. If the company were reassessed in the near future, its score would likely remain the same. Its absolute emissions from current oil and gas fields and reserves are expected to exceed its 1.5°C carbon budget by 24% between 2019 and 2050. Likewise, its projected short-term emissions intensity trajectories suggest the company is not on track to deliver the rate of reductions required by its 1.5°C pathway.
However, Equinor is planning to increase its CapEx in low-carbon projects and has clear plans to develop three low-carbon business areas. These will enable the company to reduce scope 3 emissions intensity. It is also expected that Equinor will soon start reporting current and expected revenue from its newly-created renewables segment.
Equinor is aiming to reduce its scope 1, 2 and 3 carbon intensity by 40% by 2035 and by 100% by 2050, though this target includes offsets. It also aims to reduce its upstream scope 1 and 2 emissions intensity to 6 kg CO2 per barrel of oil equivalent by 2030.
Equinor has set targets to expand its renewable, hydrogen and CCS businesses. It aims to invest more than 30% of its CapEx in renewables and low-carbon solutions by 2025 and more than 50% by 2030. It is seeking to reduce oil and gas production emissions through electrification and efficiency.
In 2019, Equinor invested 20% of its research and development (R&D) expenditure in low-carbon projects, and increased this share to 32% in 2020. It uses an internal carbon price of USD 56, except in countries such as Norway where the actual carbon price is used as it is higher. However, the company is also investing USD 0.9 billion in 2021 in exploring for new oil and gas fields.
Equinor’s ambition to develop low-carbon business activities is undermined by its continued investment in new oil and gas fields. It reviews trade associations’ positions on climate change and has left two trade associations as a result, but it continues to be a member of other trade associations opposing climate policy.