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Commentary: Occidental Petroleum's climate strategy lacks credibility; company's plan relies on untested direct air capture technology, with unrealistic targets and uncertain emissions reductions

June 6, 2024 (press release) –

Our investigation into Occidental Petroleum’s heavy investment, including taxpayers’ money, in untested direct air capture reveals the huge dangers involved in misusing carbon removals as a substitute for genuine climate action.

By assessing the validity and feasibility of the climate plans of one of the leading advocates of carbon removals in the oil and gas sector, our latest report contributes to a broader discussion on the role of these technologies in the clean energy transition.

Our investigation assesses Occidental Petroleum’s (Oxy) publicly available documents, pronouncements and projects and tests them against the climate goals of Paris Agreement using established scientific standards for the oil and gas industry. The report also evaluates Oxy’s engagement with carbon capture and utilisation, direct air capture, carbon markets, and its misleading “net-zero oil” claims.

Camouflaged intent

Our investigation reveals a clear intent on the part of Oxy to camouflage its intent to perpetuate the fossil fuel age by raising its oil and gas production behind a thick cloud of climate buzzwords. The evidence reveals that Oxy’s climate strategy is not credible: it signals a desperate attempt to legitimise big oil activity as opposed to meaningfully contributing to the transition towards a new, low-carbon society.

Oxy’s net-zero strategy is vague and lacks ambition. It has set just one net-zero greenhouse gas emissions target by 2040, but only for its direct and indirect energy-related (scope 1 and 2) emissions. Despite accounting for approximately 90% of the company’s greenhouse gases, targets to reduce indirect supply chain emissions (scope 3) are merely aspirational, with little to no concrete details. Moreover, no target to achieve net zero by 2050 has been set.

Out of thin air

Oxy also relies on experimental technologies, such as direct air capture, to continue business-as-usual activities. Its flagship project (STRATOS) is under construction as we speak, and Oxy has set itself the seemingly unrealistic and costly target of constructing 135 DAC facilities by 2030.

STRATOS was initially meant to suck a million metric tonnes of carbon dioxide out of the atmosphere, but this ambition has been slashed in half as construction has moved from design to realisation. This raises questions over whether the final capacity of the plant will fall further as the project moves from realisation to reality. This would be incredibly problematic, since even at 500,000 MT, STRATOS’s net removal capacity already plummets to a mere 195,000 tonnes, once lifecycle emissions associated with the heat and power needed both to build and run the plant are factored in.

Despite the huge uncertainty surrounding this experimental technology, Oxy intends to use DAC to offset its own emissions. However, even if Oxy were able to construct the 135 DAC plants, and assuming the plants have the same capacity as the STRATOS facility, this would only cover 11% of its carbon footprint.

The situation becomes even more alarming when you consider Oxy has already pre-sold DAC carbon credits to its customers (including AT&T, TD Bank and Trafigura) to allow them to offset their emissions. This leads to a very real risk of double counting if companies purchasing these credits and Oxy use the capacity of the same facilities to  offset their own emissions. Another risk involves both companies and countries using these DAC facilities towards climate targets.

Oiling the wheels of industry

Oxy is investing far more in fossil fuel production than in reducing its emissions. In 2023, Oxy allocated approximately $5 billion towards the development of its fossil fuel assets, compared with a mere $656 million spent on its Paris-incompatible “net-zero pathway”, which includes the construction of STRATOS. Throughout 2023, for every dollar Oxy spent on questionable climate action, it directed $7.60 into oil and gas activities.

Oxy intends to produce up to 1.3 million barrels of oil equivalent per day in 2024, representing as much as a 10% increase in oil and gas production compared to 2022. This flies in the face of IPCC and IEA guidelines demanding a reduction in global oil and gas production.

Moreover, Oxy has indicated that it intends to use captured carbon to produce so-called “sustainable aviation fuels” (SAF) and for enhanced oil recovery (EOR), a process whereby CO2 is injected into oil and gas wells to pump more fossil fuels out of the ground. The latter is being marketed as “net-zero oil”, which is a contradiction in terms, as the crude oil will still pollute the atmosphere and harm public health.

Both SAF and “net-zero oil” are misleading claims and risk exposing Oxy, its investors, and customers to massive reputational damage and possible anti-greenwashing legal action. Moreover, neither of these techniques represents a removal: they do not directly capture CO2 from the atmosphere and permanently store it underground. SAF leads to the rerelease of previously captured carbon. Meanwhile, EOR increases fossil fuel production and leads to an overall increase in emissions; the initial amount of CO2 used for oil extraction is inferior to the subsequent quantity of carbon dioxide that is emitted when the oil is burnt.

Coming clean

Overall, Oxy’s climate strategy undermines internationally agreed goals and fails to bring about the much-needed transition in this highly  polluting sector. As an oil major, Oxy must contribute to green goals, not exacerbate the climate crisis.If Oxy is serious about its climate responsibility, it must set clear and ambitious targets. This includes implementing deep and rapid emissions reductions across all scopes. Similarly, Oxy must align its investments with 1.5°C pathways and take measures to stop profiting from climate destruction. This involves winding down fossil fuel production, setting an explicit end date for oil and gas extraction, and abandoning offsetting.

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