Some of the world's largest corporate emitters are increasingly selling off dirty assets in a bid to look greener on paper.
— all publicly held firms with net-zero targets — sold off their interests in an onshore oil mining field in Nigeria last year to a private-equity backed operator. EDF says top sellers like Shell, for example, are well positioned to pilot climate-aligned asset transfers.
Between 2013 and the point of transfer, almost no routine flaring had occurred under the stewardship of TotalEnergies, Eni and Shell, the top seller of assets from 2017 through to 2021, according to the EDF's analysis. Almost immediately thereafter, however, flaring dramatically increased. The case study was said to highlight the climate risks stemming from upstream oil and gas transactions. Gas flaring is the burning of natural gas during oil production. This releases pollutants into the atmosphere, such as carbon dioxide, black carbon and methane — a potent greenhouse gas.ending this "wasteful and polluting" industry practice is central to the broader effort to decarbonize oil and gas production.A 'wink wink, nod nod approach' Andrew Logan, senior director of oil and gas at nonprofit Ceres, told CNBC that EDF's research shows there has been something of a "wink wink, nod nod approach" to transferred emissions to date, whereby energy majors sell off high-polluting assets without worrying too much about whether the purchaser is going to do what they are supposed to. "But what's interesting is that those private equity firms tend to be backed by public money. You know, it is public pensions funds that are the partners in those firms so there is leverage there," he added.oil and gas giants for selling out to private firms during the COP26 climate conference in Glasgow, Scotland, last year. Fink said the practice of public disclosed companies selling high-polluting assets to opaque private enterprises "doesn't change the world at all. It actually makes the world even worse." In July 2021, some of the world's largest oil and gas majors were ordered to pay hundreds of millions of dollars as part of a $7.2 billion environmental liabilities bill to retire aging oil and gas wells in the Gulf of Mexico that they used to own.Ceres' Logan said that an important part of responsible asset transfer must be reckoning with the costs of shutting down wells at the end of their lives. In North America, for example, he highlighted the "huge problem" with so-called "orphan wells." These are oil and gas wells abandoned by fossil fuel extraction industries which can end up in the hands of companies with no ability or intention of cleaning them up. "It is interesting to look at how different the asset sale process is in most of North America compared to the assets in the Gulf of Mexico because, in the Gulf of Mexico, there are federal rules that basically say if you sell an asset and the next company — or the next, next, next company doesn't clean it up — that liability comes back to you," Logan said. "So, you have a very strong interest in picking your partners wisely and making sure they have the money to clean the well."
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