Major energy companies withdraw from SBTi draft guidelines after proposed ban on new oil and gas fields

In a significant development for the global energy sector, Shell and several other leading oil and gas companies have stepped away from a six-year initiative to establish a “net zero” emissions standard for the industry. According to documents reviewed by the Financial Times, the companies withdrew from the Science Based Targets initiative (SBTi) after draft guidelines recommended halting the development of new oil and gas fields—a requirement they deemed untenable for their operations.

The SBTi, a respected standard-setting organization in the climate space, launched the oil and gas standard effort in 2019 with the aim of providing a clear pathway for fossil fuel producers to align their activities with the goals of the Paris Agreement. Early drafts of the standard emphasized deep cuts in carbon emissions and proposed that companies cease new fossil fuel extraction projects by the end of 2027 or upon the submission of their climate plans. These provisions, viewed as too rigid, prompted key members of the industry to reconsider their involvement in the process.

Shell, Europe’s largest oil major, publicly criticized the draft guidelines for failing to reflect the practical realities of energy markets. In its withdrawal statement, the company argued that a blanket prohibition on new fields would not accommodate the nuanced needs of different regions and technologies. Aker BP and Enbridge, among others, also exited the initiative, citing limited influence over the final standard and concerns about operational feasibility.

In response to the departures, SBTi officials announced a pause in the development of the oil and gas standard, attributing the delay to internal capacity constraints. The organization insisted that the decision was not directly caused by industry pushback. However, the suspension coincided with the appointment of David Kennedy as SBTi’s new chief executive, who has since pushed back the timeline for financial institutions’ guidance—moving the deadline for ending support for new oil and gas ventures from 2025 to 2030.

The retreat from the net zero standard has drawn criticism from climate advocates, who warn that it could undermine efforts to limit global warming to 1.5°C above pre-industrial levels. By softening the criteria for fossil fuel producers, the pause risks delaying critical emissions reductions and allowing for expanded extraction activities in vulnerable regions. Critics argue that without a robust benchmark, companies will lack the incentive to pivot toward cleaner energy solutions.

Supporters of the companies’ decision contend that a more flexible approach is needed to balance energy security and climate goals. They stress that an abrupt cessation of new field development could exacerbate energy shortages and economic instability, particularly in developing markets. The debate highlights the complex trade-offs between ecological imperatives and the global demand for affordable, reliable energy.

Analysts suggest that the impasse may catalyze a broader reassessment of industry-led climate frameworks, prompting a shift toward hybrid models that combine emissions reduction targets with transitional allowances for new projects. Whether the SBTi—or an alternative body—can reconcile these competing priorities remains to be seen, but the current stalemate underscores the formidable challenges in steering the world’s leading oil companies toward a net zero future.