Several of the world's largest automakers may be under-reporting vehicle emissions, according to a new analysis that estimates some automotive investments are as carbon intensive as investments in oil and gas companies.
The June analysis, Oil Companies in Disguise, was published by Carbon Tracker, a London, U.K.-based financial think tank that studies climate risk and capital markets. Written by Ben Scott, head of energy demand at Carbon Tracker, it examined 17 automakers representing roughly 80% of global passenger vehicle sales.
Scott identified what he describes as a carbon gap between emissions disclosed by automakers and estimated real-world vehicle emissions. Across the manufacturers studied, the analysis estimated a median gap of 33%.
According to the document, the gap is largely driven by assumptions about vehicle lifetime mileage, hybrid vehicle usage and fuel-production emissions.
One of the central measures examined is Scope 3 Category 11 emissions, which refers to emissions produced when customers use a company's products. For automakers, that generally means emissions generated while vehicles are being driven.
The analysis states that current reporting methods can understate real-world emissions exposure because some disclosures rely on conservative mileage assumptions, hybrid usage estimates or accounting boundaries that exclude upstream fuel-production emissions.
“Automakers are the gatekeepers of future oil consumption,” said Scott. “Passenger vehicles are the largest source (27%) of global oil demand and every ICE or hybrid vehicle sold today locks in 10-20 years of additional consumption.”
Scott also wrote that hybrid-heavy transition strategies risk extending future oil demand and increasing exposure to stranded assets as markets move toward electrification.
In investment parlance, a stranded asset is an investment that loses value sooner than expected because of technological, market or regulatory changes.
The research also compared emissions intensity against enterprise value, a measure of a company's total value that includes both market capitalization and debt. Among the oil companies included in the analysis, ExxonMobil recorded a figure of 1.4, BP 1.9, Chevron 2.1 and Shell 4.0, the highest among the petroleum producers examined.
Several automakers exceeded those benchmarks. Mazda recorded the highest figure in the study at 10.2 tonnes of carbon dioxide equivalent per unit of enterprise value, followed by Mitsubishi at 9.9. Subaru reached 5.9, Stellantis 5.3 and Geely 4.6, placing all three above Shell.
Suzuki matched Shell at 4.0, while Nissan reached 3.6. Hyundai and General Motors each recorded 3.2, roughly double ExxonMobil's figure.
At the lower end of the scale, BYD recorded the lowest emissions intensity among automakers at 0.3. Mercedes-Benz followed at 0.9, BMW at 1.0, Renault at 1.2, Volkswagen at 1.4 and Toyota at 1.5.
“Automakers’ flawed emissions reporting masks the reality that a dollar invested in legacy automotive firms is in many cases just as carbon intensive as a dollar invested in oil and gas,” said Scott.
