Saying is one thing, doing is another. Oil majors have, over the past several years, rolled out pledges to decrease oil and gas production and slash their emissions, citing concerns about the climate crisis. But in reality, their actions are far from aligned with the Paris agreement and the 1.5°C goal.
On Thursday, just days ahead of United Nations Conference of Parties (COP28), the International Energy Agency (IEA) released a 224-page report titled “The Oil and Gas Industry in Net Zero Transitions”, which demands answers to some critical questions and appeals for a more genuine partnership from the industry to fight climate crisis.
The report said even under today’s policy settings, global demand for both oil and gas is set to peak by 2030. Stronger action to tackle climate change would mean clear declines in demand for both fuels. If governments deliver in full on their national energy and climate pledges, demand would fall 45% below today’s level by 2050. In a pathway to reaching net zero emissions by mid-century, which is necessary to keep the goal of limiting global warming to 1.5°C within reach, oil and gas use should decline by more than 75% by 2050.
“COP28 in the Middle East, a major oil and gas producing region, will be a moment of truth for the industry. It will show whether or not the industry will be a partner in the fight against climate change,” IEA Executive Director Fatih Birol said, addressing the media from the agency’s headquarters in Paris. He said with the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible. Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector.
Just 2.5% invested in clean energy
The IEA report says clean energy investment by the oil and gas industry represented 2.5% of its total capital spending in 2022. In the net-zero energy scenario, projected oil and gas revenues would allow the industry to invest around 50% of its capital budget in 2030 in clean energy. “Achieving this level of investment would require governments, companies, shareholders and financial actors to work closely together. It is not axiomatic that oil and gas companies should invest in clean energy. If they do not, they would need to achieve very low emissions intensities and stop investment in new long lead time upstream projects if they are to claim that they are making a meaningful contribution to achieving net zero emissions by 2050,” the report said.
This year, all the clean energy investments in the world put together is around $1.8 trillion and the share of the oil and gas industry in the global clean energy basket is less than 1%. This, IEA chief says, was in contrast to the statements being made by the industry leaders off-late.
COP28 CEO Adnan Amin said: “....The (IEA) report specifically notes that all sectors must be part of the solution. Real tangible climate action will only come with everyone at the table, and we have always said that we cannot have an energy transition without the energy industry. I have consistently called on oil and gas to aim for the highest possible ambitions and deliver urgent action through decarbonisation. We believe the oil and gas industry can do more.”
Cut emissions by 60% by 2030
As of today, the oil and gas industry’s emissions, both carbon dioxide and methane, account for 15% of the total global energy-related greenhouse emissions, which is equivalent to US emissions. Birol said the IEA’s suggestion to the oil and gas industry would be to commit itself in Dubai to reduce its own emission by 60% by 2030, which would put it in alignment with the Paris agreement. “If they do that, it will provide an entry ticket for them to be genuine partners in the fight against climate crisis,” he said.
CCUS not a solution, but pure fantasy
COP28 president Sultan Ahmed Al Jaber has been openly promoting carbon capture, utilisation and storage (CCUS) technology. In May this year, Al Jaber, who is the boss of UAE oil company Adnoc, said: “If we are serious about curbing industrial emissions, we need to get serious about carbon capture technologies.” Birol, however, said CCUS is an essential technology, probably for certain sectors like cement, iron and steel. But, if the industry says it will continue to produce oil and gas and meet climate targets by carbon capture, then it is not a solution but a pure fantasy.
The IEA analysis shows if oil and natural gas consumption were to evolve as projected under today’s policy settings, this would require an inconceivable 32 billion tonnes of carbon captured for utilisation or storage by 2050, including 23 billion tonnes via direct air capture to limit the temperature rise to 1.5°C. “The necessary carbon capture technologies would require 26,000 terawatt hours of electricity generation to operate in 2050, which is more than global electricity demand in 2022.
