Ahead of COP28, the International Energy Agency (IEA) released a report urging oil and gas industries to move away from the belief that carbon capture resolves climate issues and to instead invest in clean energy solutions.
The ‘Oil and Gas Industry in Net Zero Transitions’ report maps a responsible path for the sector to positively impact the changing energy landscape. IEA projections suggest global oil and gas demand could peak by 2030, with steeper declines possible with stricter climate policies, aligning with Paris Agreement targets requiring a substantial 75% reduction in oil and gas use by 2050. Shockingly, only 1% of clean energy investment originates from oil and gas companies, with the top four players contributing 60%.
“The oil and gas industry is facing a moment of truth at COP28 in Dubai. With the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible,” said Fatih Birol, Executive Director of the IEA. “Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector.”
“The industry needs to commit to genuinely helping the world meet its energy needs and climate goals – which means letting go of the illusion that implausibly large amounts of carbon capture are the solution.”
The report underscores the necessity of a 60% reduction in the industry’s emissions by 2030 to align with a 1.5°C scenario. Prioritizing the mitigation of methane emissions, which constitute half of oil and gas operations’ total emissions, is considered both cost-effective and well-established.
Current annual investments in the industry, standing at $800 billion, exceed the requirements for a 1.5°C pathway by 2030, prompting a re-evaluation of spending on new projects.
Around 30% of energy consumed in a decarbonized system by 2050 could benefit from the industry’s expertise, including technologies like hydrogen, carbon capture, offshore wind, and liquid biofuels.
The IEA urges a significant financial shift, proposing that 50% of producers’ capital expenditures be directed toward clean energy projects by 2030 to capitalize on these opportunities.
While carbon capture remains a component of transition strategies for many firms, the report cautions against relying solely on it, citing projections indicating unsustainable carbon capture volumes and electricity demands.
“The fossil fuel sector must make tough decisions now, and their choices will have consequences for decades to come,” said Dr Birol. “Clean energy progress will continue with or without oil and gas producers. However, the journey to Net Zero emissions will be more costly, and harder to navigate, if the sector is not on board.”