Published by the International Energy Agency (IEA) ahead of this month’s COP28 climate talks in Dubai, the report called on oil & gas companies to make commitments that signify they are on board with global efforts to tackle the climate crisis. These include cutting emissions associated with fossil fuel production, massively ramping up investments in green technologies, and acknowledging that CCUS (carbon capture utilisation and storage) is not a magic bullet for the sector.
“COP28 will be a moment of truth for the oil and gas industry,” IEA executive director Dr Fatih Birol told assembled press via Zoom today (23 November). “It will show whether the oil and gas industry will be the partners of the fight against climate change or not.”
However, Dr Birol warned that the sector has enormous work to do.
“When we look at the situation today,” he said, “the starting point is not very encouraging.”
According to the IEA report, annual clean energy investment has reached around $1.8 trillion. The amount the oil & gas industry is contributing to this figure is miniscule, however.
“The share of the oil & gas industry in the global clean energy investment is less than one per cent, just to put things in context,” said Dr Birol. “We believe it’s important to put the numbers on the table.”
According to the IEA, there are two main areas where the oil & gas sector can contribute to the fight against climate change. Firstly, the agency is calling for a reduction in emissions associated with oil & gas production, with particular attention to methane emissions. Oil & gas operations account for 15 per cent of total energy emissions, before the final product is even consumed. This is equivalent to the total emissions of the US.
“These emissions, including methane emissions, we know they can be fixed easily, quickly and – in many cases – in a cost-effective manner,” said Birol.
At COP28, the IEA wants the oil & gas sector to commit to reducing production emissions by 60 per cent by 2030.
“If they commit to that, this would give them an ‘entry ticket’ to be a genuine part of the fight against climate change,” said Birol.
The second change the IEA is calling for is increased investment in the green economy. According to the agency’s report, there are numerous overlapping areas where the oil & gas sector’s existing skills could be applied to greener energy, including hydrogen, biofuels, offshore wind and CCUS. A higher proportion of the industry’s enormous revenues must be funnelled into these technologies if a successful energy transition is to take place.
“Today only 2.5 per cent of the total capital expenditure of the oil & gas industry goes to clean energy,” said Birol.
“The number is really disappointing…in my view and my colleagues’ this 2.5 per cent contradicts…with the clean energy statements coming from the oil & gas industry. Therefore, we suggest in our report that if the oil & gas industry wants to be a real, genuine partner to address the climate crisis, we think this 2.5 per cent, by 2030, reaches about 50 per cent.”
The executive director also had stark words for the industry on carbon capture technologies, warning that it was simply not possible for CCUS to allow the oil & gas sector to continue operating as it does now. He said that CCUS must be complementary to emissions reductions rather than a replacement for them. Claiming CCUS alone was compatible with climate targets was, according to Birol, “pure fantasy”.
The IEA calculated that for CCUS to offset ‘business-as-usual’ oil & gas consumption, an annual investment of $3.5 trillion would be required. This is 1,000 times the current annual levels of CCUS investment.
“The numbers don’t work at all” said Birol. “Reducing fossil fuels emissions means reducing fossil fuels use. There is no way around it.”
COP28 will take place in Dubai from 30 November to 12 Dec 2023.