In a recent report, the International Energy Agency (IEA) highlighted a critical decision facing the oil and gas industry: continue contributing to the climate crisis or pivot towards becoming a part of the solution. As the world grapples with escalating climate challenges, the industry's current investment in clean energy stands at a mere 1% of the global total.
This, combined with the continuous emission of large quantities of greenhouse gases, including the highly potent methane, poses a serious threat to global climate targets. The urgency of this situation is underscored by the IEA's emphasis on the need for rapid and drastic action.
To limit global temperature increases to 1.5 degrees Celsius above pre-industrial levels—a goal widely regarded as critical to averting the worst impacts of climate change—the industry must take decisive steps.
COP28 and the Need for Transformation
This warning from the IEA arrives just as the world prepares for COP28, the upcoming United Nations climate summit. Recent UN analyses paint a bleak picture, projecting a potential global temperature rise of nearly 3 degrees Celsius by the century's end.
Such an increase could trigger catastrophic and irreversible events, including the collapse of polar ice sheets. IEA Executive Director Fatih Birol, in a statement, stressed the industry's "moment of truth" at COP28 in Dubai.
He emphasized that continuing business as usual is no longer an option, considering the worsening impacts of the climate crisis.
Key Steps for the Industry
In the report titled "The Oil and Gas Industry in Net Zero Transitions," Birol outlined two critical measures the industry must adopt.
Firstly, it needs to drastically reduce greenhouse gas emissions from its operations, encompassing extraction, processing, and delivery. These activities account for nearly 15% of global energy-related emissions. Birol noted that many of these emissions, including methane, can be addressed effectively and cost-efficiently.
The IEA report specifies a target of reducing emissions by more than 60% by 2030 from current levels. The second measure involves a significant increase in investments in renewable energy by the industry. Despite investing about $20 billion in clean energy last year, this only constituted approximately 2.5% of its total capital expenditure.
The IEA recommends increasing this share to 50% by 2030 to meet the 1.5-degree target.
The Role of Carbon Capture Technologies
While oil and gas companies have invested in carbon capture technologies, Birol cautions against viewing this as a comprehensive solution.
He acknowledges the potential of carbon capture in certain sectors, such as cement, iron, and steel production. However, he dismisses the idea that it could enable the industry to maintain current production trends while significantly reducing emissions as "pure fantasy."