2023-11-23 05:06:01
The oil and gas industry would need to shift half of its investments from fossil fuel production to renewable energy by 2030 to meet the Paris climate goals. Private oil and gas companies might lose up to 60 percent in value, according to a special report by the International Energy Agency (IEA) released on Thursday ahead of the COP28 climate summit in Dubai.
Even under today’s policy environment, global demand for oil and gas is expected to peak by 2030, according to the latest forecasts from the IEA. More decisive action on climate change would mean significant declines in demand for both fuels. If governments fully implement their national energy and climate pledges, demand would be 45 percent below current levels by 2050, according to IEA calculations. On a path that leads to net-zero emissions by mid-century – necessary to meet the goal of limiting global warming to 1.5 degrees Celsius – oil and gas consumption would increase by more by 2050 than 75 percent.
According to the report, the oil and gas sector has so far only played a marginal role in the transition to clean energy sources. Oil and gas companies currently account for just 1 percent of global clean energy investment. The oil and gas industry invested around $20 billion in clean energy in 2022, only around 2.5 percent of its total investments. The report notes that if producers want to align with the goals of the Paris Agreement, they will need to allocate half of their investments to clean energy projects by 2030, in addition to the investments needed to reduce emissions from their own operations to reduce.
To stay in line with a 1.5 degree scenario, the industry’s own emissions must fall by 60 percent by 2030. The emissions intensity of the oil and gas producers with the highest emissions is currently five to ten times higher than those with the lowest, showing the enormous potential for improvement.
The $800 billion (around €730 billion) currently invested annually in the oil and gas sector is twice as high as what would be required in 2030 on a path that limits warming to 1.5 degrees. In this scenario, the decline in demand is so steep that new, long-lead-time conventional oil and gas projects are not required. Some existing oil and gas production would even have to be shut down.
The IEA analysis finds that the current value of private oil and gas companies, $6 trillion today, might fall by a quarter if all national energy and climate targets are met, and by up to 60 percent if the world is on the What remains is to limit global warming to 1.5 degrees.
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