The International Energy Agency (IEA), the global energy regulator, has warned that oil and gas companies are facing a “moment of truth” about the need to transition to clean energy or further fuel the climate crisis.
The report, to be published ahead of the UN COP28 climate summit in Dubai next week, said fossil fuel companies must make “critical decisions about their role in the energy system”.
Emissions from the oil and gas sector must be cut by 60 percent by 2030 to limit global warming to just 1.5°C. To achieve the net zero target, emissions must be reduced by 75 percent by 2050.
The IEA said global demand for oil and gas will peak in 2030, and if countries keep their promises, it will fall 45 percent below current levels by 2050.
The oil and gas sector, which supplies more than half of the world’s energy supply and employs about 12 million workers worldwide, was at best a “marginal force” in the transition to a clean energy system, according to the report.
Currently, oil majors account for just 1 percent of global clean energy investment, with just four companies accounting for 60 percent of that.
He warns that oil and gas will become a less profitable and riskier business as the world approaches net zero.
The current value of private oil and gas companies could fall by 25 percent from the current $6 trillion if all national energy and climate goals are met, and by up to 60 percent if the world is on track to return to the global warming limit. 1.5 °C C. .
The report says that while the oil and gas industry includes a large and diverse range of players – from small specialist operators to large national oil companies – attention often focuses on the role of large private sector companies such as BP and Shell.
Giant oil companies own less than 13 percent of global oil and gas production and reserves, according to the IEA.
The entire industry must make “profound decisions,” the report says, adding that it must “commit to actually helping the world meet its energy needs and climate goals – which means abandoning the illusion that unimaginably large amounts of CO2 capture is the solution.” “, said the doctor. Fatih Birol, head of the IEA.
The industry’s $800 billion investment in oil and gas production is double what is needed to meet climate goals by 2030. Companies need to allocate half of their capital to clean energy projects by 2030 to cope with the transition, the doctor added. – added Birol.
By contrast, the country will spend about $20 billion on clean energy in 2022, representing about 2.5 percent of total capital spending.
The report shows that oil and gas projects are currently delivering slightly higher returns on investment, but concludes that returns are less stable.
“We estimate that return on capital invested in the oil and gas industry averaged 6 to 9 percent between 2010 and 2022, while it averaged 6 percent for clean energy projects.” to more stable profits from clean energy projects,” the report says.
“Deep changes” are needed in the way the oil industry allocates resources.
“The fossil fuel sector is facing difficult decisions now, and their decisions will have consequences for decades to come,” Birol said.
“The inconvenient truth the industry has to face is that a successful clean energy transition requires much less demand for oil and gas, meaning oil and gas activity will have to be curtailed over time. “said the doctor. Birol.
“Clean energy progress will continue, with or without generators. However, the path to net-zero emissions will be more expensive and difficult if they do not cooperate.”
Offshore Energies UK (OEUK) said the sector is committed to net-zero emissions and aims to halve operational emissions by 2030.
OEUK’s Enrique Cornejo said: “In 2022, our greenhouse gas emissions fell by more than 24 percent compared to 2018, and the sector is aiming to achieve a 50 percent emissions reduction target by 2030.” CCS (carbon capture and storage) will be critical.”
He said CCS technologies were vital for the UK to achieve net-zero emissions. CCS not only cuts emissions, but also plays a key role in the UK’s energy security, he said.
Source: I News
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