COP28, a “moment of truth” for the gas and oil industry, according to the IEA

It is a question of "choosing between contributing to a worsening climate crisis or being part of the solution by adopting the path of clean energy", estimates the IEA in a "special report" devoted to the fossil industry in the energy transition.

IEA experts outline what these companies should do to align their activities with the most ambitious goal of the Paris Agreement, namely limiting global warming to +1,5°C since the era pre-industrial.

However, to be part of this trajectory, producers would have to devote 50% of their investment expenditure to clean energy by 2030, in addition to the sums required to reduce their own emissions from their operations.

The march is high: in 2022, they have invested around 20 billion dollars (18,3 billion euros) in clean energies, barely 2,5% of their total investment expenditure, indicates the IEA at one week before the opening of COP28 in Dubai where a battle between States over the future of fossil fuels is looming.

“The oil and gas industry faces a moment of truth at COP28 in Dubai,” solemnly summarized Fatih Birol, Executive Director of the IEA in this report.

The sector must "make difficult decisions now", he insisted while this year oil groups like BP and Shell, and Enel, as recently as Wednesday, announced a downward revision of some of their production targets. energetic transition.

“If governments continue to sit back and let each oil company try to be the last one standing, we all lose,” said Kaisa Kosonen, policy coordinator at Greenpeace International.

Methane, “absolute priority”

To achieve carbon neutrality in 2050, a condition for keeping the 1,5°C target within reach, the IEA estimates that oil and gas consumption must decrease by more than 75% by this horizon, which which implies a considerable expansion of renewable energies.

In this scenario, “the drop in demand is strong enough that no new long-term conventional oil or gas projects are necessary,” repeated the IEA, resuming one of its resounding recommendations in 2021.

Windows of opportunity are therefore opening for the sector but this requires “a radical change” in its investments.

These companies have certainly doubled their investments in clean energies in 2022, but these only represent 1,2% of total global investments in favor of decarbonization. And 60% relies on just four “majors” (Equinor, TotalEnergies, Shell, BP) which have each devoted around “15-25%” of their investments to the transition.

The IEA's appeal is not limited to private giants - the majors - which account for less than 13% of global hydrocarbon production and reserves: national companies owned in whole or in part by States, controlling more than half of world production.

For the IEA, the entire sector should also commit to reducing emissions from its own operations by 60% by 2030. This is "a necessary step for producers to be taken seriously in the climate discussions", Christophe McGlade, head of the IEA's "energy supply" unit, told the press. A highly anticipated subject at COP28, "the fight against methane emissions", - half of the operational emissions of these companies, "must be an absolute priority", he said.

The production, transport and processing of oil and gas causes almost 15% of global energy-related emissions, with the rest coming from fuels burned in cars or heating.

According to Fatih Birol, the climate battle also involves "getting rid of the illusion that implausibly high quantities of captured carbon are the solution", at a time when criticism is mounting on these technologies which promise to extract CO2 from the atmosphere and to store it.