A special report published by the International Energy Agency (IEA) ahead of the COP28 climate summit reveals how the fossil fuel industry can take a more responsible approach and contribute positively to the new energy economy. The oil and gas sector currently accounts for just 1% of global clean energy investments.The oil and gas industry has relied on carbon capture as a “cure” to climate change. The IEA’s new report debunks this idea and offers real solutions. In other words, the fossil fuel industry needs to jump on the renewable energies bandwagon without delay, not with large-scale carbon capture.
Carbon capture is unrealistic
Global demand for both oil and gas will peak in 2030, if not in 2025. If governments fully meet their national energy and climate commitments, demand will fall 45 percent below today’s levels by 2050. Although the targets of reducing oil and gas use by 75 percent by 2050 are nice from the outside, there is also a financial dimension. It is revealed that the current value of giant energy companies ($6 trillion) could decrease by 25% in order to achieve climate targets. This could rise to 60% if climate targets are met and the world is on track to limit global warming to 1.5C.
The IEA also points out that carbon capture cannot be used by the fossil fuel industry as a prop to maintain the status quo. If oil and natural gas consumption develops as envisaged within the framework of current policies, 32 billion tons of carbon will need to be captured for use or storage by 2050, 23 billion tons of which will be captured directly from the air, in order to limit the temperature increase to 1.5C.According to the report, the amount of electricity required to power these technologies is greater than the entire world’s current electricity demand. Therefore, carbon capture should not be the main target, at least in the critical period. To put it simply; If we don’t produce carbon, we don’t have to capture carbon.
The solution is renewable energy
The report actually suggests to the fossil fuel industry that they are “energy companies” and that they should act accordingly. In other words, the aim of these companies is to produce energy, not to produce this energy from fossil fuels. The report notes that the industry needs to change many business aspects, even if it is costly.
Additionally, the production, transportation and processing of oil and gas causes approximately 15% of global energy-related emissions. This rate alone is equivalent to all energy-related emissions of the USA. To limit global warming to 1.5C by 2050, emissions from the fossil fuel industry must be reduced by 60% by 2030.
However, the oil and gas industry has invested approximately $20 billion in clean energy in 2022, or roughly 2.5% of total capital expenditures. IEA underlines that this rate must be increased to 50 percent by 2030 in order to meet the targets.
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