Oil and gas companies have provided “few signs” that they are willing to devote enough cash to tackling climate change, a new report said.
The International Energy Agency (IEA) said that while some companies are branching into low-carbon technologies, investment in “non-core areas” has been limited to about 1% of total spend.
The report authors stressed the crucial role oil and gas firms could play in accelerating the deployment of offshore wind, carbon capture and hydrogen technologies.
IEA executive director Dr Fatih Birol said: “Without the industry’s input, these technologies may simply not achieve the scale needed for them to move the dial on emissions.”
Stepping up investment in low-carbon fuels like hydrogen, biomethane and advanced biofuels is essential.
Within 10 years, they must account for around 15% of overall investment in fuel supply if the world is to get on course to tackle climate change, according to the agency.
But investment in existing oil and gas projects, and “some” new ones, will still be needed, no matter how drastic the transition.
If investment stopped completely, the decline in output would be around 8% per year, which is larger than any plausible fall in global demand, IEA said.
Some oil and gas companies will want to stick to what they know, rather than diversifying into renewables, but they will have to think through their strategic response to “new and pervasive challenges”.
The stakes are particularly high for national oil companies tasked with the stewardship of countries’ hydrocarbon resources, the report said.
Dr Birol said: “The scale of the climate challenge requires a broad coalition encompassing governments, investors, companies and everyone else who is genuinely committed to reducing emissions.
“That effort requires the oil and gas industry to be firmly and fully on board.”
IEA, which produced the report in cooperation with the World Economic Forum (WEF), said failing to address growing calls to reduce greenhouse gas emissions could threaten oil and gas firms’ “long-term social acceptability and profitability”.
“No energy company will be unaffected by clean energy transitions,” Dr Birol said, adding: “Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.”
Dr Birol said the immediate task for oil and gas companies was to slash the environmental footprint of their own operations.
“As of today, around 15% of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers,” he said.
“A large part of these emissions can be brought down relatively quickly and easily.”
Reducing methane leaks to the atmosphere is the single most important and cost-effective way for the industry to bring down these emissions, but eliminating flaring and integrating renewables also present opportunities.
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