In a report released ahead of the COP28 climate summit in Dubai, the International Energy Agency (IEA) outlines the offshore oil and gas (O&G) sector's role in scaling up technologies vital for clean energy transitions. The report, titled “Oil and Gas Industry in Net Zero Transitions,” delineates the necessary steps for the global O&G sector to align its operations with the objectives of the Paris Agreement.
The IEA's analysis, focused on implications and opportunities arising from intensified international efforts to achieve energy and climate targets, underscores that 30% of the energy consumed in a decarbonized energy system by 2050 could benefit from the industry's skills and resources. Notable technologies in this regard include hydrogen, carbon capture, offshore wind, and liquid biofuels.
IEA Executive Director Fatih Birol emphasized the sector's pivotal role, stating, “Clean energy progress will continue with or without oil and gas producers. However, the journey to net zero emissions will be more costly and harder to navigate if the sector is not on board.”
The report calls for a transformative shift in how the industry allocates financial resources, advocating increased investments in technologies like offshore wind and hydrogen. While the oil and gas industry invested approximately $20 billion in clean energy in 2022, constituting around 2.5% of total capital spending, the report suggests that alignment with Paris Agreement goals necessitates allocating 50% of capital expenditures to clean energy projects by 2030, in addition to investments aimed at reducing emissions from operational activities.
The report also underscores that carbon capture, a key aspect of many firms' transition strategies, cannot be relied upon to maintain the status quo. To limit the temperature rise to 1.5°C, projections suggest an inconceivable requirement of capturing and storing 32 billion tonnes of carbon by 2050, including 23 billion tonnes via direct air capture. The report notes that the electricity needed for these technologies would surpass the current global electricity demand.
Birol urged oil and gas producers worldwide to make significant decisions about their role in the global energy sector, emphasizing a commitment to aiding the world in meeting energy needs and climate goals. The report proposes a pragmatic path forward, urging companies to actively engage in the clean energy economy while addressing the severe impacts of climate change.
