The International Energy Agency (IEA) is challenging the prevailing belief within the oil and gas sector that carbon capture technology holds the key to addressing climate change. In a statement released ahead of the United Nations Climate Change Conference in Dubai, Fatih Birol, the Executive Director of the IEA, emphasized the need for the industry to shift its focus towards investing more in clean energy.
Birol asserted that the industry must commit to genuinely contributing to global energy needs and climate goals, urging companies to relinquish the “illusion” that large-scale carbon capture is the ultimate solution. Carbon capture technology involves trapping carbon dioxide from industrial processes and storing it underground to prevent emissions into the atmosphere.
According to the IEA’s report, only 1% of the global investment in clean energy has originated from oil and gas companies. Birol underscored the industry’s pivotal moment, stressing that a successful transition to clean energy requires a reduction in oil and gas operations rather than their expansion.
While acknowledging the importance of reducing emissions from oil and gas operations, including addressing methane leaks and flaring, Birol emphasized that the industry needs to broaden its scope. The IEA chief called for a paradigm shift, advocating that 50% of capital expenditures should be directed towards clean energy projects by 2030 to achieve the target of limiting climate change to 1.5 degrees Celsius. Alarmingly, only 2.5% of the industry’s capital spending was allocated to clean energy in 2022.
The report highlighted a significant pitfall in the overreliance on carbon capture. While essential in certain sectors for achieving net-zero emissions, the technology should not be viewed as a means to maintain the status quo, cautioned the IEA.
To limit climate change to 1.5 degrees Celsius by 2050, an “inconceivable” 32 billion tons of carbon would need to be captured, according to the IEA’s projections. The required technology would demand a staggering 26,000 terawatt hours of electricity by 2050, surpassing the total global demand in 2022. Furthermore, an annual investment of $3.5 trillion from the present until mid-century is necessary – a sum equivalent to the entire annual revenue of the oil and gas industry in recent years.
While some U.S. oil majors, such as Exxon Mobil and Chevron, are investing heavily in carbon capture and hydrogen, European counterparts Shell and BP are placing a greater emphasis on renewables like solar and wind. However, Exxon and Chevron are simultaneously reinforcing their commitment to fossil fuels through substantial deals, with Exxon acquiring Pioneer Resources for nearly $60 billion, and Chevron purchasing Hess for $53 billion.