NordSIP’s Laundromat listened attentively to the International Energy Agency’s (IEA) webcast today, 23 November 2023, during which they perfectly encapsulate the absurd dilemma of the oil and gas industry’s net zero plans. The IEA’s new report on The Oil and Gas Industry in Net Zero Transitions comes at an apposite time, with the “Adnoc-sponsored” COP28 exactly one week away.
Last week the Laundromat covered the UN Environment Programme’s (UNEP) report on the yawning production gap, perhaps better described as the Grand Canyon between current fossil fuel production plans and the acceptable scenario for a 1.5 degree warming limit. IEA Executive Director Fatih Birol revisits the theme, warning that the good news of energy related emission peaking by 2030 is sadly tempered by an expected plateau thereafter based on the Stated Policies Scenario (STEPS), which considers what governments are actually doing rather than relying on their climate-friendly sounding pledges. Even taking the latter into account (i.e., the Announced Pledges Scenario – APS) puts the world well short of the Net Zero Emissions by 2050 (NZE) scenario that is needed to reach the Paris climate goals.
The actions of governments are crucial for successful climate action, according to the IEA. While the oil majors like ExxonMobil and Shell often hit the headlines, they account for less than 13% of global oil and gas production and reserves. National oil companies (NOCs) represent over half of global production and roughly 60% of total global oil and gas reserves. The heavy hitters in this category are Saudi Aramco, the National Iranian Oil Company, Kuwait Petroleum Corporation, QatarEnergy, and the aforementioned Abu Dhabi National Oil Company. According to Birol, these oil companies and producers are all making climate friendly noises to varying degrees and insisting on being at the heart of the COP negotiations, while only accounting for a miserable 1% of total global clean energy investment.
Oil industry’s Scope 1 and 2 exceed total USA emissions
The first step for the fossil fuel industry to take is to tackle Scope 1 and 2 emissions from company operations. Some firms are seemingly starting to do this, especially as it is far more convenient than the rather more awkward task of addressing their gargantuan Scope 3 emissions. However, the IEA report shows that there are huge discrepancies across the sector, with some firms doing almost nothing. Even COP28 host Adnoc has been found to be flaring away like crazy despite its claims to the contrary. Incredibly, the IEA report reveals that fossil fuel industry Scope 1 and 2 emissions account for 15% of the global total.
Although the IEA report is damning on the oil and gas industry, and only reinforces the Laundromat’s frustration with the sector’s constant greenwashing and blatant disregard for the climate crisis, Birol makes a genuine attempt to bring them on side. As he explains, oil and gas companies are well resourced, and their expertise could greatly benefit efforts to develop lower-emissions transition fuels and technologies. He chastises them for their over-promotion of carbon capture, utilisation and storage (CCUS), but offers up a nuanced perspective. Killing them with fact and figures, Birol points out that were we to rely on CCUS to reach 2050 net-zero, the required electricity usage of the requisite carbon capture plants alone would exceed the total current global demand. Investment in the technology would also have to be 1,000 times current levels, which is of course entirely unrealistic. Nevertheless, he acknowledges that CCUS has its place in the climate toolkit, particularly for hard-to-abate but essential industrial sectors like steel or cement.
This IEA report should be compulsory reading for all COP28 delegates, who should be tested on it before being allowed admission to the venue. It is crammed with hard facts that fly in the face of fossil fuel industry greenwashing and obfuscation. As Birol puts it in today’s launch speech, the net-zero transition will happen with or without the oil industry’s co-operation. It will be a bumpier ride in the latter scenario, but one can only hope the IEA’s message hits home and COP28 turns out to be effective after all.