CALGARY – The oil and gas industry needs to step up its efforts to tackle climate change or risk becoming socially unacceptable and unprofitable, according to a new report from the International Energy Agency.
“No energy company will be unaffected by transitions to clean energy,” Fatih Birol, the IEA’s executive director, said in a statement on Monday.
The world demands energy services and emission reductions at the same time, the report said. The social pressure on the industry is increasing, it noted, highlighting increasing opposition to new infrastructure projects in certain areas and fracking bans.
“Every part of the industry needs to consider how they should react. Doing nothing is simply not an option.”
Some companies have taken steps to deal with climate change, but the report said the industry as a whole could do more.
The diverse industry requires a number of different approaches depending on the circumstances of the individual company, according to the report, which was prepared in collaboration with the World Economic Forum and will be presented at the organization’s annual meeting in Davos, Switzerland, on Tuesday.
The “immediate task” for the industry is to reduce its operational environmental footprint, Birol said.
About 15 percent of the world’s energy-related greenhouse gas emissions come from getting oil and gas out of the ground and to consumers, the report shows.
“A large portion of these emissions can be reduced relatively quickly and easily,” Birol said.
The most important and cost-effective measure would be to reduce methane leaks to the atmosphere, the report said. Other measures include the integration of renewable energy and low-carbon electricity into new upstream and liquefied natural gas (LNG) developments.
The report claims that the industry and its resources and skills “will be critical” to help some important capital-intensive clean energy technologies, such as low-carbon hydrogen and biofuels, reach maturity. It says scaling up such technologies and lowering their costs requires qualities that the industry has, such as large-scale engineering and project management.
“Without industry input, these technologies simply cannot achieve the scale needed to move the disk on emissions,” Birol said.
On average, oil and gas companies invest around one percent of their total capital investment in non-core areas – with the largest amount in photovoltaic systems (PV) and wind. Leading individual companies spend about five percent, according to the report, which adds “a much more significant change” in the allocation of capital expenditures needed to accelerate energy conversions.
The energy sector can transform without the help of the oil and gas industry, the report says, but it is a harder and more expensive road.
“Whichever way the world follows, the climate impacts will become more visible and severe over the coming years, increasing the pressure on all sections of society to find solutions. These solutions cannot be found within today’s oil and gas paradigm.”
This report from The Canadian Press was first published on January 20, 2020.
The Canadian press