Why the UN climate talks are a moment of reckoning for oil and gas companies
In order to be on track for net-zero emissions, the oil and gas industry will need to cut emissions from production and processing about 60% by 2030. That’s a huge jump, and one that will cost about $600 billion between now and the end of the decade.
Slimming down production emissions won’t be enough to reach net-zero, though, so companies will also need to find ways to pivot and invest money and expertise into new technologies while ramping down fossil-fuel production.
Reaching the international climate goals set at the UN talks in Paris in 2015 will mean significant declines in demand for oil and gas. That means it’ll be necessary to cut investment into new projects and even shut down some existing ones. If oil and gas companies want to be part of an energy transition, or even to still exist a few decades from now, they need to rethink their focus and start investing in some new technologies.
Today, oil and gas companies are responsible for just 1% of investment into clean energy, and the majority of that comes from just four companies. Yet the industry could be a massive player in growing fields like geothermal energy, offshore wind, and low-emissions hydrogen.
Some of these fields have significant potential overlap with oil and gas. For example, technology developed for oil and gas extraction could be crucial in next-generation geothermal projects, as evidenced by startups like Fervo Energy that employ techniques similar to those used in the oil and gas industry.
Bigger stakes
But there’s a big difference between talking the talk and walking the walk when it comes to cutting emissions from fossil fuels. Take the head of COP28, Sultan Ahmed Al-Jaber, who in some recent media interviews comes off as a pragmatic realist on the state of climate change and the role of fossil fuels.
“A phasedown of fossil fuels is inevitable, it is essential,” he told a reporter from Time in an interview published earlier this month. Sounds like someone on board with change, right?
Yet the company that Al-Jaber helms is planning a huge expansion, to the tune of $150 billion over the next few years. Some of that will go toward renewables, but the company is also expanding its production capacity for crude oil.
