The head of the International Energy Agency (IEA), Fatih Birol, urged the oil and gas industry to shift its focus from carbon capture technology to investing more in clean energy solutions. Birol emphasized that the industry needs to abandon the “illusion” that large-scale carbon capture is the primary solution to climate change. Carbon capture technology involves trapping carbon dioxide emissions from industrial processes and storing them underground. In a report ahead of the United Nations Climate Change Conference in Dubai, Birol stated that oil and gas companies are facing a crucial moment regarding their role in the clean energy transition.
According to the IEA chief, only 1% of global investment in clean energy has come from oil and gas companies. Birol stressed the need for the industry to acknowledge an “uncomfortable truth”—that a successful transition to clean energy requires a reduction in oil and gas operations rather than an expansion. The report indicates that the industry should invest 50% of its capital expenditures in clean energy projects by 2030 to achieve the goal of limiting global warming to 1.5 degrees Celsius. However, only about 2.5% of the industry’s capital spending went toward clean energy in 2022.
Birol cautioned against excessive reliance on carbon capture, stating that while it is crucial for achieving net-zero emissions in some sectors, it should not be viewed as a means to maintain the status quo. The report highlighted that capturing an “inconceivable” 32 billion tons of carbon by 2050, as projected for current oil and gas consumption, would require massive investments and electricity demand. The necessary technology would need 26,000 terawatt hours of electricity in 2050, surpassing the total global demand in 2022. Additionally, it would necessitate $3.5 trillion in annual investment, equivalent to the entire annual revenue of the oil and gas industry in recent years.
Major oil companies, including Exxon Mobil and Chevron, have been investing in carbon capture technology and hydrogen. However, European majors like Shell and BP have focused more on renewables such as solar and wind. Exxon and Chevron are also making significant deals in fossil fuels, with Exxon acquiring Pioneer Resources for nearly $60 billion and Chevron purchasing Hess for $53 billion.
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