The oil and gas industry must abandon the “illusion” that carbon capture technology is a solution to climate change and invest more in clean energy, the head of the International Energy Agency said on Thursday.
“The industry needs to commit to really helping the world meet its energy needs and climate goals – which means letting go of the illusion that implausibly large amounts of carbon capture are the answer,” IEA Executive Director Fatih Birol said in a statement ahead of next week’s United Nations climate change conference in Dubai.
The technology captures carbon dioxide from industrial operations before it enters the atmosphere and stores it underground.
Oil and gas companies are facing a moment of truth about their role in the clean energy transition, Birol wrote in an IEA report reviewing the industry’s role in the transition to a net zero carbon economy by 2050.
Only 1% of global investment in clean energy has come from oil and gas companies, Birol said. The industry needs to face the “uncomfortable truth” that a successful clean energy transition will require scaling back oil and gas operations, not expanding them, the IEA chief wrote.
“So while all oil and gas producers need to reduce emissions from their own operations, including methane leaks and flaring, our call to action is much broader,” Birol wrote.
The industry would need to invest 50% of capital expenditure in clean energy projects by 2030 to meet the goal of limiting climate change to 1.5 degrees Celsius, according to the IEA report. In 2022, about 2.5% of the industry’s capital expenditure will go towards clean energy.
One of the biggest pitfalls in the energy transition is over-reliance on carbon capture, the report says. Carbon capture is essential to achieve net zero emissions in some sectors, but it should not be used as a means to maintain the status quo, the IEA said.
An “unimaginable” 32 billion tonnes of carbon would need to be captured for use or storage by 2050 to limit climate change to 1.5 degrees Celsius under current oil and gas consumption projections, the IEA said.
The necessary technology would require 26,000 terawatt hours of electricity to operate in 2050, more than the total global demand in 2022, according to the IEA.
It would also require $3.5 trillion in annual investment from now until mid-century, the equivalent of the entire oil and gas industry’s annual revenue in recent years, the report said.
US oil majors such as Exxon Mobil and Chevron are investing billions in carbon capture technology and hydrogen, while European majors Shell and BP have focused more on renewables such as solar and wind.
Exxon and Chevron are also doubling down on fossil fuels with mega-deals. Exxon is buying Pioneer Resources for nearly $60 billion, while Chevron is buying Hess for $53 billion.
