Cop28: The moment of truth for Big Oil

The one taking place in Dubai will be the COP of oil companies, for better or for worse. “They have to decide whether they will be partners in the fight against climate change or not,” stated Fatih Birol during the presentation of the report The Oil and Gas Industry in Net Zero Transition, released on November 23rd, 2023.

COP28 is the last call for the oil and gas industry – “the moment of truth,” as defined by IEA, urging the industry to take at least three crucial initiatives. The first is to reduce emissions resulting from extraction, processing, and transport of oil and gas. The second is to significantly increase investments in the clean energy sector. The third is to stop putting forth false promises of sustainability, such as large-scale carbon capture and storage technologies.

Similar calls to action are far from new; never before, however, an international agency historically not hostile towards this industry has expressed such a clear stance on these issues. Indeed, IEA was established by the OECD after the 1973 energy crisis to specifically monitor the oil market and secure its supplies.


Even before tackling the issue of reducing fossil fuel consumption, to lower emissions from the energy sector the industry must begin by controlling emissions from production activities, which alone account for about 15% (approximately 5 billion tons of CO2, equivalent to the annual emissions of the United States) of the nearly 37 Gigatonnes (Gt) released into the atmosphere in 2022 from the entire sector. To these emissions contribute the so-called ‘leaks’ or methane losses from pipelines (almost half of the 5 Gt), and the deliberate burning of fuel (referred to as ‘flaring’ and ‘venting’) to reduce pressure in the pipelines.

“You must commit to lower your emissions by 60% by 2030,” Birol argued during the presentation of the report. He added: “This would grant the industry an entry ticket to become a partner in the fight against climate change.” These measures, in fact, represent minimal and urgent steps that should have already been adopted years ago. By 2040, these emissions should be almost entirely eliminated. “These interventions can be implemented immediately and at a feasible cost for companies,” stressed Birol.


The other shift needed is on the financial front. Out of $1800 billion globally spent in 2023 in low-emission energy sources, the Oil&Gas sector has only contributed around 1% of the total. Among thousands of private, national, and state-owned companies, only four represent more than half of that 1%. “For the moment the oil and gas industry as a whole is a marginal force in the world’s transition to a clean energy system,” IEA states in the report edited by energy economist Tim Gould and analyst Cristophe McGlade.

The roughly $20 billion (that 1%) that the industry invests in clean energy represent about 2,5% of the $800 it spends in capital costs (CapEx), while average annual revenues have been around $3500 billion since 2018.

“All of this contradicts the claims about clean energy coming from the Oil&Gas industry,” Birol argued. He urges the sector to set a target consistent with the Paris Agreement to keep global warming below the critical threshold of 1,5°C. “To be genuine partners in the fight against climate change, this 2,5% figure should reach 50% by 2030.” In addition to the present investments, further funding is required to limit type 1 and type 2 emissions.

Carbon Capture and Storage

In another report released in October 2023, the World Energy Outlook, IEA indicated that the demand for oil and gas should reach its peak by 2030, and then begin to decline. However, with current policies (STEPS, Stated Policies Scenario), the subsequent decline in the curve would be barely noticeable, essentially representing a stabilization of demand that is not compatible with the Paris Agreement.

A projection compatible with the 1,5°C target (Net Zero climate neutrality scenario) would see a 75% decline in the demand for oil and gas compared to current levels. However, by implementing all sustainability declarations outlined in government documents (APS, Announced Pledges Scenario) the reduction in demand would only reach 45% by mid-century.

It is interesting to note that in the Net Zero scenario, the demand for fossil fuels is not entirely eliminated by mid-century. This is because they are still employed in sectors where they are challenging to substitute, such as the steel and cement industries. Additionally, they are still used as raw materials but not burned, for example, in the production of plastics (derived from oil) or to extract hydrogen (from methane).

Hence, emissions still produced by mid-century will need to be absorbed. This is why IEA assigns a significant role to carbon capture, use, and storage technologies (CCUS or simply CCS) in the Net Zero scenario.

“In our perspective, it is an important technology in certain contexts; however, over the last 20 years, CCUS has been a story of disappointments,” stated Birol, referring to the numerous projects that were funded but later abandoned due to their economic and environmental unsustainability.

“Stating that CCS would allow the Oil&Gas sector to keep the current production trend while lowering emissions is pure fantasy,” the agency director said. The report highlights that to operate CCS facilities to absorb more than 30Gt of CO2, over 26000 terawatt-hours (TW/h) of electricity would be needed, which is more than the global electricity consumption in 2022. Moreover, an annual dedicated investment of $3500 billion would be required, which is equivalent to the entire sector’s average earnings in recent years.

“It’s impossible to continue using the oil and gas we currently produce together with CCUS, the numbers don’t add up,” Birol clearly stated. “We want to emphasise this because we must not give room to false hope. CCS should not be an excuse to remain on the same path as usual. Reducing emissions from fossil fuels implies reducing fossil fuel demand.”


“The increase in clean energy (especially photovoltaic and wind sources, ed.) is now unstoppable,” Fatih Birol added. “The fight against climate change will continue even without the help of major oil and gas producers. However, it would be a more challenging path.”

The oil and gas industry have much to contribute to the energy transition, not only in terms of financial investments, which have been lacking so far, but also in terms of technical expertise.

In addition to the development of CCS and DAC (Direct Air Capture) technologies, a significant contribution, according to the IEA, can come from the fields of hydrogen, biofuels, geothermal energy, even offshore wind, along with electric vehicle charging infrastructure, and plastic recycling.

“Companies such as Adnoc can and must do more,” argued Tim Gould during the presentation of the report. “Even Saudi Aramco (the national Saudi company, ed.), which holds a strong leadership position in the sector, can step up.”

“Many producers say they will be the ones to keep producing throughout transitions and beyond. They cannot all be right,” states the report, because by 2050 the global production of oil and gas should be reduced to a small fraction of current levels.

Thus, the task of the COP28 presidency should be to reconcile the parties, not just UN member countries but also big corporations, to decide who will continue to provide the gas and oil the world will need in the next 30 years, and who must diversify their investments and business models in the energy market.

However, as emerged from confidential documents obtained by the BBC, negotiations seem to have already taken a different turn. UAE would be using their favourable position to engage in business with other countries. For instance, with China, Adnoc would be “willing to jointly evaluate international LNG [liquefied natural gas] opportunities” in Mozambique, Canada and Australia. The Abu Dhabi national oil company would also be ready to support the development of fossil fuel resources in Colombia. UAE would have held similar talks with 27 other countries.

With such premises, even IEA’s call seems to be destined to go unheard, and COP28 risks becoming a moment of truth that adds to many others already recorded in the past.


This article was translated into English by Sofia Belardinelli. The original version of this article is available here.


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