Fossil fuel companies must better engage with the climate crisis and develop a clear strategy for managing their role in the global response, according to a paper released today by the influential International Energy Agency (IEA).
IEA executive director Fatih Birol (pictured) said: "No energy company will be unaffected by clean energy transitions". Targets by oil firms to cut their emissions and switch to cleaner energies vary widely. However, these only account for up to 1% of their total spending. "Without the input of industry, these technologies may simply not reach the scale necessary to scale up the emissions dial", added Birol.
Oil and gas companies' plans to increase investment in renewable energy sources is up from 34% in 2019 to 44% in 2020.
The diverse industry requires a variety of approaches dependant on individual company's circumstances, according to the report, which was produced in co-operation with the World Economic Forum and will be presented at the organization's annual meeting in Davos, Switzerland, Tuesday.
It found that "the industry can do much more to respond to the threat of climate change".
The oil and gas industry is estimated to account for more than half of the global greenhouse gas emissions associated with energy consumption, with some research suggesting that the sector is responsible for as much as 71% of global Carbon dioxide emissions.
"There are ample, cost-effective opportunities to bring down the emissions intensity" of producing and delivering oil and gas, such as reducing methane leaks, said the IEA.
Entitled "The Oil and Gas Industry in Energy Transitions", the report analyses the ways in which the oil and gas sector is adapting - and failing to adapt to - the global transition to low-carbon energy systems, both within their own operations and through their collaboration with external organisations.
"Our research shows that the oil and gas industry has placed decarbonisation at the centre of its agenda and it will remain a priority despite uncertainty from volatile market conditions and stalling expectations for industry growth in 2020", said Liv A. Hovem, chief executive of DNV's oil and gas division. Within 10 years, these low-carbon fuels would need to account for around 15% of overall investment in fuel supply if the world is to get on course to tackle climate change.
A few of the companies have been spending till 5% however a few of the signs in the change large-scale for capital allocation has needed for putting the world on a path which is more sustainable it has said.
Birol said: "The scale of the climate challenge requires a broad coalition encompassing governments, investors, companies and everyone else who is genuinely committed to reducing emissions". This is larger than any plausible fall in global demand, so investment in existing fields and some new ones remains part of the picture. The stakes are particularly high for national oil companies charged with the stewardship of countries' hydrocarbon resources - and for their government owners and host societies that typically rely heavily on the associated oil income.
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