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New Delhi: Oil and gas demand is expected to peak by 2030 under current policies, the International Energy Agency (IEA) has projected, days ahead of the UN Climate Summit (COP28) to be held in UAE, in a region home to some of the largest oil and gas producers globally.
Following the peak, demand will not decline immediately to align with the Paris Agreement goal of keeping warming under 1.5 degrees C or 2 degrees C, but if governments deliver in full on their national energy and climate pledges, then oil and gas demand would be 45% below today’s level by 2050 and the temperature rise could be limited to 1.7 degrees C over pre-industrial levels, the agency added.
In a pathway to reaching net zero emissions by mid-century, necessary for keeping 1.5 degrees C within reach, oil and gas use would need to decline by more than 75% by 2050, it said.
“The oil and gas industry is facing a moment of truth at COP28 in Dubai. With the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible,” IEA executive director Fatih Birol said in a statement.
“Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector. The industry needs to commit to genuinely 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 solution. This special report shows a fair and feasible way forward in which oil and gas companies take a real stake in the clean energy economy while helping the world avoid the most severe impacts of climate change,” he added.
Since 2018, the annual revenue of the oil and gas industry has averaged close to $3.5 trillion. IEA has recommended that reducing emissions from the industry’s own operations should be key now. The production, transport and processing of oil and gas results in around 15% of global energy-related greenhouse gas emissions. This is a huge amount, equivalent to all energy-related greenhouse gas (GHG) emissions from the United States, IEA said.
To align with a 1.5 degrees C scenario, emissions from the oil and gas sector need to be cut by more than 60% by 2030 and the emissions intensity of global oil and gas operations must reach near zero by the early 2040s.
The emissions intensity of the worst performers in the oil and gas sector is currently five to 10 times higher than the best. Methane accounts for half of the total emissions from oil and gas operations. “Tackling methane leaks is a top priority and can be done very cost-effectively,” IEA said.
The volatility of fossil fuel prices means that revenues could fluctuate from year to year, IEA has warned adding that oil and gas becomes a less profitable and a riskier business as net zero transitions accelerate for countries. The risk of stranded assets is higher, especially for refineries and facilities for liquefied natural gas (LNG).
Oil and gas production is vastly reduced in net zero transitions but does not disappear. Even in a 1.5 degrees C scenario, some 24 million barrels per day of oil will be produced in 2050, as well as some 920 billion cubic metres of natural gas, roughly half of which is used for hydrogen production.
“The IEA report reinforces the need for COP28 to be an inflection point in the world’s efforts to tackle climate change and keep 1.5 within reach. The world must deliver an ambitious decision on the Global Stocktake and give the world some good news,” COP28 CEO Adnan Amin said in a statement.
“The report specifically notes that all sectors must be part of the solution. Real tangible climate action will only come with everyone at the table, and we have always said that we cannot have an energy transition without the energy industry. I have consistently called on oil and gas to aim for the highest possible ambitions and deliver urgent action through decarbonization. We believe the oil and gas industry can do more. That is why I have been calling for the oil and gas industry to align around net zero by or before 2050 and zero out methane emissions by 2030. They must decarbonize their own businesses and support the global transition,” he added.
Oil and gas demand to peak by 2030: IEA – Hindustan Times
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