Oil and gas companies will only survive the climate crisis if they spend more now

edition.cnn.com General,  Environmental Protection,  International 2020-01-20 14:28:55

The oil and gas industry needs to work harder and faster to tackle the climate crisis if it wants to remain profitable, a leading energy group says.


Oil and gas companies should do much more to respond to the threat of climate change, and cannot rely on fossil fuels to keep driving returns, the International Energy Agency said in a report on January 20.


Since 2015, the industry has directed less than 1% of its annual capital expenditure towards low-carbon businesses, according to the report.


Some companies have spent up to 5% but "there are few signs of the large-scale change in capital allocation needed to put the world on a more sustainable path," it said.


"No energy company will be unaffected by clean energy transitions," the International Energy Agency's executive director, Fatih Birol said in a statement. "Every part of the industry needs to consider how to respond. Doing nothing is simply not an option," he said.


Oil companies are facing mounting pressure from investors, governments and activists to invest in renewable energy to tackle the climate crisis.


But despite low oil and natural gas prices, environmental commitments by the likes of Shell (RDSA), BP (BP) and ExxonMobil (XOM) have been relatively modest so far.


BP invested $500 million in low carbon activities in 2018, about 3% of annual capital expenditure, according to its annual report.


Shell has a three-year target beginning in 2019 to reduce its carbon footprint by 2-3%, while ExxonMobil has invested $9 billion over almost two decades in lower-emission energy solutions.


Reducing emissions

"The first immediate task for all parts of the industry is reducing the carbon footprint of their own operations," said Birol.


"As of today, around 15% of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers. A large part of these emissions can be brought down relatively quickly and easily," he said.


Oil and gas companies can also play a crucial role in accelerating the deployment of clean energy technologies such as offshore wind, hydrogen, and carbon capture and storage. "Without the industry's input, these technologies may simply not achieve the scale needed for them to move the dial on emissions," Birol added.


The cost of developing these technologies represents an investment in companies' ability to prosper in the long term, the report said.


State oil firms

The report highlighted the important role to be played by state-owned oil companies, such as Saudi Aramco, which account for well over half of global production and an even larger share of reserves. In many cases, their host countries rely heavily on oil income.


The seven largest oil and gas companies account for just 12% of oil and gas reserves, 15% of production and 10% of emissions from industry operations, according to the report.


"The scale of the climate challenge requires a broad coalition encompassing governments, investors, companies and everyone else who is genuinely committed to reducing emissions," said Birol.


The International Energy Agency's report will be presented at the World Economic Forum in Davos, Switzerland on Tuesday.


(Writing by Wenxin Wu  Editing by Alex Guo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 China Coal Daily Track (Feb 20) 2020-02-20

Thermal coal Production area Coal production in northern areas is expected to fully return to normal in early March. As of February 17, over 70.2% of capacity, or 2.915 billion tonnes per a

2 S Africa thermal coal exports hit 3-yr low in 2019 2020-02-20

Thermal coal exports from South Africa, a major coal production nation worldwide, nosedived to a three-year low in full-year of 2019, showed customs data. The country supplied a total 75.

3 France to close oldest nuclear power plant in Jun 2020-02-20

France will shut down the Fessenheim nuclear reactor, the country's oldest nuclear power plant, at the end of June, with one of its reactors to be closed this weekend, Prime Minister Edouard Philippe'

4 China Shenhua Jan commercial coal output up 14.2% on yr 2020-02-20

China Shenhua Energy Co., Ltd., a listed arm of China Energy Investment Corp., registered a 14.2% year-on-year rise in its commercial coal output in January, the company said in a statement on Februar

5 China's thermal coal traders accelerate sales at ports amid bearishness 2020-02-20

Thermal coal traders were speeding up sales at Chinese's northern transshipment ports as they were not optimistic about the near-term market after over half of coal mines have resumed to work.

6 Indonesian thermal coal loses ground from 3-mth high in China 2020-02-20

Prices of Indonesian low-calorific value thermal coal started losing ground after being kept at a three-month-plus high for seven sessions, given soured outlook that a possible fallback in Chinese coa

7 Australia 2019 coal exports grow 2.2% 2020-02-20

Australia posted a year-on-year rise of 2.2% in coal exports last year, showed the latest trade statistics. The country exported 395 million tonnes coal in 2019, with 110 million tonnes f

8 Viewpoint: only 5% construction cos resume work in North China 2020-02-19

On February 18, a Chinese steel consultant company carried out a survey on the progress of resumption among 900 construction companies in North China. It showed that among all 690 valid r

9 China's steel demand to shoot up after coronavirus 2020-02-19

Market participants expected a fast rebound of steel demand in China after impact from the novel coronavirus epidemic fades away, possibly in April when construction and manufacturing activities step

10 China's coke futures close lower 2020-02-19

China's coke futures closed lower in the daytime trading of February 19 on the Dalian Commodity Futures. The most-traded contract with May expiry closed at 1,842 yuan/t, down 0.7% from th

Most Read Articles

1 China's import thermal coal trading in a standoff amid uncertainty 2020-02-18

Trading activity entered a lull in Chinese import thermal coal market at the beginning of this week, as Chinese end buyers temporarily stoppedseeking cargoesfrom import market amid growing uncertainti

2 Chinese thermal coal traders concerned about price drops on supply recovery 2020-02-17

Chinese thermal coal traders were concerned that prices of the fossil fuel may lose ground at northern transfer ports in the near term, with more coal mines restarting operation in key production area

3 China's import thermal coal outlook clouded by recovering supply 2020-02-17

China's import thermal coal market outlook was clouded by quickened resumption of domestic coal production, which could dent buying demand for overseas coal while vessels from China face 14-day quaran

4 Coal mines speeding up to reopen, virus impacts on supply abates, NEA 2020-02-17

A quick comeback of coal mines has been seen last week from suspension amid the virus outbreak, according to sources with the National Energy Administration. Impacts by restrictions against the virus

5 Chinese thermal coal prices keep sideways as supply shortage eases 2020-02-18

Spot thermal coal prices were little changed at China's northern transfer ports on the first trading day this week, as the sentiment turned weaker after domestic supply showed a sign of recovery.

6 China power demand drops as coronavirus shutters plants 2020-02-17

China's industrial power demand in 2020 may decline by as much as 73 billion kilowatt hours (kWh), according to IHS Markit, as the outbreak of the coronavirus has curtailed factory output and prevente

7 China's daily crude steel output falls 2.68% in early Feb amid virus 2020-02-17

Daily crude steel output at China's key steel mills fell by 2.68% from ten days ago to 1.94 million tonnes in early February, according to data from the China Iron and Steel Association (CISA).

8 Thermal coal supply remains tight at N China ports despite quickened mining resumption 2020-02-19

Thermal coal shipments to China's northern transfer ports remained low although more mines resumed work in response to the government's call. The National Energy Administration said on Fe

9 Indonesian thermal coal holds support from rains despite China's curtailed demand 2020-02-19

Indonesian thermal coal held steady for sessions despite a marked decrease in Chinese demand, as the material remained supported by local heavy rains that have caused prolonged supply woes.

10 China Coal Daily Track (Feb 17) 2020-02-17

Thermal coal Production area While many mines have restarted operations in Ordos, Inner Mongolia, most of them were still unable to reach normal production because returning workers are still i

Scan to download sxcoal.com mobile APP

X