Environmental groups this week called on the oil and gas industry to “be at the front of the pack” and not left behind in the ongoing energy transition, criticising the low level of investments made in aligning business models to the Paris Agreement.
During an environmental panel at the IP Week conference in London, Joan MacNaughton, chair of international non-profit Climate Group, criticised those who have yet to align themselves with the 2015 agreement that aims to keep global temperature rises under 2 degrees Celsius.
“If you don’t understand that climate change is an issue by now, you are not living on the same planet,” MacNaughton said.
Comparing the industry to the coal sector, which has been severely impacted by the push to lower emissions, MacNaughton noted that, despite government support — US President Donald Trump in 2016 was determined to support the coal industry — half of US coal companies have gone bankrupt.
“I hope you are trying to do your best, unlike the coal industry. The earlier you give signals to the investors and decision makers of the industry, the more you can avoid future issues,” she said.
“I know the pace and commitment varies across this sector, but... less than 1% of capital expenditure is going on non-core areas. You need to consider... fitting in climate risk and the public sentiment,” MacNaughton said, calling on the industry to be proactive instead of just reactive in order to regain “trust” from stakeholders.
“A wise company will be campaigning for vigorous government action pre-2035 to be able to be at the front of the pack and not at the back or middle during this decade of delivering low carbon energy,” she said.
Bob Ward, policy and communications director at the Grantham Institute on Climate Change & the Environment — part of the London School of Economics — said it is increasingly “hard to see how oil has a long-term future”.
Ward called on the industry to “own the transition to net zero” because the challenge is urgent.
“We are risking passing critical thresholds that will have severe consequences. A 1-to-3 degrees Celsius increase risks destabilising Greenland and Antarctica, which together hold enough ice to raise sea levels by 13 metres or more.
"We are now on a path of possibly passing these critical thresholds, that’s why it so urgent,” Ward, a geologist, said at the conference.
“Global temperatures will continue to go up while the net contribution of human activity increases the concentration of carbon dioxide emissions in the atmosphere. That’s why the net zero target for emissions is so important,” he said.
Ward noted the Emissions Gap Report for 2019 from the United Nations Environment Programme (UNEP) that warned that global gas emissions would need to fall by 7.6% each year between 2020 and 2030 to meet the 1.5 degrees Celsius target.
In this context, he said: “It’s hard to see how oil has a long-term future. It's primarily used in the transport sector. Carbon capture and storage (CCS) will be very difficult to use with a car, or a truck or a plane.”
Nevertheless, Ward urged the industry to promote the “essential” carbon capture, utilisation and storage (CCUS) technology and not wait for governments before making those investments.
“Investing less than 1% of your budget in non-core areas seems like investing in your own destruction,” he said, noting earlier comments from the executive director of the International Energy Agency (IEA), Fatih Birol, about current low levels of investments from areas outside of oil and gas.
“There is nothing in your projections that would lead you to believe that investing 99% of your capital in continued oil and gas production is the sensible way forward. You need a new vision for yourselves that means you can survive in a net zero world,” he said.
Setting out the challenge for the industry going forward, Ward said: “This is your job, to get us from the current situation down to net zero emissions in a way that continues to raise living standards around the world.
"You need to be part of the transition because this can’t just be something that happens to you. This industry needs to actively lead the transition.
“The industry has a track record of dragging its feet on this issue as there are still those in oil and gas promoting climate change denial.
"Every time something from within the industry promotes climate change denial, it damages the reputation of the whole industry and you need to call those out on it. It's bad science, bad economics, bad politics and bad ethics,” he said.