OPINION: The International Energy Agency (IEA) has detonated any consensus that the oil and gas industry was moving fast in the right direction on climate.
The Paris-based agency may have done so willingly or inadvertently, but this particular genie will not go back in the bottle.
Environmentalists and critics seized on one scenario that suggested that plans for new drilling on oil and gas fields should immediately be quashed.
This has now become widely accepted as IEA thinking — from an organisation established in 1974, after the first Opec oil embargo, to ensure steady global supplies.
Some observers believe a halt on new projects would inevitably benefit Opec members in the Middle East that typically have very low production costs.
Of course, the IEA has been under pressure to incorporate the goals of the Paris climate agreement into its thinking.
Unsurprisingly, there has been a backlash against its latest report from petroleum producers, users and industry groups.
The American Petroleum Institute highlighted that even the IEA acknowledges that the road map depends on new technological solutions and is, therefore, currently impossible.
The Australian Petroleum Production & Exploration Association declared that the report should be taken with a “grain of salt”.
Resources Minister Keith Pitt made clear that Australian would not be changing direction on energy policy, saying: “Coal, oil and gas will continue to be a big part of Australia’s energy mix, and our export success, for decades into the future.”
Norway was also critical, while the International Gas Union warned of supply “disruptions” and BP noted that the world needs action, not more scenarios.
Regardless, the IEA report, which outlined the proposal as a way of achieving net-zero carbon emissions by 2050, is groundbreaking.
This week it is ExxonMobil’s turn to face investors’ wrath at its annual general meeting on 26 May.
The world’s largest independent, publicly listed oil company is under pressure from activist hedge fund Engine No 1 to appoint four new directors to correct perceived foot-dragging on climate issues.
Even Norway’s sovereign wealth fund signalled it would withdraw its AGM vote for chairman and chief executive Darren Woods, but it seems more concerned about Woods having two titles than his company’s strategy on climate.
The IEA does acknowledge that continued investment in existing sources of oil and gas production is needed.
But ExxonMobil and others have repeatedly used past IEA forecasts — which tended to be much more conservative — as proof of the continuing need for exploration.
That cover has now gone, and in its stead is a demand that there must be significant moves towards electrification and energy efficiency.
The IEA still sees a significant role for hydrogen, carbon capture and storage and nuclear power for electricity production to reach net zero emissions.
This led the Financial Times to note gloomily but realistically: “The world is in trouble, because the [IEA net zero scenario] looks a tall order on every front: political, technical, financial and behavioural.”
The IEA report is a tough one for the oil and gas sector to digest, but it also puts enormous pressure on governments and consumers.
The road map looks unrealisable, but the deeper debate about how to retain energy security and stop climate change still demands real progress.
(This is an Upstream opinion article.)