In the special report released on Nov. 21, the Paris-based IEA said oil and gas companies need to start “letting go of the illusion” that “implausibly large” amounts of CO2 capture can solve the global climate crisis.
The IEA report recognizes the significance of carbon capture in combating climate change, especially for offsetting emissions in sectors without alternative solutions. However, it cautions against placing “excessive expectations” and overreliance on the technology.
According to the report, achieving the Paris Agreement’s target of limiting global temperature increases to 1.5 degrees Celsius would necessitate the “inconceivable” sequestration of 32 billion metric tons of emissions through carbon capture by 2050.
The report highlights that the electricity demand to power these technologies would surpass the current global electricity demand. Additionally, achieving the necessary level of carbon capture would entail a substantial rise in global spending on the technology, increasing from $4 billion last year to $3.5 trillion by 2050, the report stated.
According to IEA, oil and gas companies should consider diversifying into clean energy instead of solely relying on carbon capture to maintain the status quo.
Several global organizations, including the United Nations, assert that large-scale carbon capture is crucial for the world to effectively combat climate change.
However, some environmentalists argue that the oil and gas sector is leveraging this technology as a pretext to expand fossil fuel production, which they contend should remain left in the ground.
The current annual investment of $800 billion in the oil and gas sector is twice the amount required by 2030 for a pathway limiting global warming to 1.5 °C. In this scenario, demand decreases significantly, rendering new long-lead-time conventional oil and gas projects unnecessary. The transition to net zero is projected to make the oil and gas industry less profitable and riskier over time.
The report estimates that the valuation of private oil and gas companies could decrease by 25% from $6 trillion today if all national energy and climate goals are achieved, and by up to 60% if the world aligns with limiting global warming to 1.5 °C.
“The fossil fuel sector must make tough decisions now, and their choices will have consequences for decades to come,” said IEA Executive Director Fatih Birol. “Clean energy progress will continue with or without oil and gas producers. However, the journey to net zero emissions will be more costly, and harder to navigate, if the sector is not on board.”
Read more: IEA Publishes A Report On Carbon Management