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Opinion | The oil industry threatens to turn COP29 into a battle for the future of the industry

The IEA, once closely linked to OPEC, has joined this chorus by calling for an accelerated Transition from fossil fuels for clean energy. Celebrating that clean energy investment rose to $2 trillion last year, overtaking fossil fuel investment for the first time, the IEA Executive Director said Fatih Birol called on oil and gas companies to “review their business plans” as he predicts a “staggering” global surplus in fossil fuel production over the next decade.
Large oil companies has reacted sharply. OPEC Secretary General Haitham Al Ghais was one of the first to push back, saying: “Oil remains irreplaceable in promoting global prosperity and maintaining energy security.” Population growth and urbanization will be strong drivers for energy in all forms, he said, noting that 700 million people still do not have access to electricity today.
He said that since 2000, $9.5 trillion has been invested in the “transition to clean energy,” but even today Wind and solar energy only accounted for 4 percent of energy consumption and electric vehicles accounted for 3 percent of global road traffic. With such strong and diverse future demand growth, he argued, demand for oil and gas will remain strong at current levels: “The Paris Agreement is not about reducing oil demand, it is about reducing emissions.”

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“Climate time bomb is ticking”: UN chief calls for urgent reduction of CO2 emissions

“Climate time bomb is ticking”: UN chief calls for urgent reduction of CO2 emissions

ExxonMobil then contributed its Global Outlook to 2050. “In any credible scenario Oil and natural gas “Oil and gas production remains essential,” the report says, predicting that demand will stagnate at over 100 million barrels per day from around 2030. The report stresses that continued strong investment is essential and that without it, oil and gas supplies would shrink by about 15 percent annually to less than 30 million barrels per day by 2030. Such a decline would trigger a 400 percent increase in oil prices.

Given their huge vested interest in the future of oil and gas, OPEC and Exxon would say that, wouldn't they? In contrast, BP takes a much more cautious view in its 2024 Energy Outlook.

Comparing current trajectories to net zero by 2050, BP's analysis suggests that current trajectories fall far short of the emissions reductions needed to get close to net zero targets. It reflects concerns that remaining carbon budget The amount of energy needed to limit global warming to 1.5 degrees Celsius will be exhausted by the 2040s unless fossil fuel emissions are significantly reduced.
Leaving aside the obvious self-interest of ExxonMobil and OPEC members in securing future growth in the oil and gas sector, there seems to be a clear contrasting factor in their analysis. They believe that the carbon emissions problems of the fossil fuel sector can be solved by improving energy efficiency, and in particular by developing Carbon capture and storage.
Whether they are right in their confidence in the future of carbon capture is irrelevant. A Reuters report last November, drawing on work by the Global CCS Institute, found that there are only 42 operational commercial carbon capture, utilization or storage projects. Thirty of these have been developed by oil companies to help them improve production from aging wells, leaving only 12 for permanent storage.
Together, these projects have a capacity to sequester 49 million tonnes of carbon, which corresponds to about 0.13 percent of the world's 37 billion tonnes of carbon. industrial emissionsReuters concluded that “the oil and gas industry is overly reliant on carbon capture” and the current approach is “an illusion.”
The ExxonMobil refinery near the State Capitol in Baton Rouge, Louisiana, on December 12, 2019. Photo: AP
Following a Bloomberg report from last September that claimed Carbon capture industry Time was running out to prove itself. The IEA calculates that we will need to extract one billion tonnes of carbon per year by 2030. The capacity already in operation or already invested covers only 20 percent of the capture target and 15 percent of the storage target, the report says. The IEA concludes that “more ambition is needed”.
Progress has been embarrassingly slow. Reports in May suggested that two major Projects in Canada have been abandoned, most notably a C$2.4 billion (US$1.8 billion) carbon capture and storage project in Alberta that would have captured 3 million tonnes of carbon from a gas-fired power plant. Capital Power officials announced that “we have confirmed that [carbon capture] is a technically viable technology and a potential path to decarbonisation”, but “at this stage the project is not economically viable”.

Given the major disagreements over the future role of oil and gas and the obvious influence of OPEC and oil companies in their lobbying efforts, the upcoming UN climate conference is likely to be a controversial event.

David Dodwell is CEO of trade policy and international relations consultancy Strategic Access, which focuses on developments and challenges in the Asia-Pacific region.

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