The oil and gas sector could play more active role in accelerating the clean energy transition, according to a new report from the International Energy Agency (IEA).
IEA said in its ‘Oil and Gas Industry in Energy Transitions’ report that, while some oil and gas companies have taken steps to support efforts to combat climate change, the industry as a whole could play a more significant role.
In particular the sector could utilise its engineering capabilities, financial resources and project-management expertise, the report said.
It added that the landscape of the oil and gas industry is diverse, meaning there is no single strategic response but a variety of approaches depending on each company’s circumstances.
IEA executive director Fatih Birol (pictured) said: “No energy company will be unaffected by clean energy transitions. Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.
“The first immediate task for all parts of the industry is reducing the environmental footprint of their own operations.
“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.
“Also, with their extensive know-how and deep pockets, oil and gas companies can play a crucial role in accelerating deployment of key renewable options such as offshore wind, while also enabling some key capital-intensive clean energy technologies – such as carbon capture, utilisation and storage and hydrogen – to reach maturity.
“Without the industry’s input, these technologies may simply not achieve the scale needed for them to move the dial on emissions.”
The report noted that average investment by oil and gas companies in non-core areas has so far been limited to about 1% of total capital spending, with the largest outlays going to solar and wind power.
Some oil and gas companies have also diversified by acquiring existing non-core businesses – for example in electricity distribution, electric-vehicle charging, and batteries – while stepping up research and development activity.
However, overall, there are few signs of the large-scale change in capital allocation needed to put the world on a more sustainable path, IEA said.
Birol said: “The scale of the climate challenge requires a broad coalition encompassing governments, investors, companies and everyone else who is genuinely committed to reducing emissions.
“That effort requires the oil and gas industry to be firmly and fully on board.”