Keynote

The Oil and Gas Industry in Energy Transitions

Annual Meeting 2020

No oil and gas company will be unaffected by cleanenergy transitions. If not today, it is tomorrow. And I have all the confidence that the oil and gas industry, looking at the past recourse, will respond rightly and positively.

Fatih Birol, Executive Director, International Energy Agency (IEA)

The Oil & Gas Industry in Energy Transitions

Setting the stage, Dr. Birol recounted his recent experience at the 2020 Davos World Economic Forum, saying that climate change was at the heart of discussions for businesses, governments, investors, and everyone else. He had never seen it receive such focus in all his 14 years of attending Davos. While global energy transitions have happened throughout history—coal, oil, nuclear, gas, renewables—he said the important thing now is the pace and direction.

With about 80% of CO2 emissions coming from the energy sector, Dr. Birol said it must play a key role in the climate solution. To make the sector more sustainable, he recommends first improving energy efficiency, then making more use of renewables, then making use of other technologies such as carbon capture and storage (CCUS).

While the oil and gas industry is responsible for about 18% of global emissions, he said a large portion of that can be easily and inexpensively reduced without any new technologies. His advice for the immediate term is to focus on reducing emissions, with methane as the top priority.

On average, Dr. Birol said about 1% of an oil and gas company’s capital investment goes into non-core activities such as solar, hydrogen, CCUS, bio energy, etc. He feels most of these companies have “deep pockets” and can increase their investment, which would be a crucial boost toward the overall goal of mitigating global temperature rise.

At the same time, he said it would be wrong to cut investment in oil and gas because it will still be needed for years to come and, given depletion rates, investment is needed just to keep production levels where they are today.

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