Oil and gas operations must be scaled back, agency head says

This article was written by Marco Chown Oved and was published in the Toronto Star on November 24, 2023.

Carbon capture just isn’t going to cut it.

That’s the message behind a new report put out by the International Energy Agency (IEA) ahead of global climate talks set to begin next week in Dubai.

“The oil and gas industry is facing a moment of truth,” said IEA executive director Fatih Birol. “The industry needs to commit to genuinely helping the world meet its energy needs and climate goals — which means letting go of the illusion that implausibly large amounts of carbon capture are the solution.”

Many of the world’s major oil companies have committed to net zero and plan to get there by increasing production and capturing their emissions. These plans rely on a technology that hasn’t yet been proven at scale and would require a massive and rapid build up of carbon capture projects all over the world.

It is a vision that simply won’t work, the IEA’s report concludes.

“The uncomfortable truth that the industry needs to come to terms with is that successful clean energy transitions require much lower demand for oil and gas, which means scaling back oil and gas operations over time — not expanding them,” Birol said.

In Canada, where Alberta oil sands producers have been lobbying for public funds to finance a massive carbon capture and underground storage project (CCUS), the report hits close to home, said Aaron Cosbey, a senior associate at the International Institute for Sustainable Development.

“The report’s findings, arguments and recommendations are of course delivered to a global audience, but so many of them feel like they are spoken directly to Canada. The question is whether we are listening,” he said.

Canada is the only G7 country

‘‘ The uncomfortable truth that the industry needs to come to terms with is that successful clean energy transitions require much lower demand for oil and gas, which means scaling back oil and gas operations over time — not expanding them.

FATIH BIROL IEA EXECUTIVE DIRECTOR

where emissions are higher now than they were in 1990. Carbon emissions have dropped in virtually every sector of the economy, but these reductions have been cancelled out by a dramatic rise in emissions from the oil and gas sector, which now accounts for 28 per cent of Canada’s total.

The Pathways Alliance of oil sands producers’ plan to build a CCUS project in Alberta would cost $16.5 billion to build and would capture about 10 per cent of the industry’s extraction emissions. This does not include the emissions caused by burning the fossil fuels extracted.

“Excessive expectations and reliance on CCUS is a mistake. To give an idea of the scale of infeasibility: if production continued at normal levels and we simply sucked up the emissions with CCUS, by 2050 it would require more electricity than the entire world consumed in 2022, as well as USD $3.5 trillion in investments every year between now and then,” Cosbey said.

In response to questions, Pathways Alliance president Kendall Dilling sent a statement saying carbon capture is only one of the technologies the oil sands companies are working on to decarbonize.

“With more than 50 years of scientific and technological innovation, carbon capture and storage is a safe and proven technology that is critical to reaching global climate change goals,” he said. “Several global organizations, including the UN Intergovernmental Panel on Climate Change, have deemed (carbon capture) an essential solution to the climate challenge.”

The IEA’s latest projections show global demand for oil and gas peaking before the end of the decade. Yet many oil companies continue to expand production, stating they intend to provide the world with its last barrel of oil as fossil fuels are phased out.

“This IEA report shows that if governments continue to sit back and let every oil company try to be the last one standing, then we all lose,” said Kaisa Kosonen, a policy coordinator with Greenpeace International.

“Industry self-regulation leads to collective disaster, so the real moment of truth will come at this year’s climate summit when governments have the chance to agree to make fossil fuels history, in a fair and fast manner.”

In Canada, federal environment minister Steven Guilbeault has promised to introduce a hard cap on oil and gas emissions before the end of the year.

In addition to highlighting falling demand for oil and gas, the IEA report emphasizes the need to invest in non-emitting energy sources, like wind and solar.

Globally, the oil and gas industry invested about $20 billion (U.S.) in clean energy in 2022, or roughly 2.5 per cent of its total capital spending. The report found that producers looking to align with the aims of the Paris Agreement would need to ramp that up to 50 per cent of their capital expenditures by 2030, on top of the investment required to reduce emissions from their own operations.

“The moment of reckoning has arrived for the oil and gas industry. Their smoke and mirrors game with carbon capture and forest offsets is no longer fooling anyone. Aligning with the Paris Agreement means scaling up renewable energy solutions while scaling back oil and gas operations,” Kosonen said.