Energy transition

OPEC Challenges IEA's Stance on Oil Industry's Climate Efforts

The International Energy Agency recently said the oil and gas industry is spending far too little on clean energy technologies.

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In a sharp response to a recent International Energy Agency (IEA) report, OPEC Secretary General Haitham Al Ghais admonished the group for accusing the oil and gas industry of not doing enough to mitigate climate change.

The IEA's report released last week, "The Oil and Gas Industry in Net Zero Transitions," painted a bleak picture of the industry's future in the context of climate change. For the first time in its analysis, the IEA offered a scenario in which global demand for oil and gas peaks before 2030 due to existing climate policies, rising investments in solar and wind power, and electric vehicle uptake.

The IEA also criticized the oil and gas sector for being a "marginal force" in the energy transition, noting that oil and gas companies currently account for only 1% of global clean energy investment.

Among other proposals, the Paris-based group has called on the industry to reduce its emissions by 60% and increase its investments in cleaner energy technology from 2.5% of capital spending to 50% by 2030.

In its response published 27 November, OPEC argued that the IEA’s latest position “unjustly vilifies” the industry while downplaying the issues of energy security and affordability.

"It is ironic that the IEA, an agency that has repeatedly shifted its narratives and forecasts on a regular basis in recent years, now addresses the oil and gas industry and says that this is a ‘moment of truth’,” said Al Ghais in a statement.

The OPEC leader continued: “Energy security, energy access, and energy affordability for all must go hand-in-hand with reducing emissions. This requires major investments in all energies, all technologies, and an understanding of the needs of all peoples. At OPEC, we repeat that we believe the world has to concentrate on the task of reducing emissions, not choosing energy sources.”

OPEC's stance is that the IEA's proposed framework to align company targets with a net zero emissions scenario could undermine the sovereignty of oil-producing developing countries and their national oil companies. The organization also suggested that the IEA is out of step with the Paris Agreement's bottom-up approach which allows each participating country to craft its own plan to reduce emissions and help achieve the 2°C goal.

The IEA has taken particular aim at carbon capture utilization and storage (CCUS), describing the impact of the technology as an “illusion” that the industry must acknowledge. Al Ghais countered this notion by noting that the UN Intergovernmental Panel on Climate Change remains in support of CCUS.

The OPEC Secretary General concluded by emphasizing the need for more dialogue and less finger pointing.

“We do see a ‘moment of truth’ ahead. We need to understand that all countries have their own orderly energy transition pathways, we need an assurance that all voices are heard, not just a select few, and we need to ensure that energy transitions enable economic growth, enhance social mobility, boost energy access, and reduce emissions at the same time,” he said.