“The oil and gas sector is not part of the solution. The oil and gas sector is slowing down the transition.” That was one of several harsh messages delivered to the industry by Grahame Buss, spokesman for campaign group Just Stop Oil, at the recent International Energy Week (IE Week) conference.

Buss, a former principal scientist at European oil major Shell, went on to call the recent COP28 climate talks in Dubai “another failure”. “We have 2,500 oil executives there. Why do they think they are there? To slow down the transition,” he said.

Buss shared the podium with David Whitehouse, CEO of North Sea industry group Offshore Energies UK, who responded with a passionate defence of his industry: “The oil and gas sector that I have worked in for 30 years is thousands of really decent people who care just as much about the environment as Grahame does,” said Whitehouse, a former Shell production engineer.

The debate over the oil and gas sector’s motives and role in the transition will rumble on. What was not up for debate at IE Week was that the transition must accelerate on many fronts to keep alive any hopes of net-zero emissions by 2050.

Last year was the warmest on record. “The world is on an unsustainable path. Carbon emissions are continuing to rise, and we need to make sure that carbon emissions get to net zero as quickly as possible,” said Spencer Dale, chief economist at oil major BP.

Technology mix

For the energy industry and its financers, speeding up the transition means betting on a wide range of technologies and not trying to pick winners, delegates agreed. Electrification, green molecules, CCS, carbon markets and energy efficiency must all be ramped up, especially in this crucial decade on the path to net zero. This will require governments to step in with subsidies to help de-risk technologies, especially early-stage ones.

“The world is on an unsustainable path. Carbon emissions are continuing to rise” Dale, BP

Mallika Ishwaran, chief economist at Shell, outlined the hierarchy of technologies the oil major deploys in its 2050 scenarios. Top of the stack is electrification, she said. Where this is not possible then green molecules should be used, and for the rest of the emissions carbon capture and removal has to play a role. “You need that combination—that is the hierarchy we use in all scenarios,” she said.

Despite the gloom over rising emissions, significant progress has been made in some areas.  About a fifth of the world's emissions are covered by some form of carbon pricing, either taxation or emissions trading schemes, said Jim Skea, chair of the Intergovernmental Panel on Climate Change. The global buildout of renewables is also moving at pace. “We have seen incredible falls in the cost of renewables over the last decade. About 10% of the world's electricity is now coming from wind and solar,” he said.

Fast, but not fast enough

The problem is that emissions are still rising. This gives rise to a false narrative that low-carbon energy is not growing, said BP’s Dale. “The low-carbon economy is growing unbelievably quickly—it is just not growing quickly enough,” Dale said. “And it is not growing quickly enough to meet the growth in energy demand, which is why carbon emissions are still rising because fossil fuel consumption is still rising.”

Investment in low carbon energy last year was equal to $1.7t, up by 40% on three years prior to that. That is 60% more investment than there was in fossil fuels last year. In 2023, the amount of wind and solar capacity installed was double the amount seen in 2019, and the world purchased about 9.5m electric vehicles, up from 2m in 2019.

Dale also pointed to the risk of the Western world assuming its transition model will work in developing countries that face the challenge of rapidly rising energy demand. He cited recent conversations with government officials in India, who reacted “somewhere between a spectrum of frustration and anger” to the Western world imposing its transition blueprints on emerging economies.

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Author: Stuart Penson