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RIYADH: Global demand for oil and gas needs to decline by over 75 percent by 2050 to limit global warming to 1.5 degrees Celsius, according to the International Energy Agency. 

According to an IEA report released on Nov. 23, the market for the fossil fuels is expected to peak by 2030.

However, it would drop by 45 percent below today’s levels by 2050 if governments worldwide deliver in full on their national energy and climate pledges. 

The report said: “To align with a 1.5 degrees Celcius scenario, these emissions need to be cut by more than 60 percent by 2030 from today’s levels, and the emissions intensity of global oil and gas operations must near zero by the early 2040s.” 

The report, titled “The Oil and Gas Industry in Net Zero Transitions,” explored the industry’s potential to adopt a more responsible approach and actively contribute to the evolving energy landscape. 

It emphasized that the industry’s contribution to clean energy investment is minimal, with only 1 percent from oil and gas companies globally.  

Furthermore, 60 percent of this investment is borne by four companies, highlighting the need for a broader and more concerted effort across the sector. 

The IEA underscored the considerable emissions potential for improvement, especially in methane reduction, which accounts for half of total oil and gas operations emissions. 

While acknowledging that production of these fuels will continue at lower levels in net-zero transitions, the report called for clear consumer signals to guide producers’ decisions on future spending. 

It estimated that the $800 billion currently invested annually in the oil and gas sector is double what is required to limit warming to 1.5 degrees Celsius by 2030. 

Released ahead of the UN climate change conference in Dubai, or COP28, the report emphasized the urgent need for the fossil fuel industry, responsible for over half of the world’s energy supply and employing nearly 12 million workers globally, to align its operations with the Paris Agreement goals. 

IEA Executive Director Fatih Birol said in a statement: “The oil and gas industry is facing a moment of truth at COP28 in Dubai. With the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible.” 

He added: “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.” 

Despite the challenges, the report identified opportunities for the oil and gas sector to play a significant role in clean energy transitions. 

Approximately 30 percent of the energy consumed in 2050 could come from technologies such as hydrogen, carbon capture, offshore wind, and liquid biofuels, leveraging the industry’s skills and resources. 

However, achieving this would require a substantial shift in financial resource allocation, with the report recommending that oil and gas producers invest 50 percent of their capital expenditures in clean energy projects by 2030. 

The report concluded that carbon capture, while a crucial transition strategy, cannot sustain the status quo and emphasizes the need for proactive decisions by the fossil fuel sector to navigate the journey to net-zero emissions.