![]() ![]() Balancing short-term returns with long-term licence to operate The costs of developing low-carbon technologies represent an investment in companies’ ability to prosper over the long term. This effort would be greatly enhanced if more oil and gas companies were firmly and fully onboard. As such, it opens a way – which some companies are already following – for the oil and gas industry to engage with the “grand coalition” that the IEA considers essential to tackle climate change. The analysis in this report highlights that this could be possible if the oil and gas industry takes the necessary steps. Oil and gas companies have been proficient at delivering the fuels that form the bedrock of today’s energy system the question that they now face is whether they can help deliver climate solutions. Societies are simultaneously demanding energy services and also reductions in emissions. The oil and gas industry faces the strategic challenge of balancing short-term returns with its long-term licence to operate. Every part of the industry needs to consider how to respond. No energy company will be unaffected by clean energy transitions. The focus of this report is therefore on accelerated energy transitions, the forces that could bring them about – whether from society, policy makers, technology, investors or the industry itself – and the implications that this would have for different parts of today’s oil and gas industry. These outcomes fall far short of the world’s shared sustainability goals. The other scenario referenced in the analysis is the Stated Policies Scenario (STEPS), which provides an indication of where today’s policy ambitions and plans would lead the energy sector. The SDS and the range of technologies that are required to achieve it provide a benchmark for the discussion throughout this report. The WEO Sustainable Development Scenario (SDS) charts a path fully consistent with the Paris Agreement by holding the rise in global temperatures to “well below 2☌ … and pursuing efforts to limit to 1.5☌”, and meets objectives related to universal energy access and cleaner air. These elements may appear to be in contradiction with one another, but this is not necessarily the case. Second, the recognition that oil and natural gas play critical roles in today’s energy and economic systems, and that affordable, reliable supplies of liquids and gases (of different types) are necessary parts of a vision of the future.Īnd last but far from least, the imperative to reduce energy-related emissions in line with international climate targets. First, the prospect of rising demand for the services that energy provides due to a growing global population – some of whom remain without access to modern energy – and an expanding global economy. Three considerations provide the boundaries for this analysis. The oil and gas industry is facing increasing demands to clarify the implications of energy transitions for their operations and business models It does aim to map out the risks facing different parts of the industry, as well as the range of options and responses. This report does not aim to provide definitive answers, not least because of the wide diversity of oil and gas companies and company strategies around the world. This is the topic taken up by the International Energy Agency (IEA) in this report, which builds on a multi‑year programme of analysis on the future of oil and gas in the IEA World Energy Outlook ( WEO) series. ![]() The increasing social and environmental pressures on many oil and gas companies raise complex questions about the role of these fuels in a changing energy economy, and the position of these companies in the societies in which they operate.īut the core question, against a backdrop of rising GHG emissions, is a relatively simple one: should today’s oil and gas companies be viewed only as part of the problem, or could they also be crucial in solving it? The oil and gas industry is facing increasing demands to clarify the implications of energy transitions for their operations and business models, and to explain the contributions that they can make to reducing greenhouse gas (GHG) emissions and to achieving the goals of the Paris Agreement. ![]()
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