In the 2015 climate summit, world leaders promised to cut fossil fuel production and use to a level that would limit global warming to 1.5°C above pre-industrial temperatures.
However, the 20 major fossil fuel-producing nations that produce 80 percent of the world’s fossil fuels have announced plans to extract double the amount of those fuels by 2030 that would be consistent with that goal, according to a new study by a coalition of several agencies, including the U.N. Environment Program and the Stockholm Environmental Institute.
In July, the United Arab Emirates said that by 2030, it will cut its greenhouse gas emissions 19 percent below 2019 levels. However, the state-owned oil company has announced plans to increase oil and gas production by 20 percent to five million barrels a day by 2027.
In response to a growing world market, the company also will almost triple its liquefied natural gas production from the current six million tons annually to 15.6 million by 2028.
Nations attempting to adhere to their vows will see their efforts outstripped by increased emissions elsewhere.
The U.S. is on a path to cut coal use 43 percent by 2030 and China by 15 percent, removing 200 million tons of coal from the global fuel mix. Over the same period, India, Indonesia, and Russia are planning to increase their coal use by more than that amount.
Aside from coal, U.S. oil production will remain between 19 and 21 million barrels a day through 2030, staying close to record levels. The U.S. also is on track to ramp up natural gas output from about 850 billion cubic meters in 2022 to 1.2 trillion by 2030, the report said.
TREND FORECAST: China has said global gasoline demand has peaked, as we reported in “China’s Largest Oil Company Says Gasoline Demand is Permanently Declining” (3 Oct 2023). The International Energy Agency has predicted that worldwide oil demand will stagnate before 2030 (“Oil Demand Will Stagnate in Next Five Years, IEA Predicts” 3 Jun 2023).
Oil majors read the market differently. ExxonMobil and Chevron recently bought additional reserves and Exxon, at least, is looking for more. (See “ExxonMobil Buys Major Shale Producer for $59.5 Billion in Stock” 17 Oct 2023 and “Chevron Grabs Hess for $53 Billion in Stock” 24 Oct 2023).
Oil demand is at an all-time high and will remain strong at least into the 2040s, they believe.
“These companies believe in the long-term viability of the oil and gas industry because hydrocarbons remain the most cost-effective and easily transportable and storable energy source,” Shon Hiatt, director of the Business of Energy Transition Initiative at the USC Marshall School of Business, told CNBC.
“Their strategy suggests that in emerging economies marked by population and economic expansion, the adoption of low-carbon energy sources may be prohibitively expensive, while hydrocarbon demand in European and North American markets, although potentially reduced, will remain a significant factor,” Hiatt said.
Oil companies are betting against a rising tide.
Governments are mandating shifts to clean energy. General Motors, Volkswagen, and other automakers have pledged to abandon fossil fuel vehicles within 15 years. China’s shift to cleaner energy continues, if gradually. The World Bank is cutting back funding for fossil fuel projects. Consumer pressures for clean energy are increasing, especially among younger people.
These pledges and pressures are subject to change as economic realities change.
Petroleum’s place in the energy mix will diminish over time. However, the predicted speed of that transition failed to allow for the possibility that inflation and high interest rates would slow it.
The current economy will cost the transition at least two years’ worth of momentum.