Five Reasons Why IEA's Net-Zero Drive Needs Oil and Gas
Last week the International Energy Agency (IEA) issued a report outlining how to achieve a net-zero emissions energy system by 2050. The report, among other things, calls for immediately ending fossil fuel investments and envisions no sales of internal combustion engine-powered passenger cars by 2035. Two informed oil and gas market-watchers late last week offered Rigzone their perspectives on IEA’s report.
Texans for Natural Gas (TNG), a Texas Independent Producers and Royalty Owners Association (TIPRO)-managed education campaign, has conducted its own assessment of the IEA “net-zero pathway” and contends the report confirms that the world will continue to rely on oil and gas.
“Most notably, the report outlined an extreme scenario for global oil and gas producers, which included no new investment in fossil fuel supply projects,” remarked Ed Longanecker, TIPRO President, in a written statement emailed to Rigzone. “As anti-fossil fuel voices have continued to highlight the recommendation, they have failed to take a closer look at the report, which in its entirety emphasizes the ongoing role oil and gas have to play in the global population’s everyday lies – even under the IEA’s net-zero pathway.”
In its take on the IEA report, TNG maintains:
IEA’s document underscores oil and gas’ importance to the world’s energy future rather than anticipates an end to fossil fuels.
“In their report, the IEA reimagines its role in the world economy,” commented Longanecker. “Even in the IEA’s scenario to reach net-zero by 2050, fossil fuels will remain a critical part of the energy mix, making up about one-fifth of the global energy supply. The fundamental shift in the energy mix will not be the decline in oil and natural gas, but the steep increase in renewable energy. The IEA reports that in its net-zero scenario, fossil fuels will also continue to be used in essential goods, like the creation of plastics, in facilities fitted with carbon capture technology.”
Methane emissions from fossil fuel supply will drop 75% over the next decade under IEA’s net-zero pathway.
“Oil and gas producers are already well underway to meeting this ambitious goal, continually investing, adapting, and innovating to address methane emissions across operations,” said Longanecker, adding the efforts are already paying off. “According to the World Bank’s most recent Global Gas Flaring Tracker Report, flaring in the United States fall by 32% from 2019 to 2020. In one of the world’s most prolific producing basins – the Permian – methane emissions intensity fell 77% between 2011 and 2019.”
Direct air capture and storage represents a leading innovation opportunity to reach net-zero by 2050.
“Oil and gas producers … are some of the world’s leading investors in carbon capture and storage (CCS) technology,” noted Longanecker. “ExxonMobil (NYSE: XOM) alone has invested $3 billion in low-carbon efforts focusing on CCS. Operators continue to undertake ambitious CCS projects – for example, in March, Houston based liquefied natural gas (LNG) developer NextDecade (NASDAQ: NEXT) announced the formation of its subsidiary NEXT Carbon Solutions, a CCS project tied to its Rio Grande LNG facility that aims to reduce the LNG terminal’s emissions by more than 90%.”
Natural gas will contribute to ending global energy poverty – a problem the IEA report identifies as an important goal to reach by 2030.
“The IEA writes that ‘providing energy to around 785 million people that have no access and clean cooking solutions to 2.6 billion people that lack those options is an integral part of our pathway,’” Longanecker said. “Natural gas will play a critical role in delivering needed cooking fuels and electricity to the hundreds of millions that current suffer without them.”
Rapidly reducing emissions demands natural gas.
“For many countries, transitioning from coal to natural gas would result in a dramatic reduction in carbon emissions,” noted Longanecker. “American LNG exports provide an abundant supply of energy that can be easily transported all over the world. “For example, China has become one of the world’s largest LNG importers as it aims to switch millions of homes and manufacturing facilities form coal to natural gas. Thanks in large part to natural gas, China – often named the world’s biggest emitter of greenhouse gases – has made significant progress in lowering carbon intensity.”
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