The oil and gas industry is a major contributor towards global carbon emissions, which play a significant role in global warming that is attributed to climate change.
Since the 1950’s, when oil became centre stage in world economics and geopolitics, emissions have grown at an exponential rate. As per the International Energy Agency (IEA) data, the global annual carbon emissions have grown six-fold in last 70 years, the oil and gas industry being a key contributor. Following the Paris Accord of 2015, the oil and gas industry is under pressure to mitigate its carbon footprint, igniting a potential transition towards clean energy.
The GlobalData climate change poll
During November-December 2023, GlobalData conducted a poll to gauge how the oil and gas companies are faring in their efforts to tackle climate change.
About 40% of the respondents said that nothing was done so far by the industry. They believed that despite several declarations on the part of oil companies regarding emission reduction, hardly any firm action has been taken. The oil production has increased in the last decade by over 10% to meet the global demand.
Despite hydrocarbon extraction from sources, such as shale formations being emission intensive, the production from these resources has consistently gone up. To complement the growing demand, the supporting oil and gas infrastructure has also expanded. All these activities have contributed to rise in global emissions. Hence, the respondents felt that more government intervention is needed to force the industry to act.
About 32% of the respondents, felt that several of the oil and gas companies are already doing their bit to cut down on emissions. Companies, such as BP, Equinor, and Shell have set 2050 as their target for achieving net zero emissions. They have opted to undertake newer pathways, such as renewable energy generation, green hydrogen production, and carbon capture to offset their carbon emissions. This set of respondents feels that these steps might help to address climate change.
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About 28% of the respondents felt that the initiatives taken by oil and gas companies are not enough. They opined that global temperatures are increasing at an alarming rate, hence more work was needed to be done to combat climate change. Industry participants have faced the flak for perceived lack of effort. Environmentalists have protested against these companies at major events, such as the COP28 summit in Dubai, UAE, held in December 2023.
The oil majors, in particular, can strive to cut down on their oil and gas footprint and further increase their capex allocation for renewables, hydrogen, and carbon capture projects, to depict their concern towards emissions and climate change.