Energy market research firm Westwood has published its latest report on the oil and gas industry, with findings showing that only a handful of countries are leading the way in both production and consumption of these resources.
In addition, the report found that almost all of the hydrocarbon-heavy nations lack legally binding net zero commitments – a potentially significant problem in the global push to decarbonise.
According to the research, as of 2020, around 55% of oil and gas production was driven by the US, Russia, Saudi Arabia, and Iran. Around 45% of consumption was led by the same nations, in addition to India.
Canada was also found to be a leading oil and gas producer, however it has a strong and legally binding net-zero agenda.
Such findings highlight the progress yet to be made in achieving a net– zero future – a disparity that is particularly apparent given recent estimations from the IPCC, BP, and IEA that we will need to see a 60% global reduction in oil and gas demand to achieve net– zero targets.
Arindam Das, head of commercial advisory at Westwood, said: “Ahead of COP26, we’re potentially at an inflection point – how do nations address the energy trilemma at a global and national level?”
“While Western Europe’s leadership on climate issues is hugely important in driving change, it is the direction of demand for fossil fuels in the Americas and Asia that really matter. There remains considerable uncertainty around the outcome of COP26 and the potential impact on the hydrocarbon industry & its prospects going forward.”
All eyes are indeed trained on this year’s COP26 for a model of how to shape our future energy mix, and the IEA’s 2021 World Energy Outlook labels the event as ‘crucial’ amidst the turmoil of the past two years.
While economies are beginning to turn more wholeheartedly towards renewable energy, the rise in oil and gas over the past year has caused the industry body to caution that the current trajectory is ‘a long way from alignment’ with its Net Zero Emissions by 2050 Scenario, and the pressure on the energy sector is not anticipated to ease any time soon.
In Westwood’s analysis, the group says that it will ultimately come down to the oil and gas community to ‘grasp the opportunity’ that a global energy transition offers. If harnessed correctly, they say, the sectors could be a genuine asset in the push towards a net-zero energy system.