According to the global energy watchdog, businesses are still allocating excessive funds towards fossil fuels.
The IEA reports that fossil fuel corporations are allocating double the amount of funds into oil and gas compared to what is necessary in order to control the increase in global temperatures and prevent a potential climate disaster.
The global clean energy transition has not yet gained significant participation from the energy sector, according to a statement from the world’s energy watchdog. The sector remains responsible for only 1% of global clean energy investment.
The agency has urged the oil and gas industry to demonstrate their dedication to addressing pollution by maintaining a balance between investments in clean energy and fossil fuels. This comes ahead of the Cop28 climate talks in Dubai, starting on 30 November.
The head of the IEA, Fatih Birol, stated that the industry is at a critical juncture and must make important choices about its role.
He stated that in the face of a deteriorating climate crisis, it is neither socially nor environmentally responsible to maintain the status quo.
The IEA reported that if governments fulfill their energy and climate commitments, the demand for fossil fuels will decrease by 45% by 2050. However, if we accelerate climate policies to limit global warming to 1.5C compared to pre-industrial levels, the use of fossil fuels could decrease by over 75% by 2050.
According to Birol, the general public’s growing anger towards the fossil fuel industry will likely increase as we better understand the connection between carbon emissions and extreme weather events.
“The increasing frequency of extreme weather events raises the urgency for the industry to take action. While many may express their desire to combat climate change, it is now necessary for them to demonstrate this commitment,” the speaker stated.
According to Birol, oil and gas companies allocate approximately 2.5% of their capital towards clean energy technologies, such as renewables and electric vehicle charging. This is in contrast to the remaining 97.5% which is invested in more traditional business areas.
He recommended that at least half of the focus be on clean energy, and that businesses should actively work towards reducing emissions from their fossil fuel operations.
According to the IEA, oil and gas companies have generated approximately $3.5 trillion in annual revenue over the last five years. The agency notes that half of this amount was paid to governments, while 40% was reinvested into the industry and the remaining 10% was either distributed to shareholders or used to reduce debt.