{"id":54850,"date":"2023-12-13T17:12:29","date_gmt":"2023-12-13T17:12:29","guid":{"rendered":"https:\/\/prosfunds.com\/business\/transition-away-from-fossil-fuels-big-oil-has-other-ideas\/"},"modified":"2023-12-13T17:12:32","modified_gmt":"2023-12-13T17:12:32","slug":"transition-away-from-fossil-fuels-big-oil-has-other-ideas","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=54850","title":{"rendered":"Transition away from fossil fuels? Big Oil has other ideas"},"content":{"rendered":"
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\n Is this the beginning of the end of the fossil fuel era? The world\u2019s latest climate deal could be that milestone. <\/strong>But recent events show the oil and gas industry still has a very different vision of the future.\n <\/p>\n

\n Following marathon talks, the COP28 climate summit in Dubai struck a deal Wednesday that makes the unprecedented call for \u201ctransitioning away from fossil fuels.\u201d\n <\/p>\n

\n Some countries, including the United States, welcomed the firmest-ever commitment to moving away from energy sources responsible for most planet-heating emissions, but critics were quick to point out that the agreement falls far short of requiring the world to \u201cphase-out\u201d oil, coal and gas, a position more than 100 nations had supported.\n <\/p>\n

\n \u201cThe resolution is marred by loopholes that offer the fossil fuel industry numerous escape routes,\u201d said Harjeet Singh, the head of global political strategy at nonprofit Climate Action Network International.\n <\/p>\n

\n However vague or watered down the language, the deal looks out of touch with reality.\n <\/p>\n

\n US oil production is at a record; India plans to double coal output by 2030; the UK is issuing new drilling licences in the North Sea; and American oil majors are splurging billions on deals that signal they see robust demand for decades to come.\n <\/p>\n

\n \u201cAnything less than a systematic transformation of the fossil fuel industry would be at odds with COP28\u2019s deal,\u201d said Daniel Klier, the CEO of ESG Book, a provider of sustainability data on companies. \u201cThe reality is no single climate summit can single-handedly drive the transition away from fossil fuels, let alone a phase out.\u201d\n <\/p>\n

\n The latest evidence of the industry doubling down on fossil fuels came Monday, when Occidental Petroleum said it would pay $12 billion in cash and stock to buy US shale oil producer CrownRock.\n <\/p>\n

\n It followed ExxonMobil\u2019s (XOM) October announcement of a $60 billion deal to acquire shale driller Pioneer Natural Resources, and Chevron\u2019s (CVX) agreement less than two weeks <\/strong>later to buy shale producer Hess for $53 billion. Hess (HES) also has large oil assets in Guyana, which Chevron said would help grow its production over the next decade.\n <\/p>\n

\n Another $50-billion oil and gas deal could take shape soon, this time in Australia. Woodside Energy and Santos are talking about a merger <\/strong>that would create one of the world\u2019s biggest exporters of liquified natural gas (LNG) in <\/strong>a clear bet on continued strong demand from Asia for the fuel.\n <\/p>\n

\n \u201cMarkets aren\u2019t functioning properly and are rewarding the wrong companies \u2026 If anything, our future depends on markets rewarding those oil companies that are decarbonising at pace,\u201d said ESG Book\u2019s Klier.\n <\/p>\n

\n But <\/strong>cash-rich oil giants are taking advantage of recent windfall profits to snap up lower-cost assets and boost shareholder returns, while directing much less investment to renewable energy.\n <\/p>\n

\n The industry invested just <\/strong>$20 billion in clean energy projects last year \u2014 only around 2.5% of its total capital spending, according to the International Energy Agency (IEA).\n <\/p>\n

\n The Paris-based agency says <\/strong>that share would need to shoot up to 50% by 2030 to help keep global warming to 1.5 degrees Celsius above preindustrial levels \u2014 a limit scientists say is crucial to avoid a significant worsening in the effects of climate change, including extreme flooding, drought, wildfires and food shortages.\n <\/p>\n

\n The recent flurry of deals offers little hope that oil and gas firms are planning radical changes to how they spend their cash, even though that is what is urgently needed.\n <\/p>\n

\n \u201cWith the world suffering the impacts of a worsening climate crisis, continuing with business as usual is neither socially nor environmentally responsible,\u201d IEA executive director Fatih Birol said in a statement last month ahead of the climate summit. \u201cThe oil and gas industry is facing a moment of truth at COP28 in Dubai.\u201d\n <\/p>\n

\n On Wednesday, Birol struck a more sanguine note. \u201cI congratulate the #COP28<\/a> Presidency & countries for this major outcome that clearly states the goal of transitioning away from fossil fuels in line with 1.5C,\u201d he posted<\/a> to X.\n <\/p>\n

\n The IEA did not respond to CNN\u2019s request for comment, beyond Birol\u2019s remark, on how the deal stacks up with what is unfolding on the ground, which is clearly at odds with its previous calls for a stop to all new investment in oil and gas projects. The agency said Sunday that the world is still off-track to limit global warming to the crucial 1.5-degree threshold, despite pollution-slashing pledges made by dozens of countries at COP28. It thinks global demand for oil, gas and coal is likely to peak by 2030.\n <\/p>\n

\n Even Europe\u2019s oil giants, including Shell (SHEL) and BP (BP), <\/strong>which have a better track record on renewable energy investment than their US rivals, are still channeling billions towards fossil fuels. Earlier this year, BP backed away from climate targets it set three years ago, curbing ambitious cuts to carbon emissions and oil and gas production.\n <\/p>\n

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\n Oil and gas companies operating in Norway, western Europe\u2019s largest producer, are planning to invest 240 billion Norwegian crowns ($21.85 billion) in 2024 \u2014 9% up on this year and nearly a quarter more than previously expected, Reuters reported \u2014 citing a survey from industry group Offshore Norway.\n <\/p>\n

\n Elsewhere, the United Kingdom committed earlier this year to granting \u201chundreds\u201d of new licenses to enable companies to drill for oil and gas in the North Sea.\n <\/p>\n

\n Much bigger oil and gas producing nations also look to be heading in the wrong direction. In a joint statement Wednesday, the Organization of the Petroleum Exporting Countries (OPEC) and the Gas Exporting Countries Forum (GEPC) \u2014 groups that include the United Arab Emirates, host of COP28 <\/strong>\u2014 welcomed the \u201cconsensual and positive\u201d outcome reached in Dubai <\/strong>but stressed that \u201ccontinued investment in oil and natural gas is essential.\u201d\n <\/p>\n

\n A recent United Nations Environment Programme report found that the world\u2019s fossil fuel production in 2030 is set to be more than twice the amount needed to limit the global temperature rise to 1.5 degrees.\n <\/p>\n

\n One of the major contributors to that disastrous overshoot will be India, which is burning ever greater amounts of coal and oil as it tries to meet the needs of its 1.4 billion people. It plans to double domestic coal production by 2030, even as it also sets ambitious targets for renewable energy.\n <\/p>\n

\n In perhaps the clearest sign yet that the world\u2019s latest climate deal will do little to reshape the future for fossil fuel producers, Saudi Arabia \u2014 the world\u2019s biggest oil exporter and OPEC kingpin \u2014 welcomed it.\n <\/p>\n

\n Energy Minister Prince Abdulaziz bin Salman told state-owned news outlet Al Arabiya that the COP28 deal would not affect the Kingdom\u2019s hydrocarbon exports.\n <\/p>\n

\n \u201cThe text, it provides alternatives,\u201d he said.\n <\/p>\n<\/p><\/div>\n