According to Climate Action Tracker (CAT), the world’s largest fossil fuel-producing countries have made no commitments to halt oil and gas production nor have they set global targets for renewable energy. These major players in the fossil fuel industry attract focus as the forthcoming UNFCCC COP 28 plans to address ending oil and gas production.
Key Highlights of the Climate Action Tracker Report
The report singles out two main issues. Firstly, while there is worldwide agreement on phasing out coal, there is no such consensus for oil and gas. New oil and gas investments should have ended by now, but a concrete decision hasn’t been finalized, despite India calling for a phasedown of all fossil fuels at COP27.
Secondly, only a few developed countries like Sweden, Denmark, France, and Spain have set end dates for oil and gas production, with some even ramping up production. For instance, the US has more than doubled its oil production since 2010 while Australia expects an 11% increase in LNG production between 2020 and 2030.
Carbon Capture and Storage: A Challenge and an Alternative?
Some countries are now focusing on Carbon Capture and Storage (CCS) as an alternative solution. The technique involves capturing CO2 from power plants and other industrial processes before they can be emitted into the atmosphere. However, CCS currently captures less than 0.1% of global carbon emissions due to various technological, economic, institutional, ecological, environmental, and socio-cultural barriers. The cost of CCS could rob funds from renewable energy projects, and investments in CCS might end up becoming stranded assets.
Global Scenario of Oil and Gas Production/Consumption
Global production, transportation, and processing of oil and gas emitted the equivalent of 5.1 billion tonnes of CO2 in 2022, per the International Energy Agency (IEA). Major players in petroleum liquids production include the United States, Saudi Arabia, Russia, Canada, and China. Meanwhile, the top oil-consuming countries are the United States, China, India, Russia, and Japan. The USA became the world’s top petroleum liquids producer, accounting for 20% of the world’s production in 2022.
India’s Reliance on Oil and Gas
India stands as the world’s third-largest oil consumer, with its import dependency on oil and natural gas continually increasing. Industrial activities related to fossil fuels exposes India greatly, marking an annual growth rate of oil demand at 3-4%. As of 2021-22, net import dependency rose to nearly 48% for natural gas, marking a significant increase from just over 30% in 2012-13.
Why Countries Hesitate to Restrict Oil and Gas Production
Economic, geopolitical, and political factors play crucial roles in a country’s decision not to restrict oil and gas production. These resources contribute significantly to government revenues, employment, and overall economic growth while also ensuring energy security. In some instances, countries may use energy production for political leverage or succumb to domestic pressure from industry groups, local communities, or political factions.
How Countries Can Reduce Dependence on Oil and Gas
To shift away from oil and gas dependency, countries should set concrete timelines for ending fossil fuel production and invest in the research and development of renewable energy technologies. They can also collaborate on knowledge sharing, research, and joint initiatives to develop innovative solutions.
In addition, developed countries should support developing nations in building capacity for sustainable energy projects. This includes technical assistance, training programs, and promoting green industrialisation to create local job opportunities. It will also increase energy self-sufficiency and reduce reliance on fossil fuel imports.
