05/03/2018
The Tightrope Walk: New Oil & Gas and the Paris Agreement
The global push to combat climate change, spearheaded by the landmark Paris Agreement, sets a formidable challenge for the energy sector. As nations strive to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels, a critical question looms large: can new oil and gas exploration projects coexist with these ambitious climate targets? This article delves into the intricate relationship between continued fossil fuel exploration and the urgent need for decarbonisation, exploring the arguments, data, and expert opinions that shape this vital debate.
Understanding the Paris Agreement's Mandate
The Paris Agreement, adopted in 2015, is a legally binding international treaty on climate change. Its central aim is to strengthen the global response to the threat of climate change by keeping a global average temperature rise this century well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase even further to 1.5 degrees Celsius. To achieve this, countries have committed to reducing greenhouse gas emissions. This necessitates a significant shift away from fossil fuels, which are the primary source of these emissions, towards renewable and low-carbon energy sources. The agreement calls for a "net-zero" emissions future, meaning that any remaining emissions must be balanced by carbon removal.
The Case for Continued Exploration
Proponents of new oil and gas exploration often cite several key arguments. Firstly, they contend that fossil fuels are still essential for meeting global energy demand in the short to medium term. The transition to renewables, while crucial, cannot happen overnight and requires substantial investment and infrastructure development. Until renewable energy sources can fully meet the world's energy needs, a reliable supply of oil and gas is deemed necessary to prevent energy shortages and economic instability.
Secondly, some argue that new, more efficient, and less carbon-intensive extraction technologies can mitigate the environmental impact of fossil fuel production. This includes advancements in drilling techniques, carbon capture and storage (CCS) technologies, and improved methane emission control. The idea is that if new projects are developed with the strictest environmental standards and incorporate technologies to minimise emissions, they can play a transitional role without fundamentally undermining climate goals.
Furthermore, there's an argument that natural gas, in particular, can serve as a "bridge fuel." As it burns cleaner than coal, with lower carbon dioxide emissions and significantly reduced air pollutants, natural gas can facilitate a transition away from more polluting sources like coal in power generation. New gas exploration, therefore, could be seen as a step towards decarbonisation by displacing coal.
The Counterarguments: A Growing Scientific Consensus
The overwhelming scientific consensus, however, paints a starkly different picture. Numerous reports, including those from the Intergovernmental Panel on Climate Change (IPCC), highlight that to limit warming to 1.5 degrees Celsius, there needs to be a rapid and deep reduction in fossil fuel use. This implies that, in many scenarios, there is no room for new oil and gas exploration or development if we are to meet these targets.
The core of the argument against new exploration lies in the concept of stranded assets. If the world is to transition away from fossil fuels, then new investments in exploration and production infrastructure could become uneconomical before the end of their expected lifespan. These assets, such as newly discovered reserves or planned extraction facilities, risk becoming "stranded" – unable to be exploited due to policy changes, technological advancements in renewables, or shifts in market demand driven by climate action.
Moreover, the lifecycle emissions of oil and gas are substantial. While natural gas may burn cleaner at the point of combustion compared to coal, the extraction, processing, and transportation of both oil and gas can lead to significant methane leaks. Methane is a potent greenhouse gas, with a much higher warming potential than carbon dioxide over shorter timescales. Even with improved technologies, the risk of leakage and associated emissions remains a major concern.
The International Energy Agency (IEA) has been particularly vocal on this issue. In its influential 2021 report, "Net Zero by 2050," the IEA stated that there is "no need for new oil and gas fields" in its net-zero emissions scenario. This report, which outlines a pathway for the global energy sector to reach net-zero emissions by 2050, suggests that continued investment in new fossil fuel supply projects would lead the world to miss its climate goals.
Key Considerations and Challenges
Several factors complicate this debate:
1. Energy Security and Affordability
For many nations, particularly developing economies, ensuring a stable and affordable energy supply is a primary concern. A rapid cessation of oil and gas exploration could lead to price volatility and supply disruptions if renewable alternatives are not yet scaled sufficiently. The transition must be managed carefully to avoid exacerbating energy poverty.
2. Technological Advancements
While the IEA's net-zero scenario suggests no new fields, the effectiveness and scalability of technologies like carbon capture, utilisation, and storage (CCUS) remain subjects of ongoing development and debate. If CCUS can be deployed at scale and at a reasonable cost, it could potentially allow for some continued fossil fuel production with significantly reduced emissions. However, the current deployment of CCUS is far from sufficient to offset the emissions from new exploration projects.
3. Geopolitical Factors
The global energy market is deeply intertwined with geopolitics. Decisions about oil and gas exploration are often influenced by national energy independence goals, economic development strategies, and international relations, sometimes overshadowing climate imperatives.
4. The Role of Existing Assets
Even if new exploration is halted, there are still vast reserves of oil and gas from existing fields that will likely be exploited for decades to come. The challenge then shifts to ensuring these existing operations are managed with the lowest possible emissions and that production is phased out in line with climate targets.
Data and Projections: A Stark Reality
Numerous studies have attempted to quantify the impact of new oil and gas projects on climate targets. These analyses consistently show that the world is on track to produce far more fossil fuels than is consistent with limiting warming to 1.5°C or even 2°C.
A report by the Climate Action Tracker highlights that many countries are still approving new oil and gas projects, which are incompatible with a 1.5°C pathway. This creates a significant risk of future emissions that lock in warming for decades to come. The projected emissions from existing fossil fuel reserves and planned production alone far exceed the remaining carbon budget for a 1.5°C future.
Consider the following comparison:
| Metric | Current Plans/Existing Reserves | 1.5°C Pathway Requirement |
|---|---|---|
| Oil Production (millions of barrels per day) | Projected to remain high, with new projects increasing supply. | Needs to decline significantly, with no new supply growth. |
| Gas Production (trillion cubic feet per year) | Projected to increase, driven by new exploration. | Needs to peak and decline rapidly. |
| Coal Production | Still substantial in many regions. | Needs to be phased out almost entirely. |
This table illustrates the fundamental disconnect. While the science and international agreements point towards a rapid decline in fossil fuel production, current investment and exploration plans often point in the opposite direction.
Frequently Asked Questions
- Can new oil and gas projects be "green"? While new projects can adopt stricter environmental standards and incorporate technologies like CCUS, the fundamental act of extracting and burning fossil fuels inherently releases greenhouse gases. The question is whether these mitigation efforts are sufficient to align with Paris targets, which most analyses suggest they are not.
- What is the role of natural gas as a "bridge fuel"? Natural gas is considered a bridge fuel because it emits less CO2 when burned than coal. However, methane leaks during extraction and transport can negate this benefit. Its role as a bridge is increasingly questioned as renewable energy costs fall and deployment accelerates.
- What are the risks of investing in new oil and gas exploration? The primary risk is that these investments could become stranded assets if global climate policies tighten or if the transition to renewable energy happens faster than anticipated. This poses financial risks to companies and investors.
- What is the alternative to new oil and gas exploration? The alternative is a rapid and sustained scaling up of renewable energy sources (solar, wind, geothermal), alongside significant improvements in energy efficiency, electrification of transport and industry, and the development of sustainable alternatives for hard-to-abate sectors.
Conclusion: A Crossroads for the Energy Future
The question of whether new oil and gas exploration projects can meet Paris climate targets is, for most scientific and policy experts, a resounding "no." The pathway to limiting global warming to 1.5°C requires a managed decline of fossil fuel production, not expansion. While arguments for energy security and transitional fuels persist, they are increasingly challenged by the urgency of the climate crisis and the rapid advancements in clean energy technologies.
The decisions made today regarding new exploration will have profound implications for the future of our planet. Acknowledging the scientific reality and aligning investment and policy with the goals of the Paris Agreement means prioritising a swift and just transition to a sustainable energy system. The imperative for change is clear, and the time for decisive action is now.
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