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DAVOS-IEA warns oil companies doing nothing on emissions is not an option

Mon, 20th Jan 2020 00:00

* IEA says oil and gas industry must increase climate
efforts

* Says doing nothing could threaten long-term profits

* Industry should boost investments in low-carbon fuels

PARIS, Jan 20 (Reuters) - Oil and gas companies must boost
investment in low carbon energies or face an increasing backlash
that could threaten their long-term profits and social
acceptance, the International Energy Agency (IEA) said on
Monday.

In a report with the World Economic Forum presented in
Davos, the IEA said oil and gas companies face a critical
challenge as the world increasingly adopts clean energy
transitions to curb global warming.

Around 15% of global energy-related emissions come from the
process of getting oil and gas out of the ground and to
consumers, the IEA said. Energy-related green house gas
emissions rose to a record high in 2018.

The Paris-based agency, which advises industrialised nations
on energy issues, said oil and gas companies are facing
increasing demands to explain how they intend to reduce
emissions in line with the 2015 Paris climate agreement.

"Every part of the industry needs to consider how to
respond. Doing nothing is simply not an option," IEA's Executive
Director Fatih Birol, said in a statement.

The companies are under pressure to cut emissions from their
operations and from their products as used by customers, as well
as to increase investments in cleaner energies. Targets by oil
firms to cut their emissions and switch to cleaner energies vary
widely.

"The first immediate task for all parts of the industry is
reducing the carbon footprint of their own operations," Birol
said, adding that a large part of the emissions from the sector
can be brought down relatively quickly and easily, such as
reducing methane leaks.

The IEA said another key move by the sector would be to
boost investments in the cleaner fuels – such as hydrogen,
biomethane and advanced biofuels.

"Within 10 years, these low-carbon fuels would need to
account for around 15% of overall investment in fuel supply if
the world is to get on course to tackle climate change," it
said.

So far, average investment by oil and gas companies in
non-core areas such as renewables, is still limited to around 1%
of total capital spending, mostly on solar and wind projects.

The IEA said oil and gas companies could play a crucial
role in accelerating deployment of renewables given their
advanced technologies and deep pockets.

The companies could also increase spending on some clean
energy technologies – such as carbon capture.
(Reporting by Bate Felix
Editing by Alexandra Hudson)

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