The world’s 15 largest oil and gas giants must urgently ramp up investment to stand a chance of limiting climate change to 2°C, says law firm CMS.
A new report from the business suggests although the amount of money these firms have invested in the energy transition has increased by 34% during the COVID pandemic, this figure must continue to rise.
It notes this growth in investment through the pandemic happened despite a 6% fall in global energy demand and short-term market contractions, but stresses shortcomings remain in limiting climate change to 2°C.
CMS states investment in the energy transition accounted for only 3.6% of oil and gas majors’ capex spending in 2020 – it claims annual investment in renewables from these businesses will need to rise to $28 billion (£19.8bn) in 2030, up from around $10 billion (£7bn) if existing policies and level of investment continue,
More positively, it highlights two-thirds of the companies surveyed had announced net zero pledges by the end of 2020, compared with just one in 2019.
The research also highlights that despite non-OECD oil demand being forecast to rise until the early 2030s, global peak oil is likely to be reached around the turn of the decade.
Munir Hassan, Head of the CMS Energy & Climate Change Group said: “The global pandemic is already visibly modifying behaviours in business and society, which is directly affecting the prospects of energy transition. Today, it is crystal clear that the energy sector has an essential role in the immediate recovery, as well as the full-speed transition to a lower-carbon economy. But there is much still to do.
“While many energy majors are on track with their emissions pledges made as part of the Paris Agreement, all of them still fall short in limiting climate change, which calls for more ambition, urgent investment and rethinking traditional strategies to ensure long-term growth and transformation.”
Norman Wisely, Partner in the Oil and Gas Team at CMS added: “The recovery from the shockwaves of COVID-19 will see demand for oil rebound from the levels seen last year.
“Given the likely long-term impact of the pandemic on many areas of life, the issue is no longer one of when oil will run out, but when will the transition to other forms of energy take over. It is now reasonable to bring the forecast date for peak oil forward to 2030.”