The International Energy Agency on Tuesday released a stunning report about what the world’s energy systems will look like in just over six years. By 2030, it said, global demand for coal, oil, and gas will have already peaked. Fossil fuels will account for 73 percent of the world’s energy mix—down from 80 percent today. Three times as much investment will flow to wind and solar as goes to new coal and gas-fired power plants. And half of new car registrations in the United States will be electric vehicles.
That’s a relatively rosy scenario—and it would still leave the world on track to warm by 2.4 degrees Celsius (4.3 degrees Fahrenheit), well above the Paris Agreement goal of limiting warming to “well below” two degrees Celsius. What’s more, the IEA notes that investment in fossil fuels is on track to be double what would be needed to make good on that commitment, “signaling a clear risk of protracted fossil fuel use that would put the 1.5 degrees Celsius goal out of reach.”
Fossil fuel executives seem hell-bent on sailing through that threshold as they (literally) double down on oil and gas production. Less than a month after ExxonMobil announced its intention to acquire Permian Basin driller Pioneer Resources for $60 billion, Chevron this week announced its own all-stock acquisition of Hess for $53 billion—the largest such deal in the company’s history.
Chevron CEO Mike Wirth has hit back at the IEA’s projection that oil and gas demand will peak this decade. “I don’t think they’re remotely right,” he told the Financial Times. “You can build scenarios, but we live in the real world and have to allocate capital to meet real world demands.” It’s hard to imagine he takes any more seriously the agency’s assessment of what’s required to limit warming to 1.5 degrees Celsius. To achieve that goal, the IEA predicts that every new unit of energy delivered in 2050 will need to consume two-thirds less fossil fuels.
“Looking at the world today or tomorrow, no one can convince me that oil and gas represent safe or secure energy choices for countries and consumers worldwide,” IEA head Fatih Birol told the Financial Times. Where drillers might have poured last year’s record profits into diversifying their business—expanding low-carbon ventures—they’ve just bet tens of billions of dollars on the IEA being wrong about what will, and what should, happen.
Chevron and Exxon have plenty of cause for optimism, though. The U.S. already accounts for 90 percent of new liquefied natural gas projects approved anywhere on earth since the start of 2022. Domestic crude oil production reached record levels this year and is likely to do the same in 2024. If governments follow through on today’s climate pledges, oil demand will decline by 50 percent by midcentury. Limiting warming to 1.5 degrees Celsius, the IEA argues, would see fossil fuel production decline 2 percent per year through 2030 worldwide, and 4 to 5 percent per year after that through 2050.
For oil companies’ recent investment decisions to pay off, that is, even the most modest of climate goals will have to stay firmly out of reach. Conversely, striving toward putting them within reach means rendering many of their investments worthless. Policymakers don’t seem poised to make it so.
The IEA didn’t create its projections and recommendations out of thin air. Modelers make assumptions based on available data about likely outcomes or work backward from goals like net-zero emissions. Fossil fuel executives have a vested interest in making sure some scenarios come true and others don’t. If the world goes down one path, they stand to lose trillions of dollars. If it follows another, they can continue to make fabulous amounts of money in a world that is two, three, or four degrees warmer. Those same companies painting themselves as service providers—humbly meeting the world’s energy demands—obscure just how much they do to influence that demand and, consequently, our shared future: bankrolling politicians who stop climate policy in its tracks; lobbying to kill and weaken bills that might reduce emissions; historically, backing efforts to undermine climate science and diplomacy.
The recent spending binges on Pioneer and Hess, then, should be thought of less as a sober, pragmatic assessment of where things stand than as another attempt by oil companies to tip the scales in their favor. And the IEA report is a rebuttal of sorts: a road map toward a slightly less calamitous future.