Is this the start of the end of the era of fossil fuels? That milestone may be the most recent climate agreement in history. Current events indicate that the oil and gas sector continues to hold a very distinct outlook for the future. The historic agreement reached at the COP28 climate conference in Dubai on Wednesday calls for “transitioning away from fossil fuels.”
The strongest-ever commitment to shifting away from energy sources that account for the majority of emissions that warm the planet was welcomed by some nations, including the United States. However, detractors quickly pointed out that the agreement falls well short of mandating that the world “phase out” gas, coal, and oil—a position that more than 100 nations had supported.
The head of global political strategy at the nonprofit Climate Action Network International, Harjeet Singh, said, “The resolution is marred by loopholes that offer the fossil fuel industry numerous escape routes.”
Regardless of how ambiguous or softened the wording is, the agreement appears disconnected from reality.
The United Kingdom is issuing new North Sea drilling licenses, India intends to double its coal output by 2030, US oil production is at a record, and US oil majors are spending billions on deals that indicate they see strong demand for decades to come.
“The agreement at COP28 would not support anything less than a comprehensive overhaul of the fossil fuel sector,” stated Daniel Klier, CEO of ESG Book, a source of sustainability information on businesses. “The truth is that no single climate summit, much less a phase-out, can force the transition away from fossil fuels.”
The announcement on Monday that Occidental Petroleum would pay $12 billion in cash and stock to acquire US shale oil producer CrownRock was the most recent example of the industry’s increased reliance on fossil fuels.
It came after Chevron (CVX) announced less than two weeks later that it would purchase shale producer Hess for $53 billion, and ExxonMobil (XOM) announced in October that it would acquire shale driller Pioneer Natural Resources for $60 billion. Chevron stated that Hess (HES) would be able to increase its production over the next ten years because of its substantial oil assets in Guyana.