The Strategist

IEA calls for halt to investment in oil exploration and development

05/25/2021 - 03:44

The International Energy Agency (IEA) is calling for an immediate halt to investment in exploration and development to achieve carbon neutrality by 2050. The IEA's call has been heavily criticised and called reckless.

The IEA Net Zero 2050 report, which calls for a complete halt to investment in oil and gas projects to achieve carbon neutrality by 2050, has had a bombshell effect. Carbon neutrality - the complete cessation of greenhouse gas emissions into the atmosphere, especially carbon dioxide and methane - should prevent the global warming that is causing devastating climate change.

IEA Executive Director Fatih Birol said that to achieve carbon neutrality by 2050, investments in exploration and development of new oil and gas fields must be banned this year already. The IEA recognises that such a decision would have "far-reaching implications for all countries and companies producing these fuels" The IEA believes that, with the move to carbon neutrality, the number of oil and gas producers in the world would shrink significantly - only producers with low production costs would remain in the market. Since OPEC countries have the lowest production costs, their share in the global oil market will increase from 37% of the current production costs to 52% by 2050.

Immediately after publication, the IEA report was heavily criticised. According to critics, Birol has forgotten what the IEA was created for: achieving energy security, avoiding shortages in energy supply, especially oil and gas, to ensure accelerated economic development. The IEA report ignores the fact that oil and gas continue to play a key role in the global economy. Oil and gas are the raw material for producing more than just motor fuels and other fuels. These hydrocarbons also produce fertilisers, polymers and other petrochemicals, without which modern society cannot exist.

Critics of the IEA conclude that without oil and gas there can be no transition to carbon neutrality before 2050. Even if OECD countries would reduce oil and gas consumption significantly to achieve carbon neutrality and protect the environment, non-OECD countries have no intention of doing so.