The pivotal role of fossil fuels in energy transition has taken center stage at COP28 in the UAE. The International Energy Authority (IEA) report, highlighting government-linked fossil fuel production and tax revenue, suggests the conference may be extended by two days to forge a binding energy transition agreement.
Sultan Al Jaber, head of the United Nations Climate Conference, has called for expedited negotiations to resolve the future of fossil fuels before the summit’s conclusion.
The IEA report reveals that state-affiliated oil and gas companies, which constitute a significant portion of global production and reserves, are impeding a fair transition to sustainable energy. Governments, benefiting from substantial tax revenues from these companies, show reluctance to shift towards clean energy, fearing the loss of fiscal income.
The report indicates that national oil companies account for over half of global production and nearly 60% of oil and gas reserves. In contrast, major private firms represent less than 13%. Saudi Aramco and Russia’s Gazprom lead the government-affiliated producers.
With 15 government and seven private oil companies dominating production, the report underscores the need for enhanced efforts to align demand reduction with climate objectives. Currently, corporate investments in clean energy constitute a mere 1% of global totals, underscoring the urgency for increased commitment.
The current momentum behind clean energy transformations is sufficient to achieve the highest levels of demand for oil and gas by 2030, but there is still a lot that needs to be done to reduce demand in ways that meet national and global climate goals.
