Big oil companies used an industry conference this week to argue against a rapid shift to green energy, with fossil fuel companies emboldened by rising demand and record profits despite growing concern about climate change.
Executives attending the annual CERAWeek meeting in Houston expressed confidence that fossil fuel consumption will continue to grow, just months after world leaders pledged at the COP28 climate summit to begin a “transition away from fossil fuels” and triple the use of renewable energy sources by 2030.
“The environment right now is very positive for the oil and gas industry,” Alan Armstrong, CEO of Williams, the largest US gas pipeline company, told the Financial Times.
“If we go back in time four or five years ago, they were saying: ‘Oh, everything is going to be renewables and batteries’ – and now they’re saying: ‘Wow, wow, this is going to be very expensive.’”
The upbeat comments at the event – which saw a record attendance of more than 8,000 delegates – came against a backdrop of record temperature rises and growing scientific concern about the need to cut greenhouse gas emissions to tackle climate change.
This week, the United Nations World Meteorological Organization launched a “red alert” as it confirmed that 2023 was the hottest year on record. He pointed to unprecedented surface and ocean temperatures, the retreat of glaciers, and rising sea levels. Jim Skia, head of the United Nations Intergovernmental Panel on Climate Change, told a Financial Times conference last week that the world is in “uncharted territory.”
But industry leaders say consumers are unwilling to pay the costs associated with a rapid transition to wind and solar power. A boom in the construction of power-hungry AI data centres, population increases and mass electrification mean increases in all forms of energy, except coal, are needed to meet demand, they said.
The “harsh reality” is that the world “has not yet reached the point where big customers are willing to pay for this new energy, and consumers may not really want to,” said Liam Malone, head of ExxonMobil's exploration and production business. Find out what it costs.”
“Until there is a market-based economy and everyone understands what it costs, consumers are paying more than they need to for energy — it's simply not that complicated,” he said. “You can argue about the environment all day and NGOs all day, but these are the facts. I think this message is starting to resonate.”
Industry heavyweight Shell last week weakened its carbon dioxide emissions reduction target. BP, which lowered its climate targets last year, touted the potential to grow its oil and gas operations in the US Permian Basin at the conference.
U.S. oil and gas production has broken new records in recent months, and the country is now pumping more than any other country in history. Meanwhile, rising prices in the wake of Russia's invasion of Ukraine have pushed producers around the world to record profits in the past two years.
“We have to abandon the fantasy of phasing out oil and gas, and instead invest in them that reflect realistic demand assumptions,” Amin Nasser, CEO of Saudi Aramco, the world’s largest oil producer, told delegates at the conference this week.
But some renewable energy executives at the conference pushed back on the fossil fuel narrative.
Sandhya Ganapathy, president of EDP Renewables North America, described the comments from oil and gas executives as a “limited” view of the role renewables will play in the future.
Mark Hutchinson, CEO of Fortescue Energy, responded to Aramco's Nasser's comments by saying: “The fantasy is that the oil and gas industry believes that by increasing emissions in the world, things will get better.
“You have the oil and gas industry that is baring its teeth. . . Now the world knows that these people will never be part of the solution.
However, oil and gas executives have pointed to the need for reliable electricity to fuel the growing energy demand caused by the proliferation of data centers needed for artificial intelligence.
The International Energy Agency expects global energy consumption from data centers to exceed 1,000 terawatt hours by 2026, more than double 2022 levels and an increase equivalent to Germany's total energy use within four years.
“These great things that civilization does, and the innovation we are advancing, depend on our industry to deliver,” said Toby Rice, CEO of EQT, the largest U.S. natural gas producer.
“When we talk about data centres, there's no longer going to be, 'Okay, let's use wind, let's use solar' – that needs reliable, consistent energy that can only be provided by hydrocarbons.”
Last year, the International Energy Agency predicted that demand for oil and gas would peak before the end of the decade, a forecast disputed by producer group OPEC+ and several major oil companies, who do not expect demand to peak until the 2030s or later.
The world is accelerating the pace of deployment of renewable energy sources, adding 50 percent more capacity in 2023 than the previous year, according to the International Energy Agency, with faster growth expected in the next five years.
But the IEA is facing a backlash from major oil companies and Republican supporters in the US Congress, where a group of lawmakers accused the agency on Wednesday of adopting “misleading and troubling” positions on fossil fuels and straying from its core mission of promoting energy security.
A report from Carbon Tracker this week found that the world's largest oil and gas companies remain out of alignment with the Paris Agreement's goals on tackling climate change, despite corporate messaging on supporting a low-carbon future.
Protesters outside the event in Houston staged a mock “funeral march” as they criticized executives over pollution in Gulf communities and the industry's contribution to climate change.
“Our dependence on fossil fuels has been hurting, killing, and causing suffering to communities and people for decades,” said James Hiatt, an activist from southwest Louisiana.
“We are on the brink where we must transform if we do not want to inflict collective suffering on our children and their children.”
