While many energy companies are doing their part to bring down emissions, the head of the International Energy Agency (IEA) says any plans to boost production by three million bbls/d are not in-step with the Paris Agreement.

Fatih Birol participated in a conversation dubbed Navigating the Disorderly Energy Transition at the recent Columbia Global Energy Summit 2023.

“The world still needs investment for oil and gas,” he said. “We are using oil and gas.”

With that said, "if [1.5 degrees C is] the target, oil, gas, coal consumption needs to come down.”

Limiting the temperature increase to 1.5 C above pre-industrial levels is included in the 2015 Paris Agreement.

“If an oil company says, ‘I am going to increase my oil production in the next 10 years by three million barrels per day,’ I have no problem, that is their strategy … ” said Birol.  “But if they say ‘I am going to increase my oil production by three million barrels per day and my company’s strategy is in line with the Paris Agreement … this doesn’t work. I am very sorry, one needs to choose one of them. You cannot on one hand see your oil production to increase by three million barrels per day and on the other hand you say ‘I am for 1.5 [degrees Celsius].’

“In absence of a huge revolution on CCS or something that like, it will not work.”

He does, however, see efforts from industry to make a difference.

“Oil companies … gas companies have to make a choice,” explained the IEA boss. “I know many oil companies and gas companies are doing excellent work in terms of the carbon capture, in terms of hydrogen, in terms of solar. More and more are coming to solar.”

Moderator Jason Bordoff, founding director, Center on Global Energy Policy; professor of professional practice, Columbia University SIPA; co-founding dean, Columbia Climate School, asked Birol about the role for oil and gas companies in the energy transition.

“Investments need to be made,” Birol replied. “But these investments, in my view, for climate reasons and for business reasons, they shouldn’t be large scale investments. If you make an investment or start a new project today, the first oil will come to the markets in five, six, seven years of time. Whether or not the world needs increased oil production in seven years of time, in my view, is a big bet.”

Today, said Birol, world clean energy investment is slightly more than $1 trillion.

“In order to be in line with the 1.5 degree target we have … in 10 years of time, we will need to go to four trillion [dollars],” he added. “Going to four trillion is a challenge but the bigger challenge is part of the growth from today to four trillion needs to come from emerging and developing countries.

“ … There are dozens of challenges to reach our climate goals,” continued Birol. “If you were to ask me to pick one, for me, it would be how are we going to accelerate the clean energy investment in developing countries.”

 Birol was asked about OPEC producers recently announcing plans to cut oil production.

“We expect one million barrels per day increase from the non-OPEC producers, including the United States, but it will tighten the markets in the second half,” Birol said. “It is unfortunate because Europe and the global economy is still fragile. For the global economy, it is a bad surprise.

“We could see tightness in the second half, and this could push the prices upwards.”

Looking at energy security in Europe, Birol highlighted the pullback from reliance on Russia.

“I think Europe should be able to do without Russian LNG,” he said. “I personally believe Russia played the energy card, they failed and should fail. Europe should do everything [they can] … to make sure European citizens don’t pay [the] Russian government.”