Financing for oil at this time

Under the 2015 Paris Agreement, 196 countries agreed to limit global warming to well below 2ºC, preferably to 1.5ºC compared to pre-industrial levels. The countries submitted plans for climate action known as nationally determined contributions(NDCs) and long-term development strategies for low greenhouse gas emissions in 2020. Many countries scrambled to promise to achieve net-zero carbon emissions by 2050. 

 

According to Mckinsey & Company, a global business management consulting firm, the oil and gas industries account for 42% of the global greenhouse gas emissions. The industry’s major companies have also pledged their commitments to achieve net-zero by 2050. Most commitments are concerned with investing in renewable energies, planting more trees, or using carbon capture technologies. But they are also still planning to invest their money into drilling new fields. As per the International Energy Agency(IEA), no new oil and natural gas fields were needed on the path to climate neutrality in their report “Net Zero by 2050”.

Many experts say that most companies’ plans are not enough to achieve the target even without new extraction projects and they must set interim targets before 2050. 

 

I think they can only get closer to net-zero by the 2050 target and the Paris Agreement when investing money on developing renewable energies quicker and to improve/improving our resilience to climate change. Recently, oil and gas companies have been advertising how they are sustainably acting in relation to the environment. It over-represents clean energy investments and makes investors confused. Therefore, investors need to look beyond their ‘green policies’ and put pressure on them to speed up the transition to renewable energies. High demand can help make the transition and develop access to renewable energies faster which will cut down demand for oil and gas. Moreover, although the main agents of change will be businesses in their respective fields/industries, there will be a limit to what can be achieved without a government support.