We keep hearing that we are close to “peak oil” – the point when global demand and production of oil reach their maximums, after which both decline. For instance, Reuters wrote last month:
“World fossil fuel demand is set to peak by 2030 as more electric cars hit the road and China’s economy grows more slowly and shifts towards cleaner energy, the International Energy Agency said, undercutting the rationale for any rise in investment.”
But is that true? It isn’t certain. That article even adds:
“The report from the IEA, which advises industrialised countries, contrasts with the view of oil producer group the Organization of the Petroleum Exporting Countries, which sees oil demand rising long after 2030 and calls for trillions in new oil sector investment.”
Aligned with that sentiment, The Guardian offers news of planned massive growth of fossil fuel projects:
“The world’s fossil fuel producers are planning expansions that would blow the planet’s carbon budget twice over, a UN report has found. Experts called the plans ‘insanity’ which ‘throw humanity’s future into question’. The energy plans of the petrostates contradicted their climate policies and pledges, the report said. The plans would lead to 460% more coal production, 83% more gas, and 29% more oil in 2030 than it was possible to burn if global temperature rise was to be kept to the internationally agreed 1.5C. The plans would also produce 69% more fossil fuels than is compatible with the riskier 2C target.”
This isn’t really news, however. A late 2021 report from a group including the Stockholm Environmental Institute and the United Nations Environment Program concluded:
“... governments are in aggregate planning to produce around 110% more fossil fuels in 2030 than would be consistent with limiting global warming to 1.5°C, and 45% more than would be consistent with limiting warming to 2°C, on a global level. By 2040, this excess grows to 190% and 89%, respectively.”
That was two years ago, but seems to have been forgotten in recent refreshed calls that “peak oil” is in sight.
Now we are on the heels of COP28 in two weeks where more expectations will be sown. So, what should you believe? What is the path/timing for peak oil, and how should you incorporate that into your company’s own climate plan? There isn’t really one answer. Companies are left to their own devices in evaluating various information sources, making their own judgments and taking action. But something that should be constant is planning for contingencies and changes in the world’s oil and energy markets. It probably won’t be smooth sailing – you are better off accepting that and preparing for it. Our checklist Identifying & Updating Climate Risks and Uncertainties with ten categories of specific potential risks/uncertainties companies can help you identify issues and prepare for this journey. Are you a PracticalESG.com member with access to this resource, along with many others? If not, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.
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