Several significant oil and gas firms, including ExxonMobil, Shell, and BP, reported record profits in 2022 as the price of both fossil fuels increased as a result of Russia’s invasion of Ukraine.
According to Fatih Birol, executive director of the International Energy Agency (IEA), the sector as a whole produced $4 trillion in profits last year, more than quadrupling its prior annual average of $1.5 trillion.
Particularly in emerging & developing economies, the sector has a unique potential to invest a sizeable portion of this in clean energy transitions, according to Birol on Twitter.
Yet it doesn’t appear like the oil and gas sector is taking Birol’s counsel to heart. After posting record profits last year, BP said that it would boost oil and gas production over the following seven years, abandoning earlier plans to reduce output by 2030.
Exxon has also reduced or ceased funding for initiatives to convert algae into biofuels, according to Bloomberg, despite the fact that it has long advertised its involvement in this climate solution. Exxon did not, however, tie its abandonment of algae to its record oil and gas revenues.
As reported by Bloomberg, Exxon’s senior director of technology Vijay Swarup stated that the company currently has other programs that are prepared for deployment. For hydrogen, biofuels, and carbon capture, we must go up the deployment curve. Algae still require improvement.
Nairametrics reports that Birol discussed oil and gas profits on Tuesday while he was a speaker at the Oslo Energy Summit in Norway. According to OilPrice.com, the six top worldwide oil majors—Exxon, Shell, BP, Chevron, and Total Energies—made a record $219 billion in profits, roughly double their 2021 earnings. They each achieved record profits on their own.
Despite the industry’s record profits, Birol still advocated a switch to cleaner energy, particularly for nations whose economies depend heavily on fossil fuels, according to Reuters. Otherwise, as demand declines in the future, these countries risk running into problems.
The International Energy Agency (IEA) has previously stated that if world leaders want to keep global warming to 1.5 degrees Celsius above pre-industrial levels and prevent the worst effects of the climate crisis, no additional fossil fuel development should take place beyond what is already planned through 2021.
“Economic diversification is especially important for Middle Eastern nations. According to me, the COP28 (climate summit) might be a great turning point for the Middle Eastern nations,” Birol said on Tuesday, according to Reuters. “You cannot anymore run a country whose economy is 90% reliant on oil and gas revenues because oil demand will go down.
COP28, which is scheduled to take place in Dubai in November 2023, has drawn criticism because the UAE chose Sultan Al Jaber, the CEO of the Abu Dhabi National Oil Company (ADNOC), to preside over the negotiations. This has alarmed environmentalists who fear that the oil industry will have a significant influence on international negotiations.