With extreme weather conditions becoming more and more frequent and the 2024 summer being the hottest on record, the question of moving to eco-friendly and sustainable ways of living has never been more pertinent. The United Nations shared that the fossil fuels industry, one of the biggest climate change adversaries, accounts for over 75% of global greenhouse gas emissions, alongside almost 90% of all carbon dioxide emissions.
Governments across the globe seem to be finally putting more pressure on fossil fuel businesses by introducing laws more sympathetic to clean energy that could make the "dirty" energy less lucrative, and potentially push firms toward aims laid out in the 2015 Paris Agreement. According to the International Energy Agency's (IEA) latest World Energy Investment report, in 2024, out of over $3 trillion worldwide investments into energy, some $2 trillion was directed to clean energy sources, while the remainder was put into fossil fuels, with the investments in the latter tumbling 19% and investments in the former soaring by 78% compared to 2015. Nonetheless, even with such developments, "much greater efforts" are needed to meet climate goals, the IEA highlighted. "Achieving net zero emissions globally by 2050 would mean annual investment in oil, gas, and coal falls by more than half, from just over $1 trillion in 2024 to below $450 billion per year in 2030, while spending on low-emissions fuels increases tenfold, to about $200 billion in 2030 from just under $20 billion today," IEA said.
But abandoning such a profitable field will be no easy feat. Firstly, fossil fuel global demand is anticipated to grow in the years to come. According to data from Precedence Research, the global fossil fuels market size is expected to jump by a whopping 64% to $11.8 trillion by 2032. Secondly, oil and gas businesses have seen their revenues and stock skyrocket over the years, with 2022 being a record year. The leading oil and gas public firm is Saudi Aramco, with a valuation of $1.7 trillion. In second and third place are ExxonMobil and Chevron with a market capitalization of $532.8 billion and $273.8 billion, closely followed by PetroChina and Shell, valued at $225 billion and $214.9 billion. Taking this into account, it’s not difficult to imagine why the transition toward clean energy could be pushed back.
Even though most of these companies pledged to reduce emissions significantly by 2050, many are yet to make any promises. "Less than half of current global oil and gas output is produced by companies that have targets to reduce these emissions," IEA said in its 2023 Oil and Gas Industry in Net Zero Transitions report. Furthermore, certain leaders in the oil and gas industry remain adamant that these fuels will continue to power the future world. "We should abandon the fantasy of phasing out oil and gas," Aramco CEO Amin Nasser stated at CERAWeek by S&P Global, adding that even with electric vehicles, and wind and solar energy, he sees oil demand on the path to reaching a record high in 2024. Shell CEO Wael Sawan stressed that while "there is going to be a multidimensional energy system in the future, oil and gas will continue to have an important role in stabilizing that system for a long, long, long time to come."
There have also been discussions about the lack of transparency in the industry, as well as about concerns that the costs related to clean energy transition might hinder a lot of countries and companies in their ambition to switch.
Thus, while clean energy might overtake "polluting" energy at some point in the far future, the fossil fuel industry is likely to remain dominant and fruitful in the next couple of decades and the transition is likely to take more time than expected.
