Fossil Fuel Demand Is Predicted to Peak by 2030. Oil Giants Are Betting Against It.
Mike Wirth, chairman and chief executive officer of Chevron, during a Bloomberg Television interview on October 23
Why Chevron and Exxon are doubling down on fossil fuels, despite what the International Energy Agency says about our renewable future.
by Kate Aronoff
The International Energy Agency on Tuesday released a stunning report about what the world’s energy systems will look like in just over six years. By 2030, it said, global demand for coal, oil, and gas will have already peaked. Fossil fuels will account for 73 percent of the world’s energy mix—down from 80 percent today. Three times as much investment will flow to wind and solar as goes to new coal and gas-fired power plants. And half of new car registrations in the United States will be electric vehicles.
That’s a relatively rosy scenario—and it would still leave the world on track to warm by 2.4 degrees Celsius (4.3 degrees Fahrenheit), well above the Paris Agreement goal of limiting warming to “well below” two degrees Celsius. What’s more, the IEA notes that investment in fossil fuels is on track to be double what would be needed to make good on that commitment, “signaling a clear risk of protracted fossil fuel use that would put the 1.5 degrees Celsius goal out of reach.”
Fossil fuel executives seem hell-bent on sailing through that threshold as they (literally) double down on oil and gas production. Less than a month after ExxonMobil announced its intention to acquire Permian Basin driller Pioneer Resources for $60 billion, Chevron this week announced its own all-stock acquisition of Hess for $53 billion—the largest such deal in the company’s history.
Chevron CEO Mike Wirth has hit back at the IEA’s projection that oil and gas demand will peak this decade. “I don’t think they’re remotely right,” he told the Financial Times. “You can build scenarios, but we live in the real world and have to allocate capital to meet real world demands.” It’s hard to imagine he takes any more seriously the agency’s assessment of what’s required to limit warming to 1.5 degrees Celsius. To achieve that goal, the IEA predicts that every new unit of energy delivered in 2050 will need to consume two-thirds less fossil fuels.
“Looking at the world today or tomorrow, no one can convince me that oil and gas represent safe or secure energy choices for countries and consumers worldwide,” IEA head Fatih Birol told the Financial Times. Where drillers might have poured last year’s record profits into diversifying their business—expanding low-carbon ventures—they’ve just bet tens of billions of dollars on the IEA being wrong about what will, and what should, happen.