The bombshell suggestion of the International Energy Agency (IEA) that the world doesn’t need any new oil and gas investments ever if it is to reach net-zero emissions could further raise the volatility in oil markets if investors heed the call, according to an internal OPEC report seen by Reuters.
Earlier this week, the IEA published a Net Zero by 2050 report, in which it said that the road to limiting global warming to 1.5 degrees Celsius involves a rapid and radical shift away from fossil fuels.
According to the Paris-based agency, created to safeguard the stability and security of energy supply in the wake of the Arab oil embargo of 1973, the world will not need new oil and gas projects beyond those sanctioned as of this year.
But in the pathway to net-zero emissions, in a scenario in which oil demand is plunging, supplies will become increasingly concentrated in a small number of low-cost producers, the IEA said in its report.
OPEC’s share of a much-reduced global oil supply would surge from around 37 percent in recent years to 52 percent in 2050, “a level higher than at any point in the history of oil markets,” according to the IEA.
In its internal briefing report discussing the IEA report, OPEC said, as carried by Reuters:
“The claim that no new oil and gas investments are needed post-2021 stands in stark contrast with conclusions often expressed in other IEA reports and could be the source of potential instability in oil markets if followed by some investors.”
Moreover, developing countries will need financial and technical help to have a chance to go on the net-zero pathway, OPEC noted.
Just two months ago, Fatih Birol, the Executive Director of the IEA, said that India and other developing nations should get international financial support, as well as strong government commitment and aid, in order to phase out coal and contribute to emissions reduction.