International Energy Agency’s projections challenge the viability Big Oil’s growth strategies and highlight the urgent need for a course correction by shareholders
PRESS RELEASE 16 October 2024
The International Energy Agency (IEA) predicts that global oil and gas demand both peak before 2030, even in a scenario with minimal climate action leading to 2.4°C global warming. This starkly contrasts with the growth forecasts of major oil companies like Shell, BP, and Exxon, who continue to bet on expanding gas production.
“This disconnect is alarming for shareholders,” says Mark van Baal, founder of Follow This, a shareholder advocacy group. “Oil majors are ignoring the IEA’s scenarios and jeopardizing shareholder value by clinging to outdated fossil fuel expansion strategies. They’re gambling on the failure of climate policies and betting against the global energy transition.”
The IEA’s 2024 World Energy Outlook, published today, contains scenarios leading to 1.5°C, 1.7°C, and 2.4°C global warming. All scenarios show a decline in fossil fuel demand after the peak. In contrast, BP projects a 10% increase in gas demand by 2030 and 17% by 2040, Exxon forecasts 12% and 19% respectively, and Shell anticipates a 13% rise by 2040 (references below).
“Oil majors could lead and thrive in the energy transition, but the boards are neglecting the IEA scenarios to justify their continued investments in fossil fuel extraction,” Van Baal continues. “Shareholders should address the boards’ stubborn determination to keep investing in the extraction of fossil fuels.”
Even in IEA’s most pessimistic scenario, which leads to a devastating 2.4°C temperature increase, “oil and natural gas demand both peak before 2030 and decline slowly thereafter” (IEA World Energy Outlook 2024, page 200).
Van Baal emphasizes the inherent risk in Big Oil’s growth plans: “Oil majors are not only assuming governments will fail to implement additional climate policies, but they are also betting on their own ability to get current policies off the table. Moreover, they’re pushing for increased fossil fuel consumption that goes against market trends and jeopardizes the future of their companies.”
“The fact that oil majors plan to grow fossil fuel production beyond 2030 indicates they’re willing to accept even more devastating climate change,” Van Baal concludes. “Shareholders should change their minds.”
References:
- IEA World Energy Outlook 2024 (available on October 16, 6:00)
- Shell LNG Outlook2024, page 5, Gas demand by sector
- BP Energy Outlook 2024, page 40, Natural gas demand – current trajectory (dataset downloadable)
- Exxon Global Outlook 2024, Energy mix projections, first graph: Global energy demand by fuel – natural gas (dataset downloadable)
