The world’s oil and gas companies will undergo annual reviews by the International Energy Agency to assess how they’re doing on climate change and clean energy issues.
Driving the news: The group released a report on Sunday showing that oil and gas producers, including those owned by governments, spend on average just 1% of their total capital expenditure outside oil and gas.
What they’re saying: IEA Executive Director Fatih Birol told Axios in an interview that the group, a Paris-based intergovernmental research organization, is creating a “verifiable process” to assess what companies are doing to reduce emissions and invest in areas outside of oil and gas.
- Such a process is necessary, he said, to assure critics and "to get companies a social license to operate so that they are part of the solution.”
- It wasn’t immediately clear which specific companies IEA would review and how the process would work, but this report includes all international oil and gas companies and most big state-owned ones.
The big picture: Some of the world's biggest oil and gas companies are slowly beginning to invest in renewable energy and other technologies to addressing climate change. The industry is facing increasing pressure from investors, politicians and activists to be more transparent about the problem and diversify their business models.
“We believe that the oil and gas industry in general faces the critical challenge of matching their short-term profits with their long-term license to operate. We see that no oil and gas company will be unaffected by the clean energy transition: from demand side, from supply side, whatever it is.”— Fatih Birol
What’s next: Birol says companies should push for policies in governments that would help provide certainty around the transition to cleaner energy sources, which he and most other experts describe as inevitable. The uncertainty is around how long and how fast it’ll be.
- “I think they should not wait for only the government signals because sooner or later I believe the imperatives of climate change will push them to reduce their emissions,” Birol said.
- In the U.S., oil companies are slowly beginning to actively lobby for a price on carbon emissions, but it’s so far not moving the needle. Lawmakers and companies don’t seem to be making it a top priority among a crowded domestic agenda of issues, including ongoing trade concerns.
Go deeper: Big oil teeters between ally and enemy in climate fight