• An increasing number of oil and gas companies are facing financial, social and political pressure to clarify the roles they intend to play in net zero transitions. The industry landscape is diverse and no single option will make sense for all, but many oil and gas companies have already made announcements on how they plan to respond.
  • The oil and gas industry currently employs nearly 12 million workers globally. This falls by 10% in the APS and 20% in the NZE Scenario to 2030. Governments and companies will need to work together closely to maximise opportunities for reskilling workers.
  • The ratio of investment in fossil fuels to clean energy rises from 1:1.8 globally in 2023 to 1:5 in 2030 in the APS and to more than 1:10 in 2030 in the NZE Scenario. These ratios can provide a guide for financial actors looking to assess the alignment of their portfolios with the outcomes of net zero transitions.
  • A key strategic challenge for oil and gas companies is aligning existing skills and capital with the new requirements of energy transitions.  We have developed a new framework to examine the possible contribution of oil and gas companies to net zero energy transitions that allows for a more granular discussion of the targets these companies are setting.  The framework covers the following:
  • Scope 1 and 2 emissions: in the NZE Scenario there is a 60% reduction in scope 1 and 2 emissions from oil and gas operations to 2030. A number of companies have already undertaken efforts to cut these emissions and this reduction is broadly consistent with all companies achieving the emissions intensity of current best practices by 2030.
  • New oil and gas projects: the NZE Scenario does not require new exploration or the development of new long lead time upstream conventional oil and gas projects. No companies have to date made specific pledges on this.
  • Investment in clean energy:  Clean energy investment by the oil and gas industry represented 2.5% of its total capital spending in 2022. In the NZE Scenario, projected oil and gas revenues would allow the industry to invest around 50% of its capital budget in 2030 in clean energy. Achieving this level of investment would require governments, companies, shareholders and financial actors to work closely together.
  • It is not axiomatic that oil and gas companies should invest in clean energy. If they do not, they would need to achieve very low emissions intensities and stop investment in new long lead time upstream projects if they are to claim that they are making a meaningful contribution to achieving net zero emissions by 2050.
  • The NZE Scenario trends on scope 1 and 2 emissions and oil and gas industry investment in clean energy provide important guidance for oil and gas companies looking to play their part in net zero transitions, even if the energy transition does not accelerate at the pace seen in that scenario.