Executives at Australia’s big oil and gas producers this week said they recognised society’s accelerating climate demands and the risk of sharing the coal industry’s fate of being shunned by equity investors and lenders without strong climate commitments.
90 per cent of the questions we are getting at the moment on climate are about oil and gas companies. This is a really topical issue.
Climate Action 100+ director for Australia Laura Hillis
But they have also voiced confidence in robust future demand underpinning new growth projects in Australia, as large Asian customers continue turning to LNG as an affordable, reliable and comparatively less-emitting alternative to coal fired power.
They also point to the International Energy Agency’s description of its latest 1.5-degree scenario as just one possible pathway, rather than the only pathway, to net-zero emissions.
While acknowledging that no climate scenario was a “crystal ball”, Ms Hillis said institutional investors would be using the IEA’s latest scenario to guide their own investment road maps, realign their capital-allocation strategies and guide engagements with company boards.
“There is going to be a capital flight that moves away from oil and gas companies that aren’t really far progressed along their transition pathway,” she said.
Tony Nunan, vice-president of Shell Australia, said he believed there was largely a consensus now between investors, the wider public and the energy sector on the end goal of hitting net-zero emissions by 2050, “and oil and gas is on board”. The question now, he said, was the speed required to get there.
“What is clear is that society’s expectations of us is that we do it as quickly as we can,” he said.
Natural gas, as the least-emitting fossil fuel, is often touted as a “transition fuel” in the green power shift because it can back up renewable energy when weather conditions for wind and solar output are unfavourable.
Gas is also a raw material in a range of manufacturing processes. But its future is increasingly under question, with scientists, think tanks and climate advocates arguing gas remains a heavy source of emissions and its role must be limited to meet the Paris agreement’s targets.