Mark Campanale, founder and director, said:

“The IEA’s forecast of an upcoming peak in demand for oil, gas, and coal remains unchanged, even as its forecasts for clean energy deployment have been revised upwards yet again. With electric vehicle sales and renewable capacity additions breaking records fossil fuels are looking increasingly obsolete.

“For an investor reading the latest WEO, what screams out is the warning that we’re in for a period of lower oil prices and growing overcapacity. This is the death knell for the profitability of many oil and gas producers, many of whom require high break-even prices on each barrel to generate the returns investors have grown to expect. And if low prices are sustained, combined with falling demand, why should any investor accept this additional risk, regardless of any climate concern?

“It looks like we’re in for a period of growing volatility and falling returns. It provides yet another reason for financial institutions to join the likes of PGGM, New York City Pension Fund and the Church Commissioners in abandoning the sector for good.

“And yet, we are still to see evidence of oil and gas majors considering the impacts of declining prices and overcapacity in cash flow forecasts. If such information is not included in today’s asset valuations, investors face the risk of yet more stranded assets as a result of the energy transition.

“The final communique at COP28 referred to the need to transition away from all fossil fuels in order to stay in line with net zero by 2050. But to listen to the major oil and gas producing countries and companies over the last 10 months, it’s like COP28 never happened.

“We are therefore pleased to see the IEA repeat its recent messaging that we need fossil fuel phase-out alongside a massive expansion in renewables and rapid action on methane if we are to have any chance of keeping 1.5C alive. Luckily, the IEA shows that this can be largely achieved using the technologies we have today, which are maturing, readily available, and cheaper than ever.

“As the oil and gas industry’s favourite solution, carbon capture, continues to underdeliver, the IEA calls for greater investments in grids and storage as key enablers of rapid electrification that will help drive emissions down.

“Policy continues to play a crucial role in accelerating the transition. We hope that the parties to COP29 next month will not only take on board what the IEA has to say about transitioning away but go further in their conclusions – not least with the crucial new round of NDCs now on the horizon.”