The world would not need to invest in new oil and gas projects if demand for the fuels fell in line with the 1.5C limit on global warming, says the International Energy Agency (IEA).
The agency has been under attack from the Trump administration in the US for saying that fossil-fuel use is on track to peak this decade, given current policies and firm political pledges.
But, in a new report, the agency reiterates its 2021 finding that no investment in new oil and gas would be needed in a 1.5C world, albeit with some caveats.
The report also sets out how the oil-and-gas industry has been needing to “run fast to stand still”, spending around $500bn per year just to keep output at today’s levels.
It says this is due to output falling faster than previously thought at the world’s oil and gas fields, with an increasing reliance on shale oil and gas projects that face rapid rates of decline.
Amid growing calls for further licensing in the North Sea, the IEA also notes that new exploration licenses take an average of nearly 20 years to deliver additional oil and gas production.
Turning unconventional
The IEA report begins by arguing that discussions on the future of oil and gas “tend to focus on the outlook for demand, with much less consideration given to how the supply picture could develop”.
This is why the IEA has published a report on the rate of decline at existing oil and gas fields, as well as looking at where these fuels come from today and how this might change in the future.
Over the past quarter-century, global oil supplies have risen by a third, as shown in the figure below. At the same time, the source of those supplies has shifted towards “unconventional” resources, such as “tight oil” from shale formations (red) and oil sands (orange).
Shale gas is also behind much of the growth in global gas production over the past 25 years, shown by the green wedge in the figure below.
Accelerating decline
The shift towards unconventional resources, such as shale oil and gas, means that the output from existing fields will decline ever-more steeply without continued investments.
Indeed, the IEA report shows that this is already the case, with global “decline rates” for both oil and gas getting steeper – and the trend set to accelerate – as shown in the figure below, for gas only.
The consequence of these accelerating rates of decline is that the oil-and-gas industry is already needing to “run fast to stand still”, the IEA report explains.
It notes that nearly 90% of annual upstream investment in the sector since 2019 has been “dedicated to offsetting production declines rather than to meet demand growth”.
The industry needs to invest around $500bn per year, just to maintain current output, it says.
With investment set to reach $570bn in 2025, the IEA notes that this is enough to sustain “modest” production growth, but only a “small drop” away from flat or declining output.
The IEA also notes that around the world, on average, there is a delay of nearly 20 years from the issuing of oil and gas exploration licenses, until additional production starts to flow. It explains:
“This includes five years on average to discover the field, eight years to appraise and approve it for development, and six years to construct the necessary infrastructure and begin production.”
(In a recent speech pledging to “maximise extraction” of oil and gas from the North Sea, if elected, the UK’s opposition Conservative leader Kemi Badenoch talked of the need for new licenses.)
Need for new investment?
The IEA report goes on to show that without continued investment in maintaining output, global oil and gas production would plummet, as shown in the figure below.
The Financial Times said the IEA report illustrated the “costly battle” facing the oil-and-gas sector if it wants to maintain current output.
However, the newspaper added that the sector would likely welcome the findings:
“The IEA’s findings are likely to be greeted enthusiastically by the oil industry, which has consistently maintained that it needs to spend heavily to maintain its current production levels.”
The catch is that the report also spells out the implications of falling demand, in a world that limits warming to below 1.5C above pre-industrial levels.
In the 1.5C-compliant “NZE scenario”, the IEA says that a “huge acceleration in the pace of energy transitions relative to current trends” would see oil and gas demand falling dramatically.
It adds that if this drop in demand were to happen, then no investment in new oil and gas production would be needed, as shown in the figure below. Specifically, the IEA report says:
“The pace of demand reduction in the NZE [1.5C] scenario is therefore sufficiently rapid that, in aggregate, no new long lead-time conventional upstream projects would need to be approved for development.”
(The IEA says that even in this 1.5C-compliant “NZE scenario”, there would still need to be some investment in “existing and approved” projects, to balance decline rates.)
The new report, thus, reiterates the IEA’s previous finding that no investment in new oil and gas would be needed if the world got onto a 1.5C path.
However, it puts the emphasis more firmly on the need for demand to decline, in order to eliminate the need for new investment, contrasting with the way this finding has been widely reported.
In its coverage of the 2021 finding, for example, the Guardian reported that oil and gas development “must stop…if the world is to stay within safe limits”.
On the contrary, the new IEA report says that investment in new oil-and-gas development will be needed to meet demand, unless demand is dramatically reduced in line with the 1.5C limit.
In addition to making this point more firmly, the IEA report notes that a swathe of the highest-cost oil and gas projects in the world would need to close early – effectively becoming stranded assets – if demand for the fuels declines in line with the 1.5C limit. It says:
“[T]o ensure a smooth balance between supply and demand, declines in demand in the NZE scenario would lead to the early closure of several higher cost projects before they reach the end of their technical lifetimes. In 2050, for example, around 8mb/d of oil production and 250bcm of gas production would be retired earlier than would be implied by observed decline rates.”
The post IEA reiterates ‘no new oil and gas needed’ if global warming is limited to 1.5C appeared first on Carbon Brief.
IEA reiterates ‘no new oil and gas needed’ if global warming is limited to 1.5C
At Climate Home News, we found this year a pretty depressing one to cover, shaped as it was by Donald Trump’s attacks on climate science and action at home and abroad – and rounded off by the UN declaring global warming will break through the key 1.5C limit the world set itself in 2015.
But it wasn’t all bad. Nobody had decided to follow the US out of the Paris Agreement by the time it turned 10 this month. Anti-climate candidates in Canada and Australia, backed by Trump, lost elections convincingly. And 2025 may also have been the year carbon dioxide emissions fell for the first time.
What’s more, our reporting this year saw results in the real world. After we revealed that Chilean doctors believe pollution from copper mines in the northern hub of Calama is causing autism, campaigners sued state-owned mining company Codelco. The case is ongoing.
One of the lawyers representing the campaigners said “when [Climate Home News] revealed our silent suffering and our fight, we felt we had finally been heard and had entered the national conversation thanks to international media coverage. That was the final push to file the lawsuit.”
If you want to fund more impactful reporting like this in 2026, please subscribe and unlock all of our content for just the price of a coffee per week. Or to keep up with our latest coverage, you can sign up for our free newsletter and follow us on LinkedIn, Instagram, BlueSky and Facebook.
Below are nine of our best stories this year and, if that’s not enough, here’s nine more from 2024.
1. Solar squeeze: US tariffs threaten panel production and jobs in Thailand
In the year of trade wars, Trump extended Biden-era tariffs on solar panels from China to neighbouring countries. Nicha Wachpanich spoke to some of those workers who subsequently lost their jobs making panels at Chinese-run factories in Thailand and found that the US levies and bad behaviour by bosses had combined to crush their dreams of a better life.
2. Business-as-usual: Donors pour climate adaptation finance into big infrastructure, neglecting local needs
Trump being Trump, and axing US climate finance, is no reason to let other wealthy donor nations off the hook. We examined the latest spreadsheets for annual adaptation aid and found Japan is counting support for massive infrastructure projects in its figures, despite them having only a dubious role in helping people adapt to climate change.
Our reporter Tanbirul Miraj Ripon visited one such project – the Matarbari port in Bangladesh. He found that the port handles coal and gas imports and has destroyed locals’ homes and livelihoods. Despite this, on paper it represents $363 million in Japanese climate adaptation finance, the biggest single climate resilience project being funded by a wealthy country in 2023.
3. Ethiopia’s bold EV ambitions hit bumps in rural areas
Other nations are trying hard to go green but finding it tricky. This year, Ethiopia hosted the Africa Climate Summit, was selected as the host of COP32 and opened the continent’s biggest hydropower dam.
It plans to use some of this clean power to charge electric vehicles, after banning imports of cars with internal combustion engines (even as the European Union is softening its own 2035 ban on ICEs). While that will reduce Ethiopia’s already tiny emissions and its fossil fuel import bills, it won’t be easy in a nation where only half the population has electricity access, as Solomon Yimer and Vivian Chime reported.
4. Ending poverty and gangs: How Zambia seeks to cash in on the global drive for EVs
Other African governments are trying to cash in on their minerals, which big players like China, the US and increasingly Saudi Arabia want for green technologies and/or making equipment for wars.
Pamela Kapekele went to look at the situation in Zambia’s Copperbelt province – where you can probably guess what they produce! She found that good tax regulations and working conditions will be needed if locals are to see the benefits of surging demand for the metal.
Later in the year, an acid spill from a copper-mine tailings dam that contaminated the country’s main river showed the value of environmental regulation too. Reporting from Nigeria’s lithium and South Africa’s platinum mines also highlighted the challenges of making minerals mining and processing cleaner and fairer for communities.
5. Is the world’s big idea for greener air travel a flight of fancy?
Some sectors – like international aviation and shipping – tend to fall outside the scope of national media, and it’s a gap we’ve aimed to fill. Together with Singapore’s Straits Times, we tracked the supply chain for what the airline industry calls “Sustainable Aviation Fuel” (SAF) and found that virgin and barely used palm oil – which threatens rainforests – is being passed off as waste cooking oil and used to power planes in Europe.
Malaysia is a particular hotspot for this fraud, as government subsidies there make virgin palm oil cheap in the shops – and it can be sold for a higher price as “used” cooking oil, providing a profit motive for flipping it. Our investigation was picked up by the Financial Times, Bloomberg and the Malaysian authorities, who have since launched a crackdown on this kind of fraud.
But with verification of the materials used for SAF relying on just a handful of commercial auditors conducting mainly paper-based checks, airlines currently cannot know for sure if their green jet fuel is actually sustainable. Their advertising to passengers should – but often doesn’t – reflect this uncertainty.
6. Brazil’s environment minister suggests roadmap to end fossil fuels at COP30
Our reporting was often prescient this year. We called it correctly that the US would leave the Paris Agreement but not the UNFCCC, that Argentina would not follow America out of Paris, that Ethiopia rather than Nigeria would be chosen as COP32 host and that petrostates would try to kill a new green shipping framework at the International Maritime Organization.
We are also pretty sure we were the first – at least in English – to pick up on Brazilian Environment Minister Marina Silva’s proposal for COP30 to agree on a roadmap away from fossil fuels, which she aired back in June at London Climate Week. That proposal was pushed by President Lula at the start of COP30, dominated much of the conversation at the summit and will continue to be discussed throughout 2026.
8. PR firm working for Shell wins COP30 media contract
In the summer of 2025, our crack investigative reporter Matteo Civillini got the scoop on how the Brazilian government, via a contract tendered by the UN, was working with Edelman on international media relations for the COP30 climate summit while the global PR giant was simultaneously engaged in promoting Shell’s fossil fuel interests in Brazil.
This story was picked up by a range of other media, and amplified calls for agencies whose clients include fossil fuel firms to be excluded from the climate negotiations. Advocacy group Clean Creatives was inspired by Matteo’s reporting to launch a campaign against Edelman’s COP involvement. That culminated in an open letter from influencers and creators with a combined audience of over 24 million calling for Edelman to be dropped. The drumbeat on this theme is likely to get louder in 2026.
8. “House of cards”: Verra used junk carbon credits to fix Shell’s offsetting scandal
And talking of smoke and mirrors, just when we thought the murky web of carbon offsetting linking oil and gas major Shell to sham rice-farming projects in China couldn’t get any more convoluted, it did exactly that.
By combing through the records of carbon-credit registry Verra – the world’s biggest – Matteo confirmed that nearly a million bogus offsets from 10 disqualified methane reduction projects had been compensated for with the same number of junk credits from another four such projects that were also axed by Verra.
“It’s frankly unbelievable that Verra considers it appropriate to compensate for hot air credits with other hot air credits,” Jonathan Crook, policy lead at Carbon Market Watch, told us. “To pretend this is a satisfactory resolution is both absurd and deeply alarming.”
Verra insists the replacement credits were technically available to plug the gap left by the first batch – even though the second set, too, now need to be swapped out. Shell is keeping its distance, saying it does not manage or operate “the projects in question” despite being earlier involved in the Chinese rice-farming programmes as their “authorised representative”. Mind-boggling indeed!
9. Self-taught mechanics give second life to Jordan’s glut of spent EV batteries
In what was on balance a bad year, we brought you some hope too. A landmark advisory opinion on climate change and human rights from the International Court of Justice in The Hague was stronger than anyone imagined and may open the door to lawsuits against polluting countries and companies in 2026.
Other good news stories included analysts suggesting China’s fossil fuel use could peak this year, the UN’s loss and damage fund launching its first call for proposals, South Korea and Morocco moving to phase out coal and a boom in imports of solar panels to Africa.
Hope came too from ordinary people and their ingenuity – like the untrained Jordanians interviewed by Yamuna Matheswaran, hooking up solar panels to old Tesla batteries, lowering both their electricity bills and their carbon emissions into the bargain.
The post Nine of our best climate stories from 2025 appeared first on Climate Home News.
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