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.”
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IEA reiterates ‘no new oil and gas needed’ if global warming is limited to 1.5C
June Rubis is a steering group committee member for the Cali Fund, from Sarawak in Malaysian Borneo.
At COP16 in Cali, governments made a significant commitment: at least half of the funding from the new Cali Fund should support the self-identified needs of Indigenous Peoples and local communities, including women and youth. It was a watershed moment for multilateral benefit-sharing.
The challenge now is to translate that commitment into access arrangements that recognise the different institutions, priorities and decision-making processes of Indigenous Peoples and local communities.
For generations, biodiversity and traditional Indigenous knowledge have provided significant value to companies who depend on nature’s genetic diversity to discover new drugs that fight diseases, create products that improve health, and grow crops resilient to extreme heat and flooding events. While some compounds are sampled directly from the source country, increasingly the digital blueprints are held in online public databases which are freely accessible to use for innovation and research.
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The Cali Fund was established at COP16 to encourage commercial users of Digital Sequence Information, or DSI, to share benefits arising from its use. Estimates suggest it could generate over $3.5 billion a year – a stark contrast to the modest $10,656 currently committed to the fund from just five SMEs, underlining how much progress must be made at COP17 over the next two weeks.
The COP16 decision that set up the fund offers two routes for money to reach Indigenous Peoples and local communities: through government authorities, and through direct payments to institutions identified by Indigenous Peoples and local communities themselves.
Varied ways of organising
Indigenous Peoples and local communities organise through a wide range of institutions. Some have national or regional organisations experienced in managing international grants. Others work through territorial organisations, customary institutions, community associations, cooperatives or networks. Some have professional finance teams and audited accounts; others have extensive experience governing territories, collective resources or conservation work without having been organised around international funding requirements.
For direct access, some questions are already apparent. Which institutions should be able to receive funds? How should they be identified? What fiduciary standards should apply? How should safeguards and accountability work where institutional capacities differ? What support may be needed where institutions have strong community mandates but less experience with international finance?
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If access is designed mainly around institutions that already meet the expectations of large international finance mechanisms, early funding will tend to favour those already familiar to funders. They will gain further experience and become better positioned for future funding, while institutions with less administrative capacity may remain outside the system despite strong community mandates and long histories of stewardship.
These first decisions matter most, because they set the terms for everyone who follows.
The role of intermediaries requires care. Some Indigenous organisations may want a fiscal host to hold and manage funds on their behalf. Communities may choose to work through an NGO they trust. Government-facilitated arrangements may work well in particular national contexts.
What matters is the function an intermediary performs and the authority that comes with it. Providing administrative support is different from deciding which Indigenous organisations qualify, which priorities can receive support, or how success will be assessed. Direct access means communities keep that decision-making authority.
Decision-making power
The COP16 decision refers to institutions that Indigenous Peoples and local communities identify. But authority among Indigenous Peoples does not sit in one kind of body. It may sit with territorial organisations, customary institutions, community associations or combinations of these. Legal recognition and customary authority do not always align neatly.
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An important feature of the Cali Fund’s governance is that Indigenous Peoples and local communities participate as full members of the Steering Committee, rather than as observers. Seven Indigenous Peoples and local community representatives, one from each of the seven socio-cultural regions, participate in consensus-based decision-making alongside representatives of governments and UN entities. Six additional representatives from civil society, scientific institutions and the private sector participate as observers.
That representation carries responsibility. Institutional legitimacy, access and representation take different forms across the seven socio-cultural regions. Indigenous Peoples and local communities members therefore have an important role in bringing those differences into the Fund’s governance and in ensuring that arrangements developed for one context do not become the assumed model for everyone else.
Safeguards and clear responsibilities
COP17 can establish the core principles and direction, while allowing operational pathways to develop in ways that respond to different regional contexts. The decisions countries take in Yerevan will shape how that flexibility is realised in practice.
The choices made around access will influence which institutions are able to participate, which routes become established and which forms of authority are recognised within the funding architecture. The aim should be an architecture with enough structure to maintain confidence while allowing for different forms of Indigenous and community governance.
A credible direct-access pathway will need safeguards, financial oversight and clear responsibilities. This would give the 50% commitment a stronger institutional foundation.
The Cali Fund’s importance will ultimately depend not only on how much funding reaches Indigenous Peoples and local communities, but on whether they are able to determine how the money is accessed, governed and used. This requires access pathways that recognise their institutions, priorities and decision-making processes, rather than requiring them to conform to a single predetermined model.
The post COP17 must settle who decides how Cali Fund money is disbursed appeared first on Climate Home News.
COP17 must settle who decides how Cali Fund money is disbursed
The UK government has approved extraction at the Jackdaw gas field in the North Sea, despite acknowledging that this decision could make it harder for Britain to convince other countries to move away from fossil fuel production.
UK energy secretary Miatta Fahnbulleh approved the drilling on Wednesday after months of high-profile debate, fuelled in part by interventions from US President Donald Trump. She argued that the project would boost energy security in the wake of the Middle East fossil fuel crisis, protect hundreds of jobs and add £2.9 billion ($3.88bn) to the UK economy.
She said Jackdaw’s gas would be cleaner than imported gas and would not prevent the UK from meeting its legally-binding carbon targets and its goal of net zero by 2050. As the field is already licensed, she said extraction was consistent with the Labour Party’s 2024 manifesto promise not to issue any new oil and gas licenses.
The same morning, the government announced a new Energy Wealth Fund to reinvest oil and gas revenues in the climate transition. It will start with £2 billion ($2.67bn) from the government and be topped up over time with tax revenues from offshore oil and gas production.
Climate campaigners in the UK and abroad were quick to condemn the decision, while a leading legal expert told Climate Home News it goes against the advice of the International Court of Justice. Meanwhile, the government’s own documents reveal that it recognises the drilling could damage the UK’s reputation and its ability to push forward the global transition away from fossil fuels.
“Climate leadership” blow
The 92-page decision document says Fahnbulleh “acknowledges that international standing on climate is important and accepts that a decision to grant consent may not further the UK’s international climate leadership.”
It adds: “She acknowledges concerns about the potential implications for the UK’s credibility and influence – including the difficulty inherent in encouraging other states to move away from fossil fuel production while the UK continues, in a limited and transitional way, to draw on its own domestic resources.”
While noting that Jackdaw has not been issued with a new license – just permission to extract gas – the document says Fahnbulleh “accepts this does not fully resolve the underlying tension in the UK’s position” but “considers this alongside the substance of the UK’s wider record [on emissions reduction], which remains significant”.
It continues that she accepts these concerns are “legitimate” and weigh against approving gas extraction, but only gives this argument a “moderate negative weight” set against the benefits of gas production.
“Huge” wrong signal
In international climate talks, the UK has long supported the transition away from fossil fuels and is one of very few major oil and gas producers to ban new licenses. Across the North Sea, the Norwegian government continues to make offshore areas available for oil and gas exploration through annual licensing rounds.
Climate experts and campaigners shared the concern, acknowledged in the decision document, that approving Jackdaw could set a precedent for fossil fuel production elsewhere. Sam Fankhauser, professor of climate change economics at Oxford University, said the direct climate impact of Jackdaw is “much smaller than the debate around it would suggest” but the “wrong signal it sends, however, is huge”.
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Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change, said that while Jackdaw’s output will be very small, “it will signal to other fossil fuel producers that they too should carry on with business as usual, less than a month before the COP31”.
Kenyan campaigner Mohamed Adow, director of Power Shift Africa, called the decision “a serious blow to Britain’s international climate credibility” as “the UK cannot expect developing countries to move away from fossil fuels while giving the green light to new drilling in its own backyard”.
International Court of Justice
In July 2025, the International Court of Justice (ICJ) advised that government failure to take appropriate climate action “including through fossil fuel production” may amount to an internationally wrongful act.
The UK voted in favour of a United Nations resolution welcoming the advisory opinion. Yet, in its Jackdaw decision document, it notes that the ICJ opinion is not legally binding and says the UK does not accept the court’s opinion that the customary international law duty to prevent significant harm to the environment applies to climate change.
Fahnbulleh concludes that, although it will have “significant effect on the environment”, gas drilling in Jackdaw “would not lead to significant harm to the environment” – and so does not breach any duty to prevent such harm. Instead, the government document says the duty should be considered “as a matter of policy rather than legal obligation”.
Margaretha Wewerinke-Singh, who led Vanuatu’s legal team pushing for the ICJ’s advisory opinion, told Climate Home News that treating the duty as a matter of policy rather than legal obligation is “not how international law works”. “An advisory opinion is not a judgement,” she said, “but it states the law as it stands, and that law binds the UK whether or not it accepts it.”
“Even as a matter of policy,” she added, “the decision asks the wrong question: whether Jackdaw on its own would cause significant harm. The Court found that accumulated emissions are already causing significant harm. What matters is whether approving new production is consistent with the stringent due diligence the duty requires.”
Public support for decision
While the decision was criticised by climate campaigners and the opposition Green party, polling reported by Politico suggests that 55% of British adults support drilling at Jackdaw, with just 14% opposed. Even supporters of the UK’s net zero target back new drilling by more than two to one, the polling found.
Jackdaw is one of two North Sea oil and gas fields the government has been debating whether to extract more from for months. While Jackdaw is a small gas field, the other, Rosebank, is a much larger field that holds mostly oil.
Rosebank’s emissions are estimated to be around seven times higher than Jackdaw’s. Fahnbulleh told Sky News that Rosebank is “different” to Jackdaw because its oil would be exported, whereas Jackdaw’s gas will be used in the UK, adding that she will consider it “in its own right”.
The Guardian reported on Wednesday that UK officials say Fahnbulleh is minded to refuse approval for Rosebank. She has not yet taken a final decision on Rosebank, the newspaper said, but a ruling is expected later this year.
The post UK approves gas drilling despite admitting blow to “climate leadership” status appeared first on Climate Home News.
UK approves gas drilling despite admitting blow to “climate leadership” status