World energy ice creams

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Hello readers,

This will be my last month sending you this newsletter as I’m moving on from Zero Carbon Analytics at the end of the year – you can keep in touch with me via LinkedIn. I’ve really enjoyed producing these and found it incredibly useful to tie together the news stories of the month into a (slightly) bigger picture – I hope you’ve found them useful too. I’ll be passing the pen over to my colleague Nick Hedley who will be keeping the newsletter running next year.

November saw the release of the International Energy Agency’s (IEA) annual World Energy Outlook, which reportedly heralded either 25 years of growing demand for oil and gas or the end of the fossil fuel era, depending on where you read your news. COP almost addressed the biggest cause of climate change, but then normal operations resumed and fossil fuels were once again left out of the conclusions. Thankfully a coalition of the willing will take on international efforts for a transition away from fossil fuels. All that and more in this month’s edition.

As a reminder of why this all matters, fossil fuel emissions reached another record in 2025 with coal, oil and gas contributing equally to the rise in emissions. The remaining carbon budget for 1.5C is just four years at current emissions levels.

Please share this newsletter with your colleagues and contacts who can subscribe here. 

Thanks,

Murray

Oil and gas in the transition

COP fails on fossils but launches a coalition of the willing

At COP 30 we learned that, unfortunately, the petrostates are more resolute than the climate ambitious countries when it comes to whether to accept an outcome that does, or doesn’t, mention fossil fuels. Despite 29 countries saying they would reject a COP outcome that didn’t include fossil fuels, all had swung behind a text that omitted the biggest cause of the climate crisis by the end of the summit. Fingers were pointed at Saudi Arabia, Russia and the more than 1,600 lobbyists linked to fossil fuel interests for blocking progress at the talks. It turns out that those pushing for action would ultimately rather see climate multilateralism inch forward at the expense of more ambition.

While unanimity within the COP process brought the lowest common denominator to negotiations, the summit also saw 24 countries back the first global conference on the transition away from fossil fuels. This coalition of the willing, which extends beyond the usual suspects to include major producers like Australia and Mexico, could prove a crucial model for international progress on a fossil fuel phaseout in parallel to the official COP negotiations. When drawing up their roadmaps for transitioning away from fossil fuels, negotiators may want to take a look at our analysis of how much more quickly advanced economies need to phase out the use of oil and gas for an equitable pathway to 1.5C.

World energy ice creams

To the casual reader, the news coverage of this year’s World Energy Outlook (WEO) from the IEA appeared impossible to reconcile. Did it say that oil and gas demand would rise for 25 years, as reported in the FT, or that cheap renewables would seal the end of the fossil fuel era, as seen in the Guardian? Could both stories really be based on the same report?

With the IEA’s press release apparently desperate to avoid any kind of narrative, a victim of the competing pressures on the agency from the US and its other members, it was left to journalists to attempt to find a story in the 519-page report. Some focused on the IEA’s reintroduction of the badly named “Current Policies Scenario”, which – despite what the FT reported – is not in any way a continuation of current trends, but instead lays out what would happen if all governments stopped implementing climate policies and technological change slowed to a glacial pace. This scenario, introduced at the behest of the Trump administration, would indeed result in oil and gas demand growing for decades.

Yet away from the fossil fuel industry’s fever dream scenario, the WEO highlighted that in all scenarios renewables are set to grow faster than any other energy source. Total fossil fuel use is still set to peak before 2030, and there will be a significant glut of LNG with no apparent buyers, unless governments radically change course.

The WEO also affirmed that limiting warming to 1.5C is still possible, although now with a high level of “overshoot” (temperatures above 1.5C) before bringing temperatures back down to that target. Bringing temperatures down is no small task. The negative carbon technologies required use significant resources, including a land area bigger than Peru to grow – and burn – the crops for bioenergy with carbon capture and storage (BECCS). In addition, solar panels would need to be deployed over an area larger than Belgium to power direct air capture (DAC) to suck CO2 out of the atmosphere. All of this CO2 removal would cost upwards of a not insignificant USD 850 billion a year. If the world is serious about limiting warming to 1.5C, then every extra tonne of carbon that’s emitted will have to be removed later – at a staggering cost. It also shows that we’re well past the point of easy solutions – smooth pathways to a safe climate future without negative emissions no longer exist.

As one anonymous energy analyst put it, “energy scenarios are like ice cream: they come in many flavours and you’ll always find one that suits your taste”. The WEO only offers a set of options of what the future could look like, not a crystal ball to the future.

Chinese production booms, while demand stagnates

Chinese state-owned PetroChina has been the world’s top spender on oil drilling and exploration over the last five years, as part of a national drive to increase domestic production. Although China remains a huge gas importer, it has become the world’s fourth-largest gas producer and some analysts expect that its domestic gas production will outpace demand growth by the end of the decade – further reducing its demand for LNG imports. Imports are already set to fall some 5% this year, with signs that gas demand has now decoupled from GDP growth. This would have a huge impact on the many companies and countries that hope China will be a major growth market for LNG exports.

Oil demand for transport in China has also continued to decline as a result of the huge growth of EVs, with the expansion of the chemical industry responsible for the 2% rise in oil consumption. Chinese EVs aren’t just cutting oil demand domestically – the country is sending record exports to Europe, Asia, Latin America and the Middle East, while Africa recorded a 184% increase in imports in the first nine months of 2025 compared with the previous year. Although consolidation is expected in the Chinese EV industry, this data shows that the growth in EV sales isn’t limited to traditional markets like Europe or China.

Trump expands drilling and financing fossil fuels

The US Interior Department is proposing oil and gas offshore licensing sales across an area more than half the size of the United States. The enormous proposed expansion of drilling areas is likely to set up the Trump administration for a huge range of fights, including with California Governor Gavin Newsom, Florida Republicans concerned about the impact on tourism, as well as those worried about risks to military activities in the Eastern Gulf of Mexico and environmental risks of drilling in the Arctic off Alaska. Environmental groups have already challenged plans for further drilling in the Gulf of Mexico for failing to adhere to the 50-year-old National Environmental Policy Act.

The US is also setting its sights on selling fossil fuels abroad, announcing that the US Export-Import Bank would invest USD 100 billion focused on bringing “US energy molecules to every corner of the globe”. Financing projects that will import US LNG is set to be a major focus of the fund, alongside building supply chains for critical minerals and promoting nuclear power.

LNG is slowing Asia’s energy transition, Canada doubles down on exports to Asia

A confidential report by Deloitte for the Western Australian government concluded that its gas exports carry “substantial risks” of slowing the transition to clean energy in Asia. Rather than reducing emissions by displacing coal, as its proponents usually argue, the report found that gas exports came with the risk of establishing a long-term dependency that slows the region’s decarbonisation.

These concerns don’t seem to have weighed on Canada’s Prime Minister Mark Carney, who wants to double the country’s LNG output through a new round of “nation-building projects.” In addition to doubling output from the existing LNG Canada project, the government is also backing the Ksi Lisims LNG terminal, both aiming to export Canadian gas to Asia.

At the end of the month Carney, once a former UN special envoy for climate change, went even further, scrapping a planned emissions cap on the oil and gas sector, dropping rules on clean energy and backing a million-barrel-per-day oil pipeline to the Pacific coast. In return, the oil and gas industry agreed to cooperate on building a large carbon capture and storage project. You really couldn’t make it up. The PM has now lost a Cabinet member over the deal, the Premier of British Columbia opposes the pipeline and Indigenous groups have vowed to oppose its construction. Expect many more battles as this saga unfolds. 

No North Sea exploration in the UK

The UK government has confirmed its manifesto commitment to stop oil and gas exploration in the North Sea. It did however decide to allow new extraction projects to go ahead where they link into existing offshore infrastructure, known as “tiebacks.” In practice this exemption is unlikely to make much of a  difference to the long-term decline in output from the basin; there could be as little as 45 million barrels of oil equivalent within 50km of existing production sites, less than a tenth of the size of the controversial Rosebank field, according to the NGO Uplift.

Energy transition strategies

After massively increasing its ‘low carbon’ spending plans last year, ExxonMobil’s CEO Darren Woods has indicated the company is set to row back that commitment before the end of the year. It had previously planned to spend USD 30 billion on clean energy projects up to 2030, which placed it ahead of European rivals like BP and Shell. Woods now says that consumer demand and government policies haven’t matched their expectations.

ExxonMobil has also formed an unholy alliance with chemicals giant BASF and fossil fuel financiers BlackRock in an attempt to rewrite the rules on measuring greenhouse gas emissions. Unsurprisingly, they don’t like being held responsible for the emissions from the products they produce and sell – known as Scope 3 emissions. Instead they want to shift that responsibility onto consumers, and replace absolute emissions measurement with intensity metrics. A genuinely terrible and self-serving set of proposals.

Saudi Aramco is continuing its pivot to gas, aiming to increase production by 80 per cent by the end of the decade. It is due to start operating the giant new Jafurah shale field in the coming weeks as it seeks to diversify away from oil. The company hopes that by producing more gas it can protect itself from the risks of declining demand for oil, while providing power for a new fleet of gas-fired power plants in the kingdom.

TotalEnergies is continuing its push into gas-fired electricity generation, with a EUR 5.1 billion deal for a 50% stake in 14 GW of power plants in Europe. The deal with Czech company EPH, which owned the power plants, will also see EPH become one of TotalEnergies largest shareholders. TotalEnergies CEO said that he hoped the deal would increase returns to shareholders by generating more cash than its existing renewables generation projects.

Clean energy investments

TotalEnergies has secured a 15-year agreement to supply Google’s data centres in Ohio with 1.5 TWh (terawatt hours) of electricity from a solar farm. Despite all the hype on data centres and gas in the US, renewables are forecast to provide nearly as much additional electricity for the sector as gas up until the end of the decade.

Hydrogen and ammonia

You’ll need your hydrogen colour chart handy for this one, as ExxonMobil has announced a new turquoise hydrogen project at its huge Baytown complex, in partnership with BASF. The project will use methane pyrolysis technology, which converts methane (usually from natural gas) into hydrogen and solid carbon. It’s a newer technology that isn’t yet commercially deployed, which on paper has some significant advantages. As it produces solid carbon, it doesn’t need expensive and inefficient carbon capture technology and emits no carbon dioxide. It also uses less electricity than green hydrogen and doesn’t require water. However, as it uses natural gas (and more of it than traditional hydrogen production), its lifecycle emissions are linked to methane emissions in the gas supply chain, meaning it is estimated to have emissions about five times higher than green hydrogen.

The announcement of this new demonstration plant was quickly followed by the news that ExxonMobil was freezing its previous plans for a giant blue hydrogen project at the same site. The company blamed weak demand for its decision, though I think that the Trump administration cutting over USD 300 million in subsidies for the project earlier in the year could have been the decisive factor. 

From Zero Carbon Analytics

Our breakdown of oil and gas industry investment since the Paris Agreement shows it has spent 46 times more on upstream supply than on clean energy. The industry also spent 32 times more money on oil and gas exploration than on the “crucial enabler” of carbon capture and storage. 

There have been a staggering 5.5 oil incidents per day in Brazil on average over the last decade, including accidents and “almost accidents”. Yet this may only be the tip of the iceberg for the Americas; the quality, detail and accessibility of reporting across the continent means that the scale of oil incidents from production and transport infrastructure is hidden from public view.

90 billion dollars of LNG with no buyers?

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The following text went straight to our readers’ inboxes and is now available here for your interest. If you’re not a subscriber yet, sign up via the subscribe button in the top right corner.

Hello readers,

This month is a bumper edition of the newsletter, rounding up the biggest stories covering oil and gas in the energy transition from September and October. Apologies for the lack of an update from me last month, I discovered that covid is not a thing of the past and had to take a couple of weeks off to recover.

Some of the biggest stories have been the reported agreement on a potential new gas pipeline from Russia to China that could reshape the LNG market, and the Trump administration’s sabotage of an international agreement to tackle emissions from shipping. Taken together with the collapse of Plastics Treaty talks earlier this year, the prospects for major progress at COP aren’t looking brilliant. On the topic of COP, only 23 of the 63 Nationally Determined Contributions (NDCs) submitted so far express support for transitioning away from, phasing out or phasing down the use of fossil fuels. There’s still a long way to go to make that commitment from COP28 a reality.

One piece I would recommend reading is by the influential Bloomberg columnist Javier Blas, whom I don’t often agree with (in Bloomberg, or without a paywall here). In it, he questions the traditional argument that gas and LNG is the “bridge fuel” between the phaseout of coal and the rise of renewables so many expected. As Blas puts it, “the shores that LNG was meant to bridge — coal and renewables — are a lot closer than anyone thought; a viaduct may still be needed, but it’s much shorter than expected.”

Please share this newsletter with your colleagues and contacts who can subscribe here. It’s always great to hear from you, so do email me any feedback or suggestions.

Thanks,
Murray

Oil and gas in the transition

The Russia-China pipeline that could upend the LNG market

Russia announced that it has signed an agreement with China to build the Power of Siberia 2 pipeline, which would transport 50 billion cubic metres a year of gas to Northern China. This triumphant announcement overlooked that the fundamentals of any deal on the building of a pipeline – the gas pricing and construction cost sharing – have not been agreed. Until this is agreed, the pipeline will remain on paper. The South China Morning Post reported that Russia was looking to set a price for its gas nearly six times higher than the price the Chinese were looking to buy it for – a very large gap to close.

If built, the pipeline would account for around a third of the expected growth in gas demand from China, which had previously been assumed would be met by increasing LNG demand, largely from growing US exports. If China no longer needs this LNG, that leaves a huge amount of gas with no clear buyer – the FT’s Lex estimates that the US could lose out on USD 90 billion a year in lost revenue from LNG exports.

OPEC keeps turning on the taps, into a world awash with oil

OPEC members surprised oil market watchers in September by announcing yet another production hike, following months of rises that have increased the group’s production by an additional 2.2 million barrels per day. However, raising the production threshold is not the same as expanding production, with most OPEC+ members already near capacity. Saudi Arabia, however, has significant ability to increase production, meaning it stands to reap the biggest benefit as it aims to secure a greater share of the market.

The recent ramping up of production has led the IEA to say that “something has to give” in the market, with supply set to significantly exceed demand. Increasing oil going into storage, mostly in China, has stopped prices from falling further this year, but there’s a limit to how much oil can be stored. As that threshold approaches, the downward pressure on prices next year is set to become even greater. OPEC has now said it won’t increase production again in the first quarter of 2026, but that won’t be enough to stop the expected oil glut. 

Oil and gas oversupply enables Western sanctions on Russia

One geopolitical twist is that the huge amount of supply means that the Trump administration has felt able to introduce more stringent sanctions on the Russian oil industry. Previously, the US had been concerned that any sanctions on Russian oil could limit global supply, pushing up prices for US consumers. With more oil supply, the US has a freer hand to curb Russia’s exports. 

The same is happening in the gas market, with the expansion of US (and Qatari) LNG leading to fears of a significant supply glut. Even TotalEnergies CEO has said he thinks the US is building too many LNG export terminals, with no sign of an uptick in demand from major importers like China. Under pressure from the US, the EU is now aiming to end imports of Russian LNG by the start of 2027, a year earlier than previously planned. This decision stands to benefit the US, with the EU likely to replace much of those Russian LNG imports by buying up the huge wave of new supply coming from the US.

The twilight of US shale?

The oversupply of oil isn’t good news for the US though – low oil prices are starting to hurt domestic producers. As one US oil executive commented, “We have begun the twilight of shale. The US isn’t running out of oil, but she sure is running out of $60-per-barrel oil.” After years of booming growth, it appears that the low prices are about to push US oil production into decline. The US government isn’t giving up on the fossil fuel industry – new analysis shows that it is now handing out USD 35 billion a year in subsidies.

Carbon majors responsible for heatwaves

New research in Nature has found that emissions from the largest fossil fuel and cement producers contributed to half of the increase in intensity of heatwaves since pre-industrial times. The emissions from the 180 companies that make up the ‘carbon majors’ were found to be responsible for 0.7C of the 1.3C rise in global temperatures by 2023. Just 14 companies – including ExxonMobil, BP, Saudi Aramco and Shell – are responsible for 0.3C of that warming. This study adds to the growing body of literature linking the emissions of oil and gas companies to specific weather events, exactly the kind of research that’s likely to prove pivotal in future legal claims for climate damages. 

Trump snatches defeat from the jaws of victory on shipping

The US government waged an unprecedented campaign of “intimidation” against countries and negotiators on the verge of agreeing an unprecedented global carbon tax on shipping at the International Maritime Organisation (IMO). Its campaign was successful, and the decision to adopt the proposed Net Zero Framework for shipping has been delayed by a year. Over that period we will see whether the overwhelming majority of countries that backed the deal are able to reassemble their coalition, or whether the US will further escalate its tactics, described by one IMO veteran as “behaving like gangsters”.

Court case lost, but the climate test for new extraction confirmed

The European Court of Human Rights sided with Norway in the long-running People vs Arctic Oil case, finding that the country’s granting of exploration licences in the Barents Sea did not violate the claimants’ human rights. Europe’s top court did, however, confirm the legal requirement for an environmental impact assessment to include the emissions from the oil and gas extracted before opening new fields, in order to comply with the European Convention on Human Rights. This follows similar rulings in the domestic courts of Norway and the UK, and cements this principle for countries across Europe.

Energy transition strategies

ExxonMobil is continuing its battle to limit shareholder and regulator efforts to scrutinise its climate policy. The SEC has approved a proposal by ExxonMobil to allow it to build a system that automates retail shareholders’ votes in line with those of the board of directors. This would build in a huge default wave of support for management, and against any shareholder activism efforts. The company is also suing the state of California over rules that would require it to report its Scope 3 emissions – those from the use of the fuel it sells – on the grounds that this disclosure would violate its free speech rights. 

Clean energy investments

Only 49 of the largest 250 oil and gas companies own any renewable energy projects, totalling around 1.4% of operating capacity, according to a new study in Nature. I think that fairly definitively answers any claims that the industry is making a meaningful contribution to global renewables deployment.

BP has abandoned its plans for a biofuels plant in Rotterdam and dropped its target for producing more biofuels by the end of the decade. The move follows a similar decision earlier this year by Shell amid a wider collapse in investment in biofuels.

Equinor announced that it would invest almost USD 1 billion in offshore wind group Ørsted to maintain its 10% ownership stake, as the renewables company issues more shares to raise capital. Equinor was reported to be considering combining its renewable assets with Ørsted’s as part of the future of its stake in the firm.

ExxonMobil is increasing its investment in minerals for electric vehicles with an investment in graphite production through a Chicago-based firm. The move builds on the company’s efforts to extract lithium, another major component of EV batteries, in Arkansas.

TotalEnergies won a EUR 4.5 billion tender to build France’s largest offshore wind farm, which would be the country’s largest renewable energy project.

Carbon Capture and Storage (CCS)

The world’s potential for the storage of captured carbon is just 10% of industry estimates, according to a study published in Nature. Storing carbon should be seen as a “scarce resource” rather than “an unlimited solution to bring our climate back to a safe level”, according Joeri Rogelj, one of the authors of the study.

Finance

The giant insurance marketplace Lloyd’s of London has u-turned on its commitment to end coverage for the most polluting fossil fuels in the name of granting insurers “more freedom”.

From Zero Carbon Analytics

  • Nearly a third of deals in the Japan-backed Asia Zero Emissions Community (AZEC) involve fossil fuel technologies, including 30% of new deals announced in October 2025. We’ve launched the  AZEC tracker where you can find all the details of the deals.
  • We updated this handy guide to ‘temperature overshoot’, explaining why it matters and the risks involved of crossing critical climate tipping points. It’s all the more relevant given UN Secretary General Guterres’ comments in October that limiting warming to 1.5C is no longer possible, and could only be achieved by overshooting that goal then bringing temperatures back down by the end of the century.

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