Climate Commitment Complicates Record US Energy Production

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Making History

It’s a new dawn for the fight against climate change. Government officials from almost 200 countries approved a deal Wednesday, calling for nations around the world to begin to wind down the use of fossil fuels. 

After 30 years of annual climate summits, the agreement made at the 2023 United Nations Climate Change Conference, or COP28, is the first of its kind.

Complicated Reality

The COP28 deal has already garnered criticism for being scant on explicit details regarding when and how countries should phase down or phase out fossil fuel usage.

Importantly – and awkwardly – the deal is at odds with the current state of U.S. fossil fuel production. The U.S. is the world’s leading oil and gas producer, setting a record with more than 13 million barrels per day this year. Analysts believe 2024 could surpass this level. 

Business is booming for exploration and production companies like ExxonMobil (XOM), Chevron (CVX), and Occidental Petroleum (OXY), all of which recently announced billion dollar acquisitions of competitors.

Conflicting Initiatives

President Joe Biden’s Inflation Reduction Act is projected to provide billions of dollars to programs meant to fast-track clean energy adoption and create renewable energy jobs over the next years, and is expected to decrease the nation’s emissions by as much as 40% this decade. 

But, despite concerted efforts to pivot to renewable energy, traditional energy production has increased under the Biden administration, driven by a desire to keep fuel prices low for Americans. According to the Department of Energy, more than eight million people worked in the U.S. energy sector in 2022, adding another angle to the energy transition conundrum.

Time will tell if the COP28 agreement will change Washington’s near-term energy priorities, or further cloud them. 

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