Planned offshore oil and gas expansion poses a direct threat to some of the world’s most ecologically sensitive marine habitats, according to a new report warning that continued fossil fuel development conflicts sharply with biodiversity and climate commitments. The findings arrive as governments face mounting pressure to reconcile energy security strategies with legally binding environmental targets.
Where the Threat Is Concentrated
The report identifies offshore drilling activity as a growing danger to marine protected areas and biodiversity hotspots. Planned expansion projects overlap with ecosystems that support fish stocks, coral systems, and migratory species. These habitats are already under stress from rising ocean temperatures and acidification driven by greenhouse gas emissions. Additional industrial activity in these zones compounds existing pressures in ways that are difficult to reverse.
The geographic spread of planned projects is broad. Expansion is concentrated in regions where regulatory oversight of environmental impact assessments remains inconsistent. In several cases, drilling licences have been issued in proximity to areas that governments have separately pledged to protect under international biodiversity frameworks, including the Kunming-Montreal Global Biodiversity Framework agreed in 2022, which set a target of protecting 30 per cent of the world’s oceans by 2030.
The Tension Between Energy Policy and Climate Targets
The International Energy Agency concluded in its landmark 2021 Net Zero by 2050 report that no new oil and gas fields are needed if the world is to reach net zero emissions by mid-century. However, investment in new offshore projects has continued. Governments and national oil companies have cited energy security concerns, particularly following the disruption caused by Russia’s invasion of Ukraine in 2022, as justification for approving new extraction licences.
That rationale has drawn criticism from climate scientists and conservationists alike. The marine environment absorbs roughly 90 per cent of the excess heat generated by global warming, according to the Intergovernmental Panel on Climate Change. Expanding fossil fuel infrastructure in ocean environments therefore creates a compounding risk, accelerating the very warming that degrades the ecosystems surrounding the new infrastructure.
For investors, the implications are material. Stranded asset risk remains a central concern for portfolios exposed to long-cycle offshore projects. Fields approved today may not reach peak production for a decade, by which point demand trajectories under accelerated energy transition scenarios could render them economically unviable. Meanwhile, regulatory risk is rising as biodiversity loss gains traction alongside climate change as a framework for financial disclosure.
Policy Gaps and Governance Failures
A core problem identified in the report is the fragmentation of governance. Climate commitments, biodiversity pledges, and energy licensing decisions are frequently made by different ministries with limited coordination. As a result, projects can clear environmental review processes whilst still conflicting with a country’s broader international obligations. This structural disconnect has allowed expansion to proceed in areas that sit uncomfortably close to protected zones.
The 30-by-30 biodiversity target, whilst widely endorsed, lacks the enforcement mechanisms needed to block incompatible industrial activity. So far, designation of marine protected areas has outpaced the implementation of meaningful restrictions within them. In practice, some protected areas permit extractive industries under existing licences, undermining the conservation value of the designation itself.
Campaigners and researchers are calling for stronger cross-departmental coordination and for environmental impact assessments to incorporate cumulative climate effects, rather than evaluating projects in isolation. In addition, they argue that financial regulators should require clearer disclosure of biodiversity-related risks alongside the climate-related financial disclosures already being introduced in several jurisdictions.
What Comes Next for Regulators and Investors
The report’s publication on World Environment Day carries symbolic weight, though the more consequential moments will come in the months ahead. The next round of UN climate negotiations under COP30, scheduled for Belém, Brazil in November 2025, is expected to bring renewed scrutiny of fossil fuel phase-out commitments. Biodiversity governance will also face a review under the Kunming-Montreal framework, giving campaigners a formal avenue to challenge licences that contradict national pledges.
For climate tech investors and policymakers, the trajectory points toward tightening constraints on offshore fossil fuel development. Jurisdictions that move early to align energy licensing with biodiversity and climate obligations are likely to face fewer legal challenges and lower transition costs over time.
Those that continue to approve expansion in ecologically sensitive areas face growing exposure to litigation, reputational risk, and the eventual cost of decommissioning assets that markets no longer support.
