Zero Carbon Emissions: OPEC Urges Sustained Oil And Gas Investment 

Yemisi Izuora

The Organisation of Petroleum Exporting Countries (OPEC) has advised oil producing nations to continue guided investment in the oil and gas industry ahead of the net zero carbon emission by 2050.

OPEC Secretary General, Mr.  Mohammed Sanusi Barkindo gave the advise at the opening ceremony of the Nigerian Oil and Gas(NOG) Conference in Abuja, yesterday explained that oil and gas have an important role to play in the energy transition.

Barkindo who spoke on the theme, “Fortifying the Nigerian Oil and Gas Industry for Economic Stability and Growth” said, “Let me be clear, OPEC supports the need to reduce emissions, bolster efficiency and embrace innovation, but we must be aware of the risk we run of not adequately investing in the future of this industry. We are already dealing with the harsh impacts the COVID-19 pandemic has had on investment, which declined by 30 per cent in 2020.”

 

Barkindo who was the honorary conference chairman in his  keynote address titled ‘‘Global Oil Market Dynamics in a Decarbonizing World’ said the call is a dangerous and unrealistic scenario, saying these voices have emerged particularly in the context of the net zero 2050 emissions discussions.

‘‘The fact is, however, that oil and gas have an important role to play in the energy transition. Let me be clear, OPEC supports the need to reduce emissions, bolster efficiency and embrace innovation, but we must be aware of the risk we run of not adequately investing in the future of this industry. We are already dealing with the harsh impacts the COVID-19 pandemic has had on investment, which declined by 30 per cent in 2020.

Barkindo said achieving net zero emissions by 2050 is already a great challenge for advanced economies, some of whom have expressed their doubts about the reality of achieving this ambitious goal.

He added that for the developing nations, it is even that much more daunting, particularly as they are occupied with ensuring their basic needs are met day in and day out while each day is a challenge to simply put food on the table and earn a decent living wage.

‘‘There are emerging doubts as to how realistic the net zero approach is, particularly when considering the unique circumstances of developing countries, especially in combating another scourge, namely energy poverty.

The OPEC scribe added that countries around the world are feverishly attempting to adapt to the rapidly changing dynamics in the energy industry in an effort to adapt and mitigate the impacts of climate change.

He noted that investors, environmental lobbyists and even some corporate boards are pressuring oil companies and governments to pursue radical policies and initiatives that could, in the end, be more disruptive than productive for the global energy industry.

There have recently even been calls for investments in oil and gas to be discontinued, which is a dangerous and unrealistic scenario, saying these voices have emerged particularly in the context of the net zero 2050 emissions discussions.

‘‘The fact is, however, that oil and gas have an important role to play in the energy transition. Let me be clear, OPEC supports the need to reduce emissions, bolster efficiency and embrace innovation, but we must be aware of the risk we run of not adequately investing in the future of this industry. We are already dealing with the harsh impacts the COVID-19 pandemic has had on investment, which declined by 30 per cent in 2020.

If this were to continue, we could see demand exceed supply, posing a significant energy security risk to both producers and consumers. And this, of course, could result in knock-on effects for both the global economy and geopolitics.

One must also consider that, although many of OPEC’s Member Countries have made good progress in diversifying their economies, many of them rely primarily on revenue from their oil and gas assets to support their economic and social development.’’

Let’s face it, there is simply not a “one size fits all” solution to addressing climate change. Different countries around the world have varying capabilities and diverse needs. Thus, reducing emissions has many paths, as set out by the Intergovernmental Panel on Climate Change (IPCC), and we must consider all of them as viable options.

Barkindo noted that when considering the scale of the energy transition, we must harness all available energies.  The oil and gas industries have much to offer in this regard, including some of the world’s most cutting edge technologies and advanced innovations, which can all be leveraged to promote a lower carbon future.

‘‘From the perspective of science and innovation, we believe technologies such as carbon capture, utilization and storage (CCUS), hydrogen and other technologies are viable options for reducing the carbon footprint.

Energy efficiency programmes will also be key, and the Circular Carbon Economy, which was endorsed by the G20 under the Presidency of the Kingdom of Saudi Arabia is a blueprint for how this industry can improve its efficiencies while reducing emissions. CCE with its four “Rs” – reduce, reuse, recycle and remove – provides a balanced and inclusive solution for dealing with greenhouse gas emissions.

OPEC also welcomes the development of renewables, and many of our member countries are leading the way with massive investments in solar and wind resources.’’

Barkindo, argued further that in terms of scale and timing, the 28-year period from now until 2050 is not adequate to achieve net-zero emissions, considering the scale of investments required, the availability of land, the required massive expansion of the electricity grid and a host of nearly 400 milestones that would need to be reached to achieve the net-zero goal.

“The last transition took nearly 200 years to cycle through, and now we want to achieve an even more ambitious transition in less than 30 years! This is simply not realistic.Additionally, a swift transition to clean energy sources would be highly reliant on the steady, robust supply of critical minerals such as copper, cobalt, lithium, nickel and aluminium, many of which are produced in a geographically centralized area. We must also consider that the amount of mineral material needed to produce energy is higher than with fossil fuels.

For example, a typical electric car requires six times the mineral inputs than that required to power a conventional vehicle with fossil fuels, and an onshore wind plant requires nine times more mineral resources than a gas-fired plant of the same capacity. Furthermore, lengthy lead times on mining projects, which can surpass 16 years, could inhibit the sector from responding to increases in demand,” he said.

Barkindo pointed out that the net-zero scenario assumes that both developed and developing countries will achieve the proposed targets by 2050, with developed countries reaching their targets earlier.

“However, let me remind you that a staggering 790 million people worldwide did not have access to electricity in 2020, most of them located in Sub-Saharan Africa and developing Asia. Moreover, there were roughly 2.6 billion people who did not have access to clean cooking fuels, 35% of whom were in Sub-Saharan Africa, 25% in India and 15% in China. And, let us not forget that these are the very regions that are expected to see the most rapid population growth by 2050.This brings me to the critical topic of energy transition financing, which will be a highly debated issue at the upcoming COP26 in November.The achievement of the net-zero 2050 goals would assume that developing countries will receive the required financing and technological know-how they require to build and readjust their energy systems in line with the net-zero ambitions by 2050.

However, climate financing for adaptation and mitigation is an extremely complex process, and questions continue to be raised as to how the $100 billion per year committed in the Paris Agreement will be secured, much less the even more ambitious $5 trillion annual funding needed globally as set out by the net-zero 2050 plan.

Another issue of concern is that climate financing is increasingly being administered as loans, which means that developing countries are required to borrow at interest rates that can sometimes be prohibitively high, effectively leading them to defer or cancel their clean energy projects. These important factors all point to the fact that an energy transition on such a massive scale and within such a short timeframe will take time and patience to achieve, especially if it is done responsibly, in an equitable and inclusive manner,” OPEC secretary general said.

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