- Global oil and gas producers have remained under immense pressure to show more goodwill in the energy transition agenda.
- As this year’s climate summit enters its homestretch, the most intriguing question is whether the final accord will pledge to reduce fossil fuels.
- The oil and gas industry’s confidence has also caused tension with renewable groups and climate activists.
The 2015 Paris Agreement establishes measures and conditions requiring all member states to mitigate climate change through emission reductions. Further, Goal 7 of the 2030 Agenda for Sustainable Development calls for concerted efforts to ensure access to modern, cleaner forms of energy, while Goal 13 calls for action to combat climate change.
Consequently, the global energy transition is on the cards. There have been calls from the global north to the south for the world to find a proper compromise on energy needs even as climate change effects put sterner demands on the global sustainability quest.
But the world faces a tricky balancing act. While fossil fuels, including oil, gas, and coal, are the most significant contributors to global climate change, they account for nearly 82 per cent of the world’s energy demand.
COP28 and the pressure on oil and gas producers
Global oil and gas producers have remained under immense pressure to show more goodwill in the energy transition agenda.
Consequently, building on the United Nations Framework Convention on Climate Change (UNFCCC) and the 2015 Paris Agreement on mitigating the causes and effects of climate change, this year’s COP28 presented the perfect avenue to carry on this pressure.
However, COP28 seems to be writing an exciting script. Oil and gas executives have previously kept a low profile at the UN climate change gatherings but seem to have gone all out at this year’s event, hosted by the UAE, one of the globally significant oil exporters, and led by the CEO of its national oil company.
Heads of major oil companies attended the climate summit as their country’s delegations. Other industry representatives have attended under the umbrella of influential movements like the International Emissions Trading Association, which registered at least 110 delegates for the summit.
As this year’s climate summit enters its homestretch, the most intriguing question is whether the final accord will pledge to reduce fossil fuels. To many of the thousands of climate campaigners among the 100,000 or so delegates attending the climate summit, the prominence of the oil and gas producers is a charade, giving the industry most responsible for climate change a seat at the negotiating table.
Thus, oil and gas producers seem to contain the pressure. Saudi Arabia’s energy minister, Abdulaziz bin Salman, has already stated that the final text should not agree on the phase of fossil fuels. Moreover, OPEC’s secretary general has asked members to resist the idea.
Others take the oil and gas industry’s statements of good intent at face value, arguing that the coalition addressing the climate crisis needs a broad enough approach. Consequently, oil and gas producers make their case from luncheons to panel discussions in country pavilion panels and high-level pronouncements.
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An interesting paradox
Oil and gas industry-linked events often focus on technologies like carbon capture and switching to “greener” fossil fuel extraction. At the International Emissions Trading Association’s (IETA) two-story “BusinessHub,” carbon capture took centre stage.
Successive events on carbon capture and storage coincided with a networking luncheon for the coalition of Canadian industry leaders. Avik Dey, CEO of Capital Power, a utility with gas- and coal-fired power plants, has attended COP28 with the US-based Business Council for Sustainable Energy, an association whose members include the American Gas Association.
“I am super excited to be here because the heavy-emitting industries are here and being part of the conversation,” said Dey, whose badge lists him as an observer. “I think mankind is the problem. We are all part of the problem, so all of us need to be part of the solution.”
Contrastively, Emily Lowan of Climate Action Canada makes an interesting observation. She said, “You do not invite the tobacco lobbyists to a health convention when you are writing health policy. They have clear stated interests against the very premise of these negotiations, at this COP in particular, related to agreeing on the language on the phase-out of fossil fuels.”
Undoubtedly, Lowan makes a valid argument. For oil and gas producers, COP28 offers an opportunity to be in the same room with prospective partners and government officials with whom they could take weeks to get a meeting back home.
Ministers, CEOs, and corporate strategists cram together in the same panel audiences and sip coffee in the same pavilions, where it is easy to find some ground in an informal chit-chat.
A “green light” for oil and gas producers
“What I see now is a proliferation of these spaces to create more legitimacy for these delay tactics,” Merzian said. “Carbon capture and storage is a technology invented by the oil industry to push C02 down and push oil up.”
However, Al Jaber, who has remained clear regarding his belief that his industry should form part of the climate solution, had oil and gas at the centre of signature achievements at COP28. He convinced more than 40 oil and gas companies to join an Oil and Gas Decarbonisation Charter.
This charter is controversial as it fails to commit members to oil and gas production reductions. However, the members must stop methane emissions, a super-destructive greenhouse gas, by 2030. That could significantly impact global emissions.
“We must do all we can to decarbonize the energy system we have today,” Al Jaber told delegates last week. And he has plenty of supporters as well as detractors.
The “UAE brought the energy sector into the room to have, for the first time, inclusive real dialogue about the transition, supply-demand dynamics, about what is difficult and what is relatively easier in terms of wins, like the methane pledge,” said Jay Collins, vice chairman of corporate and investment banking at Citi.
But at some point, the paradox seems too obvious. At one of the COP28 events, Libya’s National Oil Company CEO launched a new sustainability plan, complete with glossy brochures promising the reduction of gas flaring by 2030.
However, in an interview following the event, the CEO stated the company was pursuing a production increase by one hundred thousand barrels daily by the end of 2024 and a plan to get daily production to two million barrels by 2026.
Amidst all this, the oil and gas industry’s confidence has also caused tension with renewable groups and climate activists.
A tricky balancing act for the nascent African oil and gas producers
As a convergence of what oil and gas industry players have tried are advocating for at COP28, previous research has pointed out that the energy transition must be more inclusive and equitable, considering the development needs of emerging economies, particularly the nascent African oil and gas producers.
Various African countries have vast untapped fossil fuel reserves that they intend to exploit in developing their economies. They remain keen on profiting from their oil and gas wealth for social and economic transformation, domestic energy consumption, and revenue.
Although Africa has vast renewable energy sources including biomass, hydro, solar, and wind– challenges remain in offering universal access to modern, reliable, sustainable, and affordable energy.
However, considering the recent discoveries and developments in Africa’s oil and gas sector, for instance, in Kenya, Senegal, and Uganda, there is a risk of a significant increase in the countries’ carbon footprint, undermining the global energy transition and climate change mitigation efforts.
The same countries remain keen on utilising their natural resources for social and economic transformation as they strive to lift their populations out of poverty – in line with Goal 1 of the Sustainable Development Goals (SDGs).
The resultant predicament of these countries lies in utilising the petroleum wealth in an environmentally friendly way that matches their commitments and aspirations concerning the global energy transition.
