• Thursday, March 28, 2024
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Barkindo takes swipe at ambitious plans to accelerate the end of oil

Global oil sector needs $11.8trn to meet growth in energy demand – OPEC

Mohammed Barkindo, the secretary general of OPEC has said that calls to discontinue the investment in oil and gas due to climate concerns are dangerous and unrealistic.

In a keynote address at the 20th edition of the Nigerian OIl and Gas Conference 2021, held in Abuja on Tuesday, Barkindo said that while the unpredictability and volatility brought on by the pandemic has intensified discussions related to climate change and the energy transition, it is unrealistic to think the world, especially African countries are ready for it.

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.
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, he said.

Read also: Oil prices rise as OPEC+ abandons negotiation on quota policy

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

The OPEC boss argued 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% 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” Barkindo warned.

This argument resonates with African oil and gas experts who argue that African countries rely on fossil fuels to fund their budgets and lack the capacity to quickly move away from oil.

“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. Additionally, when considering the scale of the energy transition, we must harness all available energies’ Barkindo said.

Barkindo argued that the time frame for energy transition is unrealistic to meet the milestones required “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.” he said,

To achieve 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 and the amount of mineral material needed to produce energy is higher than with fossil fuels, he said.

Barkindo further argued that many OPEC Member Countries rely primarily on revenue from their oil and gas assets to support their economic and social development.

The OPEC boss reiterated the argument 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.

To further drive home the point, Barkindo argued that 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, Barkingo said.