OPEC Bulletin Commentary October-November 2019

It’s time to talk about a controversial issue on everyone’s agenda; developments in climate change and the oil industry. As you will see when you read this month’s magazine, this topic appears many times in many stories from many speakers. It is clearly a hot topic, and it has appeared in one way or other at every event covered in this month’s OPEC Bulletin.

However, this should not be a for or against debate, but rather one about how these two seemingly opposing sides can work together to achieve the same goal in a harmonious and smooth manner — reducing greenhouse gas (GHG) emissions while ensuring a secure supply of energy for the world and addressing the scourge of energy poverty.

Fossil fuels are coming under pressure, including the oil industry. This is clear from regular protests, to investment banks backing away from spending and investing in fossil fuels. Many OPEC Member Countries are leaders in combatting climate change through policies such as zero flaring and investing in solutions such as carbon capture utilization and storage (CCUS) and energy efficiency improvements.

There is a mistaken public perception that renewables are the only solution to the climate challenge, and that the oil and gas industry is the only or main source of pollution. This is not the case and does not match the views of either scientists or experts.

OPEC Secretary General, Mohammad Sanusi Barkindo, is tackling this topic head-on in his speeches and iterations. It turns out to be of great personal importance, as he has been proactively engaged with the evolving United Nations Framework Convention on Climate Change (UNFCCC) since its inception. “I have spent almost all my working life in this process,” he said in an interview earlier this year. He has always advocated that the oil industry must be a part of the solution, harnessing its technology, manpower and knowledge to bring low-emissions solutions to the world.

Many of the messages in this edition of the OPEC Bulletin support a gradual and orderly energy transition. Recently many leaders have spoken out, from Microsoft mogul Bill Gates, who said climate proponents would be better off abandoning their divestment crusades and instead encouraging investments in alternatives such as disruptive technologies that will slow emissions, to CEO of BP, Bob Dudley, who spoke at the Oil and Money Conference in London in October, where he said when tackling emissions there needs “to be recognition that … there are many paths and we need to pursue them all.”

In the context of sustainable development, it is imperative to promote social justice within climate justice, including eradicating the scourge of energy poverty. The current disconnection lies behind the most recent protests in Santiago, Chile, which led to the necessity of shifting the upcoming COP25 meeting to Madrid, Spain.

OPEC has always supported the UNFCCC and energy efficiency improvements. All forms of energy must be embraced to meet growing energy needs and eradicate energy poverty. Many OPEC Member Countries are investing strongly into technology to mitigate GHG. However, the fact remains that particularly developing energy-producing countries stand to be hit hardest by discriminatory climate response measures, along with the actual manifestations of climate change itself.

As Saudi Aramco CEO, Amin Nasser, said at the World Energy Congress in September, the energy transition will take place and will be challenging, but the world needs to be aware that oil and gas are still essential and will be at the heart of the global energy mix for years to come. The impact of a ‘crisis of perception’ on long-term investments in the oil and gas industry, if it continues, could leave to supply shortfalls. This in turn would hurt national economies, threaten energy security and potentially create social disruption by making energy less affordable.

OPEC Member Country United Arab Emirates aims to reduce its carbon footprint by 70 per cent by 2050, and has delivered a long-term strategy in the region promoting low-emissions energy. State-owned oil and gas giant Abu Dhabi National Oil Company (ADNOC) has laid down plans to spend $1.8 billion by 2023 in projects involving CCUS; abatement of flaring; and reduction of unintended emissions. Other OPEC Member Countries are similarly addressing this issue.

In a recent round-table discussion, Barkindo extolled the virtues of Big Data as a way to harness massive amounts of data in a way that is helpful to sustainable development, energy poverty and the environment.

OPEC’s first Annual Legal Workshop discussed how the law can be an instrument for positive transformation in the energy sector, particularly with the 2030 Agenda, its Sustainable Development Goals and the Paris Agreement increasingly informing national policies and legislation.

Industry is also stepping up as we see in a warning from Total chief executive, Patrick Pouyanne, who says that the oil and gas industry must act now to maintain a license to operate amid growing public concern about climate change. “We have a lot of stakeholders today who look at us as dinosaurs. Dinosaurs have disappeared. I don’t want Total to disappear. But the only way not to become a dinosaur is to act, to invest and progress together. We have the technologies, people and financing.”

These are just a few of the comments which we hope will awaken the reader to consider the bigger picture. The world needs an orderly energy transition, a major requirement of which is energy security. This can only be done when no energy source is discriminated against and we instead look together for solutions to reduce GHG from all sources.

Dialogue, collaboration and cooperation are the only ways forward to meet this and indeed all major issues facing mankind today. OPEC has seen this mindset work to reverse a severe oil market imbalance, and it is essential to implement these same tools in the climate change conversation.