As the world looks to achieve Paris Agreement goals to reach net-zero emissions by mid-century, while meeting rising oil and gas demand, dialogue needs to be more “inclusive and broader”, Opec Secretary General Mohammad Barkindo told an online panel.
The transition should be achieved in the “least disruptive” manner and address the challenge of “energy poverty” that millions of people in developing countries are facing, Mr Barkindo said in a virtual address at an event organised by the Washington-based Atlantic Council.
Achieving net-zero emissions by 2050 is an “extremely challenging” task even for advanced economies, he added. “This further underlines the massive challenge for developing countries to reach net zero.”
Under the 2015 Paris Agreement, most world governments have pledged to keep global warming to “well below” 2°C above pre-industrial times and to strive to limit temperature rises to 1.5°C. World leaders are set to gather at the Cop26 conference in Glasgow, Scotland, in November to strengthen the Paris commitments to stabilise the planet's climate and speed up action to achieve a zero-carbon future by 2050.
“Opec supports innovation, technological advancement and the need to look for clean and more efficient solutions across available energies. We are believers that solutions can be found in technologies,” said Mr Barkindo, a former politician from Nigeria, Africa's biggest oil producer.
As the world pivots towards a net-zero “we need to transition to a more inclusive and equitable world where every person has access to energy,” he added.
Industry should also be “cognisant of the implications of underinvestment” in the sector, which has been exacerbated by the Covid-19 pandemic.
Oil industry investment declined by nearly 30 per cent due to the pandemic, he said.
“The numbers are staggering. Despite all the efforts of governments to combat energy poverty, we still have over 800 million people in the developing countries who have no access to energy.
“In Sub-Saharan Africa, nearly 600 million people have no access to electricity. Therefore, all sources of energy will be required for the foreseeable future … what is required is the deployment of appropriate technologies supported by suitable policy measures by governments and corporations to carry civil society along,” Mr Barkindo said.
Opec remains largely bullish on oil demand. Its latest forecast shows consumption exceeding pre-pandemic levels in 2022. The group expects global oil demand to reach 100.8 million barrels per day next year.
Opec revised upwards its estimated demand growth for 2022, up by 900,000 bpd to 4.2 million bpd amid expectations of higher levels of economic activity and fewer movement restrictions.
“Global emissions likely peaked in 2019, followed by an unprecedented 6 per cent drop in 2020 due to Covid-19. Emissions are now rising sharply again and will grow for the next three years before starting to decline,” Norway-based DNV, which offers technical advice to the energy industry, said in a recent report.
With emissions starting to pick up, global energy-related emissions in 2030 will only be 9 per cent lower than 2019 levels. By 2050, which is the globally mandated deadline to reach carbon neutrality, emissions will only be 45 per cent lower in comparison with the 2019 baseline.
“In any net-zero scenario in 2050, there is going to be an important role for the oil industry … even if e-cars are fully electrified, there is still an important role of oil in heavy transport like trucking, air transport, freight and shipping,” chief executive of Sharjah-based conglomerate Crescent Petroleum Majid Jafar told the panel.
“We need to do a better job as industries, as operators … explaining how the products of our sector are going to be vital in this transition,” he added.
Crescent Petroleum, one of the Middle East’s oldest private oil and gas companies, has cut gas flaring by 80 per cent, reduced carbon intensity to less than one third of the industry average and offset remaining emissions to achieve carbon neutrality across its operations, Mr Jafar said.
Natural gas now constitutes nearly 85 per cent of the company’s total production, providing electricity to millions while avoiding 42 million tonnes of carbon dioxide emissions over the past decade by replacing diesel with gas for electricity generation, Mr Jafar added.
The company has offset emissions from its operations with carbon credits to support renewable wind power projects in China and Mongolia, supporting cleaner electricity that would normally be generated by burning coal and achieving carbon neutrality across its operations.
As the world pursues decarbonisation, cleaner processes and carbon capture technologies will play a vital role and cast a light on the needs of developing countries in Asia and Africa, where 800 million people still do not have electricity and 3 billion lack clean fuel for cooking, he said.
“For 50 years, Crescent Petroleum has leveraged its understanding of the Middle East to promote cleaner energy and sustainable development, and this milestone highlights the success of our years of focused efforts,” said Mr Jafar