Last week at the World Energy Congress, a global event hosting thousands of the world’s most important energy stakeholders in the Netherlands, executives, experts, and diplomats all repeated the same message: the world needs to lower carbon emissions without compromising the supply of oil and natural gas.
Whilst oil and natural gas is diversifying, millions of people across the globe, particularly in the global south, still do not have access to basic energy needs.
Hydrocarbons will be essential for these communities to meet their energy demands, and without further investment in fossil fuel exploration, these developing states cannot guarantee their energy security – nor can they finance a transition to renewables. With the topic of “humanising energy” at the heart of this year’s Congress, Amin Nasser, Chief Executive of the world’s largest oil producer, Saudi Aramco, explained:
“A lot of the policymakers do not understand what is required and how [energy transition] is going to happen… Eighty percent of the consumption of hydrocarbons [oil and gas] by 2050 is going to be in the Global South. Today it is 40 percent in the Global North and 60 percent in the Global South. So that is huge growth in the Global South.”
In a separate interview, Nassar stated that it was wrong for banks to deny finance to developing countries if they want to exploit oil and gas reserves, saying:
“That’s not acceptable. They do not have their basic energy needs met. That’s not acceptable.”
In Lebanon, where an estimated 80 percent of citizens live in poverty and 36 percent below the extreme poverty line, a government official said:
“It is almost impossible to access large investments from bodies such as the World Bank, the International Finance Corporation and the European Bank for Reconstruction and Development (EBRD), which generally deal with large infrastructure projects.”
These conclusions align with previous statements from CEO and Secretary General of the World Energy Council, Dr. Angela Wilkinson, who earlier this year stressed the need for a more “mature” conversation around the future role of fossil fuels, and a pragmatic approach to global energy transitions.
More Innovation and Investment Are Needed
Worldwide, there is recognition that carbon emissions need to be reduced. But, as panelists at the World Energy Congress highlighted, oil and natural gas are here to stay. Innovation in the sector is imperative to balance carbon output and ensure the durability of a stable energy system. During the Congress, Sharif Al Olama, undersecretary for Energy and Petroleum Affairs at the UAE Ministry of Energy and Infrastructure, told a panel:
“People are really diverting from the real issue. We need to find solutions. We don’t need to eliminate a source of energy that is building economies [and] that is feeding all the globe.”
Other speakers also stressed the need for innovation in the sector. Breakthrough Energy’s Ann Mettler, a world-renowned expert in technology and decarbonization, said during a panel:
“If I look at sustainable aviation fuels, geothermal and floating offshore wind, we need the expertise of oil and gas in these areas. And I think from a public policy perspective, we need to really zero-in on how we can provide more incentives for the oil and gas sector help us with these solutions. Not in a punitive way, but to incentivize.”
Enabling the Transition
The faster we aim to transition, the greater demand we will place on renewable technologies. Implementing these low-carbon technologies will require the financial firepower derived from oil and gas earnings, as well as upstream expertise, particularly for carbon capture and storage.
The more pragmatic approach is to invest more, not less, into the oil and natural gas sector as policy and goodwill is not enough to aid the global energy transition.
As Amin Nasser highlighted, calls to shutdown investment in hydrocarbons would cause chaos in the energy industry, and lead to an unstable and emotional political environment, hindering innovation at a time when it is clear that the oil and natural gas sector is imperative for reaching a net zero world.
Bottom line: At the World Energy Congress, a consensus was formed: a mature and realistic transition is needed to ensure we meet demand, security, and targets. Rather than advocating to cut out parts of the energy industry, further investments should be made to help unlock innovation in the industry, driving decarbonization while also supporting global development.
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