OPINION | The Continued Role of Oil&Gas in Global Economy, By Mohammed Sanusi Barkindo

*Mohammed Sanusi Barkindo...OPEC secretary-general
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The world will continue to need more energy in the decades ahead. This is true in the near- term—as we recover from the COVID-19 pandemic—and looking longer term to 2045, as the global economy more than doubles in size and the world’s population is projected to grow by over 1.7 billion people, and given the need to rid the world of the scourge of energy poverty, bringing light, heat, power, and low-emission fuels for cooking to billions that still go without.

There are many facets to the future energy transition, but the basic challenge is simple: how can we ensure that there is enough energy supply to meet expected future demand growth, and how can this growth be achieved in a sustainable way, balancing the needs of people in relation to their social welfare, the economy, and the environment?

What is clear in OPEC’s recently published World Oil Outlook (WOO) 2020, as well as other recently published outlooks, is that oil and gas have a vital role to play. Although there are some who believe the oil and gas industries should not be part of the energy future, that they should be consigned to the past, and that the future is one that can be dominated by renewables and electric vehicles, it is important to state clearly that the science does not tell us this, and the statistics related to the blight of energy poverty do not tell us this either. The science and statistics tell us that we need to reduce emissions and use energy more efficiently.

Renewables are coming of age, with wind and solar expanding quickly, but—even by 2045 in our WOO—they are only estimated to make up just over 20 percent of the global energy mix. Oil and gas combined are forecast to still supply over 50 percent of the world’s energy needs by 2045, with oil at around 27 percent and gas at 25 percent.

We appreciate that some will view this as an OPEC forecast, dispute the numbers, and state that the Organization is against renewables.

In response, it is clear that many OPEC Member Countries have great solar and wind resources, and huge investments are being made in this field. OPEC welcomes the development of renewables. However, we do not see any realistic outlook projecting in their business-as-usual base cases that renewables will come anywhere close to overtaking oil and gas in the decades ahead.

In terms of electric vehicles, there is no doubt that they will continue to see expansion in the transportation sector. In our WOO, the share of electric vehicles in the total road transportation fleet is projected to expand to around 16 percent by 2045. We support their development in a sustainable manner.

However, for many of the world’s population, electric vehicles do not offer a viable alternative to the internal combustion engine, primarily due to cost. Moreover, there is also debate about how environmentally friendly they are considering their build process, especially the required batteries, and the sourcing of the vehicles’ electricity.

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Looking at the scale of the challenge of the energy transition, we need to utilize all available energies, and it is crucial that we appreciate just what each energy source can provide in the decades ahead.

The challenge of tackling emissions has many paths, and we need to explore them all. Complex problems require comprehensive solutions. The oil and gas industries are part of the solution; they possess critical resources and expertise that can help unlock our carbon-free future.

We need to look for cleaner and more efficient technological solutions everywhere, across all available energies. We will need a very broad portfolio of emissions removal technologies to tackle climate change. We are believers that solutions can be found in technologies, such as carbon capture, utilization, and storage (CCUS) and others

The future requires massive investments, with the WOO 2020 highlighting that the global oil sector alone requires a cumulative investment of $12.6 trillion through to 2045.

It is vital that the required investments are made, in all energies, to ensure stable and continuous supplies, and to help reduce and, ultimately, eliminate emissions.

Without the necessary investments, there is the potential for further volatility and a future energy shortfall, which is not in the interests of either producers or consumers.

Moreover, if billions of people in the developing world suffering from a lack of energy access feel they are excluded from access to energies that have helped fuel the developed world, then this could sow further divisions and expand the divide between the haves and have nots, the global North and the South.

At OPEC, we welcome coordinated action within the industry and through various research and development platforms, such as the Oil & Gas Climate Initiative (OGCI), a CEO-led group that aims to accelerate the industry’s response to climate change and engagement with all stakeholders in the energy community.

The Organization reaffirms its faith—time and time again—in the need for dialogue, cooperation, and respect. We need to talk to each other and not at each other. The challenges our planet faces require solutions from every corner of the energy sector and an appreciation of the nuances in the debate. The contributions of an entire industry cannot be overlooked.

We are all dedicated and passionate about evolving a sustainable energy future for all, and in this we need to leverage all available resources. This includes the huge capacity for technical know-how and innovation in the oil and gas industry that can help unlock the carbon-free future that we all seek. Working together, we can build a future worthy of future generations.

 

 

*Barkindo is OPEC Secretary General

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