The outcome of the recent G20 meeting held in India has left some participants disappointed, while others had anticipated a fiery discussion on hydrocarbons and energy policies. Amid growing concerns about the future of the planet, the debate surrounding the future of hydrocarbons has intensified, with the Global South aligning its objections with powerful oil and gas-producing nations. The G20 Ministerial energy meeting, hosted by India in Goa, included influential countries such as China, the US, Russia, Saudi Arabia, Brazil, Japan, Mexico, Germany, France, the UK, and the EU.
The upcoming COP28 summit in Dubai, led by Sultan Al Jaber, who also heads the Abu Dhabi National Oil Company (ADNOC), is expected to become a battleground between environmentalists, NGOs, and Western governments pushing for aggressive climate change action and the Global South advocating for the continued inclusion of hydrocarbon producers and energy companies.
The contentious debates are already underway, as evident from the G20's inability to agree on tripling global renewable energy capacity by 2030. The lack of consensus on globally phasing out fossil fuels is attributed to the opposition of major hydrocarbon producers like Russia and Saudi Arabia, triggering harsh reactions from climate scientists and activists concerned about the escalating impact of climate change, as witnessed through increased extreme weather events like heatwaves in Europe, China, and the USA. Related: UAE Says OPEC+ Cuts Are Enough To Support The Oil Market
While the G20 summit's overall outcome isn't entirely negative, with 22 out of 29 proposed paragraphs receiving unanimous agreement, significant disagreements arose over proposals to cut back or phase-out fossil fuels, particularly from countries like Saudi Arabia, Russia, South Africa, and Indonesia. These issues have become deeply divisive, leaving little room for maneuvering at present.
The focus now shifts to the preparation and results of COP28 in Dubai, where the UAE's leadership will face immense pressure from Western governments and NGOs to adopt a stronger and more viable strategy to reduce global hydrocarbon dependence and accelerate the energy transition. However, there is a concern that COP28 might turn into a stage for a hydrocarbon revival, as Sultan Al Jaber has expressed the need for an inclusive gathering that involves major energy companies, in contrast to COP26, where some were excluded.
Geopolitical considerations will undoubtedly influence discussions at COP28, similar to what happened during the G7-G20 meetings, where Russia's involvement triggered attempts to address the ongoing Russian invasion and destruction of Ukraine. China, as a supporter of Russia, prioritized focusing on global economic and financial issues, while India, as the host, aimed to maintain neutrality amidst balancing its ties with Russia and the USA.
The growing alliance between Asian, Arab, and African countries is expected to counter any hardline climate change strategies proposed at COP28. Sultan Al Jaber's leadership at the summit will be pivotal in managing geopolitical conflicts, not only between Russia and Ukraine but also between China, USA/Europe, and the West versus BRICS+ nations.
While the commitment to an energy transition and renewable energy is solid, addressing geopolitical conflicts will be an additional challenge for Sultan Al Jaber. The support of OPEC+ producers and international oil companies (IOCs) will be crucial for a functional energy transition since the world is still heavily reliant on fossil fuels, making up 80% of global energy sources.
Energy transition strategies will not only impact climate change but also influence the security and future of major regions worldwide. The role of hydrocarbons remains significant, and the discussions on energy transition must take into account the increased volatility of systems, economies, and societies when phasing out oil and gas in the long term.
In preparation for COP28, it is essential to acknowledge the intricate links between access to energy, investments, and technology and their connection to geopolitical and geo-economic alliances. Sultan Al Jaber's challenge lies in managing these complex relationships while pursuing an effective energy transition strategy.
With Russia, an influential player in the energy landscape, attending COP28, aligning with BRICS-related powers, and the UAE's interests in balancing relationships with China, India, and Russia, the summit's discussions will be far from simple.
The decisions made at G20 and COP28 will significantly impact global energy transition efforts, and it is evident that geopolitical considerations cannot be overlooked. The survival of African regimes, Arab oil and gas producers, and economic giants like China, India, and EU members largely hinges on hydrocarbon revenues and access to affordable energy.
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While climate change remains a pressing global challenge, a successful energy transition strategy must consider the interconnectedness of energy supplies, geopolitical alliances, and regional interests. Achieving a meaningful and effective energy transition will be a delicate balance of these complex factors.
By Cyril Widdershoven for Oilprice.com
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