Since the public spat over long-term forecasts between the leading voice of the world’s oil producers – OPEC – and consumers – the International Energy Agency (IEA) – broke out last fall, it remains apparent that a deep divide exists between them.
Their contrasting reports were published last October in the weeks leading up to COP28. In an interview with Oilprice.com, HE Haitham al-Ghais, OPEC Secretary General, reaffirmed his organization’s position on long-term oil demand while elaborating on its perspective on carbon emissions. His comments reflect a very different outlook from that of the IEA on key variables that will determine much of the world’s energy future.
Oilprice.com: Were the inclusive discussions at COP28 in the UAE a watershed moment? What are your views on the outcome?
OPEC Secretary General: OPEC is proud of its Member Country, the UAE, for the successful outcome of COP28. Holding COP28 underscored the UAE’s role as a climate leader, its capabilities in the realm of providing energy, and in bringing everyone together.
It is vital that we are inclusive, not exclusive. At OPEC, we do not dismiss anyone or anything. We believe this is the only pragmatic and realistic way forward. It was extremely positive that the UAE brought all voices to the table at COP28.
We need to be clear that building a low-emissions future, alongside achieving energy security and providing full energy access, has many paths. It is not just one path for all, whether that be a country or an industry. This was clear in the outcome of COP28 and the ‘UAE Consensus’.
It is also important to stress that the oil industry was proactive at COP28, with 52 oil companies representing 40 percent of global oil and gas production – including many from OPEC Member Countries – endorsing the Oil and Gas Decarbonization Charter. In doing so, they pledged to reduce carbon emissions to net zero by 2050, end routine flaring by 2030, and curb methane emissions to near-zero by 2030.
At OPEC, we believe in an all-energies approach. No single energy source can meet the rising demand and the development needs of all. We believe in an all-peoples approach, taking into account the capacities, national circumstances, and development priorities of all countries so that no one is left behind. We also believe in an all-technologies approach, which is why our Member Countries are investing in carbon capture utilization and storage, direct air capture, the circular carbon economy, as well as other energy sources, such as hydrogen, renewables, and nuclear.
Post COP28, our goal must be to reduce emissions – the core objective of the Paris Agreement – while ensuring energy security and universal access to affordable energy.
Oilprice.com: What will be the Organization’s approach in 2024 with regard to climate issues?
OPEC Secretary General: Since the organization was founded, OPEC and its Member Countries have always been attentive to issues of global concern, including climate issues.
In 2024, OPEC’s core objective, alongside its partners in the Declaration of Cooperation (DoC), will remain to help ensure sustainable stability for oil markets, which is in the interest of producers, consumers, and the global economy. This stability is vital as a platform for future investments in exploration, and production, as well as for technologies to help reduce emissions.
The OPEC Secretariat, which supports its Member Countries with research and data on a variety of key oil and energy industry issues, is fully cognizant of the importance of climate issues. This is why we have a dedicated Environmental Matters Department, which produces valuable research and analysis on climate change, sustainable development, and other relevant topics.
In addition, the Secretariat will monitor relevant developments and negotiations held under the auspices of the United Nations, along with other intergovernmental processes, and host technical workshops and coordination meetings to exchange views and information on climate change as part of OPEC’s efforts to advance information exchange.
Fostering technological innovation will also remain a key focus for OPEC. In this regard, our Member Countries will continue to invest in upstream and downstream operational efficiencies; deploy vast expertise to further help decarbonize the oil industry; and mobilize cleaner technologies at scale.
Oilprice.com: Post COP28, do you see oil demand peaking any time soon, or do you see the world continuing to require more oil?
OPEC Secretary General: When looking at realistic outlooks and strategies for both climate and energy, what the future shows us is that we need to embrace all forms of energy. It is not about choosing one source over another, especially as energy demand is set to rise by 23% by 2045, on the back of the global economy doubling in size, the world’s population surpassing 9.5 billion and given that billions still lack access to basic forms of energy.
There appear to be some outlooks that are ideologically driven, with an extremely narrow framing of the challenges before us. For example, the IEA's net-zero scenario is a normative one, which describes what needs to happen to achieve its pre-specified future.
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It is true that renewables – mainly solar, wind, and geothermal energy – will expand faster than any other source of energy in the coming decades, given their low starting base. However, hydrocarbons will still be required well into the 21st Century and beyond, and we see oil retaining the largest share of the energy mix at almost 30 percent, and global oil demand increasing to 116 million barrels a day by 2045.
It is also important to remember that the oil industry and renewables are not competitors in a zero-sum game, where the success of one represents a mortal threat to the other. There are inextricable links between the petrochemical and oil industries and the renewable industry. For example, the mass production of wind turbines cannot be achieved without vital petroleum end-use products like fiberglass, resin, and plastic.
Against this backdrop, it is clear that calls to stop investing in hydrocarbons are neither conducive to developing renewables nor to maintaining energy security. Rather, governments should strive to ensure future energy security in the face of rising population growth and energy demand – all the while reducing emissions – by embracing an ‘all-peoples, all-fuels, and all-technologies’ approach.
End of interview.
By Alan Mammoser for Oilprice.com
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1- Energy security for the global economy which takes precedence over any other issues including climate change goals. The alternative is the demise of the global economy and the end of humanity.
2- Every energy source has a role to play in the quest to satisfy global demand for energy. Therefore, a rational and practical global energy strategy is for fossil fuels and renewables to coexist and work diligently together to satisfy global needs for energy. The bigger the renewables' share in electricity generation, the less gas and coal will be needed.
3-Ensuring stability of the market and prices against market manipulation, speculation and volatility.
4- Defending its members' interests to ensure reasonable return on their investments in exploration and production capacity expansion.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert