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Oil-producing countries need international support to diversify and lessen their dependence on oil revenues if the world has any hope of reaching net-zero emissions, Iraq’s finance minister and the head of the International Energy Agency (IEA) say.
“To meet climate targets and avoid economic collapse, countries such as Iraq need international support in the transition to clean energy,” Iraq’s deputy prime minister and finance minister Ali Allawi and Fatih Birol, executive director of the IEA, wrote in an opinion piece in The Guardian.
If the major oil nations, such as OPEC’s second-largest producer Iraq, see their oil revenues plunge before their economies have diversified, poverty will increase, and livelihoods will be lost, Allawi and Birol said.
In its bombshell Net-Zero By 2050 report, the IEA said earlier this year that if net-zero emissions were achieved, OPEC would hold more than half, 52 percent, of a much reduced global oil supply. This would be up from some 37 percent of the total global oil supply in recent years.
Yet, annual per capita income from oil and natural gas in producer economies would plunge by 75 percent, which could have knock-on societal effects, the IEA said.
“Structural reforms and new sources of revenue are needed, even though these are unlikely to compensate fully for the drop in oil and gas income. While traditional supply activities decline, the expertise of the oil and natural gas industry fits well with technologies such as hydrogen, CCUS and offshore wind that are needed to tackle emissions in sectors where reductions are likely to be most challenging,” according to the report.
Iraq’s Allawi and the IEA’s Birol wrote in the opinion piece published on Wednesday:
“Countries such as Iraq cannot make the transition to clean energy alone. If they are to bring together the financial resources, expertise and policies to transform their economies in an equitable, affordable way, they will need international support. Otherwise, the path to net zero and the security of the world’s energy markets will both be imperilled.”
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com