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This Diplomatic Breakthrough Could Slam Oil Prices

This Diplomatic Breakthrough Could Slam Oil Prices

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Is OPEC’s Oil Outlook Too Bullish?

Is OPEC’s Oil Outlook Too Bullish?

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UN Official Calls On OPEC To Join Energy Transition

oil rig

OPEC should join climate change fight efforts and prepare for the global energy transition away from oil, the executive secretary of the UN’s Framework Convention on Climate Change said in an interview with Bloomberg.

“If we do not pay attention to this transition, their business is also going to suffer. The conversation here is a lot about business and price. Very few people talk about sustainability,” Patricia Espinoza said, adding “This is about the survival of their business and what are they going to do. They need markets and resiliency and that requires attention to climate change.”

Espinoza first approached OPEC about the cartel joining in the climate change fight effort back in 2013 when she became executive secretary of the FCCC, but the cartel has been slow to respond.

While a growing number of Big Oil companies reorient themselves towards a lesser reliance on oil, diversifying into renewables, energy storage, and other sustainable energy projects, the members of OPEC have been slow to adapt to the changing industry environment, having their own problems to deal with such as keeping their economies afloat during the latest price crash.

Related: The Permian Faces Shut Ins Due To Oil Pipeline Shortage

Yet they will have to reconsider in light of forecasts for the industry. Bloomberg New Energy Finance, for example, has projected that crude oil demand for cars will fall to 15.9 million bpd in 2040 from 24 million bpd today. The main driver behind this shift will not be EVs, however, but energy efficiency, which could explain Saudi Aramco’s recent venture into engine efficiency. It should set a good example for the rest of OPEC’s members, although few have the means to make big spending plans at the moment.

“They need economies that are thriving and countries that are growing for business to work,” Espinoza told Bloomberg. “That will not happen if we do not pay attention to climate change. We will have global destabilization, crisis everywhere.”

By Irina Slav for Oilprice.com

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  • Lee James on June 26 2018 said:
    The U.N. official highlights the importance of energy efficiency in combustion engines. We need ensure that efficiency targets are set and that they stay in place. Those targets are imposed "from above," but they have been working and they level the playing field. Targets are palatable to manufacturers if everyone plays by the same rules.

    I very much enjoy my 37 mpg ICE car.

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