On the second day of the virtual Abu Dhabi International Petroleum Exhibition Conference (ADIPEC) 2020 Christof Rühl, senior fellow at Columbia University and Havard Kennedy School, hosted a panel addressing emissions and sustainability in the wake of Covid-19
Rühl was joined by Neal Anderson, president of Wood Mackenzie, Francesco La Camera, director general at International Renewable Energy Agency (IRENA) Jérôme Schmitt, chairman of the Oil & Gas Climate Initiative (OGCI) executive committee, and began by outlining the challenges facing the energy industry.
The host noted that the pandemic is pushing a decline in fossil fuel prices, making it harder for non-fossil fuels to compete, while the economic hit that is affecting everyone could make financing and investments harder to obtain. The panel shared this sentiment, suggesting that many companies, in an effort to protect their shareholders, could return to more traditional tried and tested methods and turn away from the more challenging path of energy transition. Additionally, developing countries with expanding populations, such as those in sub-Saharan Africa, do not have the luxury of investing in renewables, and their primary concern is providing energy to their population.
Despite these problems, the panel actually believed that the drive to energy transition was still accelerating, and would continue to do so despite the calamitous 2020 year. Anderson pointed out that China has just announced a 2060 carbon neutral target, the US election will most likely see the country adopt a more climate friendly stance, and public opinion (especially within the EU) is becoming increasingly concerned with climate change.
This public desire for clean energy, noted Schmitt, is shaping the industry and moving away from the traditional integrated chain. Instead of producing, transforming and then selling to the customer, 2020 has provoked a move around a circular chain, where the logic starts from the consumer.
Arthur Hanna, strategic advisor for ADIPEC, echoed Schmitt after the meeting; “This year saw the consumption of 80 bn barrels of oil instead of 100+ the year before. This has accelerated the agenda. We would not have discussed this so much at ADIPEC two years ago. The consumer is now looking for clean reliable energy resources, the industry now needs to deliver. This needs to be embedded from top and work its way down, I have never seen CEO’s talk about customer and consumer interests in the way they have done”.
Large company directives and national initiatives, fostered by the public demand for green energy, are pushing for renewable energy and decreasing the carbon footprint in line with the Paris Agreement objective of keeping the global temperature increase well below 2 degrees, keeping it at 1.5 degrees. La Camera outlined that actually this long-term goal can be paired with the short-term goal of economic recovery once Covid-19 has passed. The IRENA representative stressed that, due to the available technology, the transition to green energy will not be a burden, but a boom for the economy, providing more GDP and more jobs. Schmitt was keen to add here that companies within the oil and gas industry are also driving this transition, with 50% of member companies of the OGCI making significant announcements towards carbon net zero targets.
It was clear that every participant in the discussion was wary but positive in regards to sustainability and emission reduction in a post-pandemic world. They stressed climate change will effect all and therefore the drive to transfer to green energy needed to come for all. As Rühl stated, there was no “silver bullet” to this problem, but it could only occur if the current oil and gas industries were maintained and a combination of different technologies was used to build the green energy industry and, importantly, keep energy affordable.
The session concluded with each Rühl asking each panelist what their one wish would be to accelerate the energy transition after 2020.
Anderson: “Realistic carbon price”.
La Camera: “Work on infrastructure and show exactly the way you want to go and money from private companies will come."
Jerome: “One more very large country committing to net zero very soon."