Oil and gas companies should be part of the discussion on climate change, according to panelists at the World Government Summit
The world needs “short-term” solutions as the infrastructure for renewable energy will take decades to develop, industry experts have said.
“We don’t have the infrastructure that really makes it possible for renewables to grow at the speed and scale that is needed,” Francesco La Camera, director general of the Abu Dhabi-based International Renewable Energy Agency (Irena), said during a panel discussion at the World Government Summit.
“We are talking about physical infrastructure, the legal and policy infrastructure [as well as] the professional skills.”
The war in Ukraine has triggered a global energy crisis, marked by a shortage of fuel supplies and volatile prices.
Countries in Europe and elsewhere are now racing to develop renewable and natural gas projects as they seek to reduce their reliance on Russian fossil fuel exports.
“We’re talking about the biggest investment programme ever in the energy industry, which is used to developing projects over decades,” Siemens Energy chief executive Christian Bruch told the panel.
Investment in low-carbon projects is expected to increase by $60 billion this year, 10 per cent higher than 2022, led by developments in the wind sector, as well as a “significant” rise in funding for hydrogen and carbon capture, according to Rystad Energy, a Norway-based energy consultancy.
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About $131 trillion will have to be spent by 2050 to achieve a low-carbon energy transition that will limit global temperature rises to manageable levels, Irena said.
Mohamed Al Ramahi, chief executive of Abu Dhabi clean energy company Masdar, said the Ukraine war, which disrupted energy markets and global trade flows, had created new opportunities in the renewables sector.
The current crisis has “accelerated” the rate at which renewable energy permits are being issued in Europe, he said.
“Before the war, this was literally impossible … I see these challenges creating humongous opportunities,” Mr Al Ramahi said.
Last year, EU energy ministers agreed to outline a temporary framework to hasten the granting of permits and the development of renewable energy projects.Masdar, which has Adnoc, Taqa and M
ubadala Investment Company as its stakeholders, aims to grow its renewable energy capacity to at least 100 gigawatts by 2030 while boosting its green hydrogen production to one million tonnes over the next decade.
“Is it sufficient enough? And the simple answer to that is definitely not. We need 10 times our target capacity on an annual basis for the next decade [to meet global net-zero goals]” said Mr Al Ramahi.
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However, the global energy transition is a “long and bumpy journey”, he said.
Oil and gas companies, which reported record profits last year on the back of higher energy prices, should be a part of the discussion on climate change, panelists said.
The global oil and gas industry’s income jumped to about $4 trillion in 2022, from its recent average of $1.5 trillion, according to the International Energy Agency.
“Without that money, there won’t be a transition because where’s the money going to come from?” said Marco Dunand, chief executive of commodities trader Mercuria.
He also highlighted the need for more investment in new oil and gas projects after spending in the sector fell to historic lows during the Covid-19 pandemic.
“If you want to be in line with the Paris Agreement, you should be producing worldwide about 70 million barrels per day, but the demand [is expected] to be closer to 100 million bpd,” said Mr Dunand.
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“There is no investment because there’s so much uncertainty about the transition.”
The Cop28 summit — set to be held in the UAE this year — will offer a chance to take stock of the enforcement of the Paris Agreement.
“There will be differences between countries during the stock-take [and] Cop28 should say how we can close the gap,” said Mr La Camera.