It’s an awkward moment for the oil industry to have at last won its long-sought “seat at the table” in international climate talks. The contradictions and conflicts in play at this opaque moment in the energy transition are mind-boggling.
Global temperatures are flaring. War-related market disruptions are fading. The economic outlook is extremely fuzzy. Neither the Mideast oil exporters—whose voices will be loudest at this autumn’s COP28 gathering in Dubai—nor the Western majors in their backup chorus have a coherent, well-supported message.
It is possible through the fog to glimpse two pillars underpinning such proposals as the industry does have. More unabated oil and gas now, and lots of oil and gas with carbon capture and storage (CCS) later. It’s a scenario as close to business-as-usual as it’s feasible to promote in a world beset by climate disasters. It will be a hard sell, particularly given that most of the industry isn’t confidently investing in either pillar of its own platform.
This summer’s climate breakdown is so severe and so geographically widespread that it has shattered climate-change denialism and made the topic a near-constant of mainstream news coverage this summer. Yet there’s little sign of the reemergence of the massive protest actions that marked 2019 and were derailed by COVID-19.
The next UN climate talks, COP28 in November, will be in the United Arab Emirates (UAE) under the chairmanship of Abu Dhabi National Oil Co. (Adnoc) CEO Sultan al-Jaber, and private oil industry lobbyists will be out in force. Yet the UAE and other oil-exporting countries’ positions on oil and gas in the talks appear to rest almost solely on the shaky base of CCS. The implicit keystone for the “abatement” of carbon emissions from fossil fuels.
The Fog of Transition
The Western oil industry is no help. It has no clear strategy beyond business-as-usual either for saving itself or for helping in a major way to limit the impacts of climate change. On the contrary. The Western majors have backed off emphasizing goals to reduce oil and gas production and sales. But, with the exception of Exxon Mobil, they have not rushed towards solid action on CCS.
The ironies don’t stop there. The last two years have also seen solar and onshore wind generation and electric vehicles (EVs) pass the point on their rapid growth curve where they become visible and financially viable, only to see the oil majors largely disavow interest. Here, the exception is France’s TotalEnergies. The profit margins on solar, wind, batteries, electricity transmission, and EV charging aren’t high enough to justify investment, as the other majors explain. It’s a bit like arguing that nobody is going to a once-favorite restaurant anymore because it’s too crowded.
Over the last year, the message from both the Western industry and Middle Eastern oil exporters has been that oil and gas will be needed in large quantities for a long time, and more money and attention should be going into making sure supplies are adequate to meet that need. Yet Opec-Plus feels compelled to shut down more capacity for longer in order to prop up prices.
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