Climate crisis puts oil in the crosshairs, but addiction persists

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Reducing the dependence of the world economy on oil is a colossal task.

The climate crisis has put an end to oil on the agenda, but achieving it is a colossal task given the global economy’s heavy dependence on oil.

“In 2021, several developments have clearly shown that the (oil) industry has no future,” said Romain Ioualalen of the militant group Oil Change International.

The International Energy Agency warned in May that an immediate halt to new investment in fossil fuel projects is needed if the world is to reach net zero carbon emissions by 2050 and have a chance of limiting global warming to 1 , 5 ° C.

The call was a revolution for an agency created in the wake of the first oil shock of 1970 to protect the energy security of rich and oil-consuming nations.

Another major moment in 2021 was the emergence at the COP 26 climate summit in Glasgow of a coalition of nations that pledged to phase out oil and gas production, albeit no major oil and gas producing nation has joined this group.

“It is no longer taboo to talk about the end of hydrocarbon extraction during international climate summits,” said Ioualalen of Oil Change International.

And fossil fuels, which still account for 80% of the energy consumed, have been explicitly blamed for climate change, which was not the case when the Paris Climate Pact was concluded in 2015.

More recently, conservationists won a symbolic victory when oil giant Shell decided to abandon development of the controversial Cambo oil field off the coast of Scotland, saying the investment case was ” not strong enough ”.

‘Dependent’

“We have known for several years that the end of crude oil … is near,” said Moez Ajmi, energy specialist at professional services firm EY.

“But is the world ready to live without oil? It is still very dependent in my opinion.

The IEA also estimates that the demand for oil is expected to increase further. He expects it to hit its pre-pandemic level of just under 100 million barrels a day next year.

With crude prices having rebounded in recent months, oil producers are rolling in cash and can afford to pursue new projects.

“Any discussion that the oil and gas industries would be a thing of the past and stop new investment in oil and gas is wrong,” OPEC chief Mohammed Barkindo said recently.

The boss of the French oil company TotalEnergies, Patrick Pouyanne, said he was “convinced that the transition will take place because there is real awareness, but it will take time”.

He thinks the issue is being approached from the wrong side. Instead of focusing on reducing oil, the focus should be on consumption.

Demand for fossil fuels “will decline as consumers have access to new products like electric vehicles,” Pouyanne said.

In the first half of the year, electric vehicles accounted for 7% of global auto sales, according to BloombergNEF. Although this is still a small percentage, it is increasing rapidly.

“Year of transformation”

Ioualalen of Oil Change International said the arguments made by oil companies and producing countries are cynical and focus on the short term.

“They are trying to justify an unsustainable trajectory at all costs,” he said.

“We are still a long way from a carbon-free economy, of course, but it is the investments in the energy system that are being made today that will get us there,” said Ioualalen.

Whatever the horizon of the end of oil, industry players are still preparing for it willy-nilly as the pressure mounts on them.

The American oil majors ExxonMobil and Chevron have long resisted but finally announced this year investments in the energy transition.

“2022 has the potential to be a truly transformational year,” said Tom Ellacott, senior vice president of business analysis at energy research and consulting firm Wood Mackenzie.

“It is clear that staying on the sidelines of decarbonization is not an option” given the increasing pressure on the oil industry.

Experts believe 2022 will see more investment in wind and solar power as well as technology to capture carbon emissions from power plants and fossil fuel plants.


Opinion: We should ban all new oil and gas fields


© 2021 AFP

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