When the public starts to connect climate-change policy to rising energy prices and volatility, “we're in big trouble,” the International Energy Forum’s secretary general said on March 20.
“We've seen a lot of rising costs and volatility,” said Joe McMonigle at CERAWeek by S&P Global. A lot of that is driven by project-risk uncertainty as a result of governments’ energy-transition policies.
“We need to invest in upstream oil and gas.” The IEF and the Organization of Petroleum Exporting Countries (OPEC) are “the only ones that talk about investing in oil and gas—[and] for this whole reason: to manage a transition and keep costs low.”
Understanding that oil and gas are essential going forward no matter public policy is essential in the success of a transition, he added.
“If you care about the energy transition—[that is] if you care about the climate—you want to make sure we manage it to keep prices low so we can grow the economy and invest in new technologies,” McMonigle said.
In developing its high-case and low-case energy-demand scenarios, the IEF examines forecasts from a myriad of sources, including OPEC and the International Energy Agency, which alone has a half-dozen scenarios, including a “famous net-zero” one, McMonigle said.
In these, the difference between the highest and lowest forecasts for oil in 2050 is about 100 MMbbl—"the size of today's oil market, give or take.”
If trying to make investment or policy decisions, “what do you do with that kind of uncertainty?”
Oil and gas investments still need to be made, but the policy messaging disfavors it. “It's not as clear … to the public. The transition is not going to be easy.”
‘We will decarbonize after we carbonize’
The IEF was founded in 1991 by energy-consuming and -producing countries, currently totaling more than 70, and is currently based in Riyadh, Saudi Arabia. Members represent the “global north” of developed countries and the “global south” that are developing or undeveloped.
At the last two COP (Conference on the Parties) meetings, the south is “becoming increasingly louder about what they view as [being] sort of unfair goals set for them,” McMonigle said.
One African minister told the developed countries pushing climate caps that “we will decarbonize after we carbonize.”
There is a succinct disconnect between the energy haves and the have-nots. “I mean Heathrow airport in London uses more energy than the entire country of Sierra Leone. It is just a disconnect.”
Developed countries can transition because they have infrastructure. “But in the developing world, you can't do that.
“I think we're going to keep hearing at COP meetings and other big energy events the developing world raising their voice,” he said.
“And the days of going to COP meetings and just singing from the same song sheet to be nice, I think those days are over.”
Recommended Reading
US Interior Department Releases Offshore Wind Lease Schedule
2024-04-24 - The U.S. Interior Department’s schedule includes up to a dozen lease sales through 2028 for offshore wind, compared to three for oil and gas lease sales through 2029.
DOE Considers Technip, LanzaTech For $200MM ‘Breakthrough’ Technology Award
2024-03-25 - The U.S. Department of Energy funding will be used to develop technology that turns CO2 into sustainable ethylene.
US EPA Expected to Drop Hydrogen from Power Plant Rule, Sources Say
2024-04-22 - The move reflects skepticism within the U.S. government that the technology will develop quickly enough to become a significant tool to decarbonize the electricity industry.
CERAWeek: Energy Secretary Defends LNG Pause Amid Industry Outcry
2024-03-18 - U.S. Energy Secretary Jennifer Granholm said she expects the review of LNG exports to be in the “rearview mirror” by next year.
Hirs: LNG Plan is a Global Fail
2024-03-13 - Only by expanding U.S. LNG output can we provide the certainty that customers require to build new gas power plants, says Ed Hirs.