Opec’s interest in emissions reduction

You might think an event hosted by an oil producers’ cartel is not the most obvious place to talk about sustainable energy, but with growing interest among world governments in reducing carbon emissions, they would be mad to ignore it.

Opec yesterday held a session on sustainable energy at its Vienna seminar, where it made some favourable remarks on carbon capture and storage (CCS), but implored developed nations to take the lead in reducing greenhouse gases and not let the burden fall on producing nations.

So how to reconcile the group’s natural interest in promoting fossil fuels with carbon reduction?

There is a connection of course: it’s true that higher oil prices benefit Opec and encourage efficiencies and investment in alternatives. The group highlighted this in a short press statement.

Reuters reports Yvo de Boer, head of the UN climate change secretariat, also took a collaborative approach:

“Fighting climate change cannot realistically mean fighting oil. Fighting climate change means fighting emissions.”

While Eni chief Paolo Scaroni said:

“Low oil prices are the enemies to research into alternative sources. What affects oil prices affects other energy sources. Oil must be at the centre of any concept of sustainable development.”

But this talk of mutual benefits for Opec and the environment only goes so far: Opec can’t benefit from prices at any height – at some point, substitution and demand destruction will kick in. Opec is aware of this delicate balance. Its press communique also stated that developed countries should take the lead in mitigating greenhouse gases “given their historical responsibility, and their technological and financial capabilities”; while Mohammad al-Sabban, Saudi Arabia’s representative to the UN climate change secretariat, said oil producing nations were willing to “bear our fair share, but no more”.

Ali al Naimi, the Saudi oil minister, went further, warning that underinvestment in oil would be bad for everyone. From The National:

“In years to come, if traditional energy supplies should prove inadequate because capital expenditure was curtailed due to unsustainable prices, unreliable indications of future demand or hopes for a substitute that oil cannot deliver, such a supply crunch would be catastrophic,” he said.

“The painful result would be felt sooner rather than later. It would effectively take the wheels off an already derailed economy.”

But, as we pointed out in an earlier post today, oil prices are still far away from the point at which oil consumers will have a purely economic motivation to move away from oil. Jeroen van der Veer of Shell highlighted this at the seminar a day earlier when he said: “Hydrocarbon fuels are extremely price competitive even if you’re at $45. The future for the oil and gas industry is very strong.”

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