Opec Secretary General Mohammad Sanusi Barkindo has cautioned that ongoing energy transition needs to be more inclusive and equitable, while ignoring existing sources of energy can lead to unintended consequences such as market distortions, heightened price volatility and energy shortfalls.
"Climate change and energy poverty are two sides of the same coin," Barkindo told the 23rd World Petroleum Congress in Houston in a recorded address.
Barkindo said that the “narrative around the energy transition has been overtaken by emotional outburst with rational discussions based on facts, data and science taking a backseat".
“The complexity of the challenge calls for the inclusive approach, not the passage of a single one-size-fits-all definition,” he said.
Delicate balance needed
Barkindo said the world faces enormous challenges and it requires a “delicate balance".
“We need to ensure that energy's affordable for all, and we need to transition to a more inclusive, fair, equitable world in which every person has access to energy,” he said.
Barkindo highlighted Opec's recently released 2021 World Oil Outlook to show that global energy demand is forecast to expand by 28% by 2045, with more than 50% of the share still likely to be dominated by the oil and gas sector.
He acknowledged that renewables are coming of age, with wind and solar expanding quickly.
However, he said it is estimated that even by 2045 renewable sources will only account for around 24% of the global energy mix.
“It underlines the need to have a holistic view of the energy sector and appreciate what each energy source can offer,” he said.
Barkindo described halting new investment in oil and gas as "misguided" and said it could lead to serious consequences for world energy security.
“If the necessary (oil and gas) investments are overlooked, It could have knock-on implications and leave long-term scars, particularly for security of supply, affecting not only producers but consumers too,” he stated.
Opec’s 2021 World Oil Outlook claims that investments of $11.8 trillion will be required between now and 2045 in the upstream, midstream and downstream sectors.
However, in the past year alone, upstream investments plummeted by 30% and are expected to remain at lower levels this year, which Barkindo described as a key concern.
“Let me stress that the return on investment is a core objective of the declaration of cooperation between Opec and non-Opec producers,” he said.
Barkindo said that the “current energy market turmoil seen across the world in recent months is perhaps an insight into some of the issues we are dealing with, and what could augur if we do not see the bigger picture and the interwoven complexities".
He said that the oil and gas industry needs to be a part of the solution to tackle climate change and evolve with the transition.
"I have no doubt the resources and expertise of our industry can be harnessed again to help develop cleaner and more efficient technological solutions contributing to the reduction of emissions,” he said.