OPEC has a long history of supporting environmental issues and sustainable development. We have been directly involved in the evolution of the United Nations Framework Convention on Climate Change (UNFCCC), from the UN Intergovernmental Negotiating Committee in 1990 to the present day.
The UAE has repeatedly shown climate leadership, particularly through its ‘Net Zero by 2050’ strategic initiative and investing $40 billion in the renewables industry to date. Astonishing progress has been achieved in a relatively short period of time.
We have followed with interest the calls by COP28 President Designate, His Excellency Dr. Sultan Ahmed Al Jaber, for a positive, pragmatic and above all, realistic approach to the climate challenge.
The reality is that oil and gas will continue to be an integral part of the energy mix for the foreseeable future. According to OPEC’s World Oil Outlook, oil is expected to retain the largest share in the energy mix throughout the outlook period, accounting for almost a 29% share in 2045.
The global economy in 2045 is expected to be double the size it is today. The global population is set to increase by 1.6 billion people between now and 2045. As a result of these global demographic and economic changes, energy demand is forecast to increase by a significant 23% in the period to 2045.
Such an increase in demand necessitates adequate investment in our industry. The global oil sector will need cumulative investment of $12.1 trillion through to 2045. Investment is also urgent to account for annual decline rates, which amount to about 5% in our industry.
Despite the urgent need for investment, we have heard disheartening calls from some quarters to divest from hydrocarbons.
OPEC has been clear in highlighting the very real and dangerous consequences of divestment or underinvestment in the oil industry:
Given these high stakes, as an industry, we need to speak with one voice and louder than ever before on the harmful realities of underinvestment. Indeed, the antidote is international cooperation based on mutual respect, multilateralism and constructive dialogue, not constant and inconsistent criticism.
For its part, OPEC has sought to do this through our partnership with 10 non-OPEC producers under the banner of the ‘Declaration of Cooperation,’ as well as our international energy dialogues with many partners, including many key consumers globally.
On a positive note, it is particularly encouraging that many OPEC Member Countries have heeded the call to invest in all sectors of the oil value chain. For example, ADNOC is ramping up production capacity to 5 mb/d by 2030, Saudi Aramco is taking steps to increase to 13 mb/d by 2027, Kuwait to 4 mb/d by 2040, and Iraq to 6 mb/d by 2027.
OPEC Member Countries are also investing significantly in the downstream sector. Recent examples include ADNOC’s Crude Flexibility Project at the Al Ruwais refinery here in the UAE, the Dangote Refinery in Nigeria and the CFP project and Al Zour refinery in my home country of Kuwait.
OPEC believes that the challenge before us must be accurately diagnosed. It is about reducing greenhouse gas emissions and not the misguided narrative of replacing one energy source with another.
Technological innovation will play a critical in realizing this objective. This is why our Member Countries invest heavily in hydrogen projects, carbon capture utilization and storage facilities, and the circular carbon economy.
There is no better place than the UAE that exemplifies this. The Al –Reyadah CCUS facility has an 800,000 tonnes per year of CO2 capture capacity. Work is ongoing to increase this capacity by 500% to approximately 5 million tonnes per year by 2030.
The breadth of measures the UAE has deployed to tackle the climate challenge is critical because there is no panacea to address it. We need to focus on ‘all-peoples, all-fuels and all-technologies’ approach for the energy transitions.
I stress it as a plural, as OPEC firmly believes each nation and peoples have their own energy transition pathway.
The capacities and national circumstances of developing countries must be taken into account in all actions. We should never forget that climate change and sustainable development are two sides of the same coin.
According to the UN, 733 million people do not have access to electricity. Furthermore, one third of the world’s population use dangerous or inefficient cooking systems, which causes a host of health related problems.
Therefore, policy-makers need to be cognizant that even the best intentioned policies, can have unintended consequences. This increases the stakes in the ‘policy-design’ phase.
The oil and gas industry has been challenged recently by some to rise to a ‘moment of truth’ at COP28.
Obviously, I cannot claim to speak on behalf of everyone, but I believe that the industry must recognize and be proud of what it has been doing in terms of ensuring global energy security and reducing emissions across the board.
Energy security for all and decarbonization must go hand-in-hand. This requires major investments in all energies. This is the truth that needs to be spoken.
I would like to underscore OPEC’s appreciation for the UAE’s leadership role in the energy sector, tackling the climate challenge, and bringing stakeholders together at COP28.
This mirrors the constructive role the nation plays in OPEC and OPEC+, acting as a builder of consensus and forger of cooperation, under the able leadership of the UAE’s head of delegation to OPEC, HE Suhail Mohamed Al Mazrouei, Minister of Energy and Infrastructure.
On behalf of the entire OPEC Family, I would like to sincerely thank the UAE for this contribution to making OPEC the successful and vibrant Organization that it is today.
By HE Haitham Al Ghais,
OPEC Secretary General