By Ikenna Omeje, Oluwatoyin Bayagbon, Jerome Onoja
In recent years, discussions on energy transition have dominated topical issues at both local and international energy conferences, with Western countries at the vanguard of this transition. Energy transition is a global push towards cleaner energy from fossil fuels, which are harmful to the climate.
Reducing global carbon dioxide (CO2) emissions to net zero by 2050 is consistent with efforts to limit the long-term increase in average global temperatures to 1.5˚C and international institutions have lent their voice to this cause.
For instance, according to the International Energy Agency (IEA), “The energy sector is the source of around three-quarters of greenhouse gas emissions today and holds the key to averting the worst effects of climate change, perhaps the greatest challenge humankind has faced.”
The United Nations recently revealed that “Along with companies, cities and financial institutions, 131 countries have now set or are considering a target of reducing emissions to net zero by mid-century. While net zero is a critical longer-term goal, steep emissions cuts – especially by the largest greenhouse-gas emitters – are imperative in the next 5 to 10 years in order to keep global warming to no more than 1.5 °C and safeguard a livable climate. Of the 191 Parties to the Paris Agreement, more than 90 countries have so far submitted a new or updated national action plan – called Nationally Determined Contributions (NDCs) – as required by the agreement.”
On the flipside, a recent World Bank publication titled “Africa’s Resource Export Opportunities and the Global Energy Transition,” points to the global shift toward renewable energy and clean energy technologies which will result in reduction in global demand for hydrocarbon fossil fuels, such as coal, oil, and natural gas.
In recent years, discussions on energy transition have dominated topical issues at both local and international energy conferences, with Western countries at the vanguard of this transition. Energy transition is a global push towards cleaner energy from fossil fuels, which are harmful to the climate.
Reducing global carbon dioxide (CO2) emissions to net zero by 2050 is consistent with efforts to limit the long-term increase in average global temperatures to 1.5˚C and international institutions have lent their voice to this cause.
For instance, according to the International Energy Agency (IEA), “The energy sector is the source of around three-quarters of greenhouse gas emissions today and holds the key to averting the worst effects of climate change, perhaps the greatest challenge humankind has faced.”
The United Nations recently revealed that “Along with companies, cities and financial institutions, 131 countries have now set or are considering a target of reducing emissions to net zero by mid-century. While net zero is a critical longer-term goal, steep emissions cuts – especially by the largest greenhouse-gas emitters – are imperative in the next 5 to 10 years in order to keep global warming to no more than 1.5 °C and safeguard a livable climate. Of the 191 Parties to the Paris Agreement, more than 90 countries have so far submitted a new or updated national action plan – called Nationally Determined Contributions (NDCs) – as required by the agreement.”
On the flipside, a recent World Bank publication titled “Africa’s Resource Export Opportunities and the Global Energy Transition,” points to the global shift toward renewable energy and clean energy technologies which will result in reduction in global demand for hydrocarbon fossil fuels, such as coal, oil, and natural gas.
Though energy transition intends to make the earth more habitable and conducive, it is unfortunately not in the best interest of Africa. The global energy transition is expected to have profound effects on Africa’s economies. This is because nearly 50 percent of sub-Saharan Africa’s export value is composed of fossil fuels.
The publication, however, showed that while the region as a whole is poised to prosper from shifting exports to mineral energy materials (MEMs) such as nickel, copper, and cobalt, the changes in global energy demand might be more disruptive to the region’s oil-dependent countries like Angola, Nigeria, Equatorial Guinea, Gabon, among others.
The publication further showed that the Sub-Saharan Africa’s export value of hydrocarbon fossil fuels from 1995 to 2018 accounted for 48.5 percent of export, while mineral energy materials accounted for just 23 percent of export in the period under review.
Also, the IEA recently estimated that under its new net-zero projection, per capita income from oil and gas in producer countries would fall by 75 percent. It added that even if the world falls somewhat short of the Paris Climate Change Agreement goals, governments in oil-dependent countries face the prospect of lower revenues and public assets wasted by excessive concentration in a declining sector.
The IEA further articulated several dramatic milestones that would be necessary to reach net-zero, including: no approvals of new oil and gas field development and no new coal mines or mine extensions by this year; electric vehicles reaching 60 percent of global car sales by 2030; and nearly 70 percent of global electricity generation produced from solar and wind by 2050.
Dissenting voices
In an article titled, “Africa Can, and Should, Decide How to Harness its Natural Resources Especially With Gas”, published on the African Energy Chambers website, NJ Ayuk, its Executive Chairman, said that pressure is building to phase out petroleum production in Africa to fight climate change, but noted that when harnessed strategically, “Africa’s oil and gas industry can power a better future for Africa.”
Making a case for Africa in respect to carbon emission, he said that over the last 300 years, all of Africa has emitted seven times less carbon dioxide than China, 13 times less than the United States, and 18 times less than the combined countries of Europe.
He noted that “attempting to phase out Africa’s oil industry to prevent climate change is like snuffing out a small, controlled campfire instead of focusing your attention on kilometers of blazing forestland.”
“The most important reason why Africa should be free to continue hydrocarbon production is this: Africa’s huge natural gas reserves are the continent’s best shot at alleviating energy poverty,” Ayuk said.
“Today, more than 620 million people in sub-Saharan Africa don’t have electricity. That’s two-thirds of the population. Hundreds of millions more have unreliable or limited power.
“What does that look like? Without electricity, you’re cooking your food and warming your home by burning wood, charcoal, or maybe even animal waste. Your regular exposure to indoor air pollution increases your risk of respiratory infections and chronic conditions.”
He called on global community to stop attempting to dictate how Africa should use its own oil and gas resources, adding that with the right strategies, a thriving African oil and gas industry is the key to alleviating widespread energy poverty, bolstering economic growth and diversification, and improving the lives of the people.
“Along with companies, cities and financial institutions, 131 countries have now set or are considering a target of reducing emissions to net zero by mid-century
“Allowed to continue to use our resource wealth our way, other African countries can follow that lead. So, you see, Global Community: Africa doesn’t need you to help it. Africa doesn’t need you to decide how to best protect Africa from climate change. Nobody protects the environment better than Africans. Look at the emission numbers. Africans need you to respect us and to understand that your perspectives, priorities, and solutions are just that: yours,” he stated.
Also, speaking at the 2020 Sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC), the Secretary General of African Petroleum Producers Association (APPO), Dr. Omar Farouk Ibrahim, regretted that member countries of the Organization for Economic Cooperation and Development (OECD) had begun to initiate discriminatory policies towards hydrocarbons as primary energy sources and discourage research and investment in the sector – actions which would eventually make fossil fuels less accessible and more expensive and position other sources of energy as viable alternatives.
He noted that these developments were taking place at a time that Africa is making more finds in oil and gas, hence making it imperative for African nations to take their destinies into their own hands and pursue the development of local capacities to operate the oil industry successfully and use energy to fuel the national, sub-regional or continental economies.
For the continent to harness its huge hydrocarbon resources, Ibrahim stressed the “need to domesticate the oil and gas technology and encourage local content development in the oil and gas industry on our continent.”
On his part, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote, noted in his presentation on “The Future of Nigeria’s Hydrocarbons Sector and the Global Energy Transition” at the recently concluded 20th Nigeria Oil and Gas Conference and Exhibition (NOG 2021) that Nigeria ought to be careful lest the “gas as a transition fuel” narrative soon becomes a thing of the past.
Climate change science
As a result of human activities over the years, the chemical composition of the Earth’s atmosphere is said to have been altered. Studies have proved this to be inexorably true. In an article, the University of California, Davis said: “As greenhouse gases increase — primarily composed of carbon dioxide, methane, and nitrous oxide — the heat-trapping properties of these gasses indisputably cause the Earth’s climate to respond. However, it remains uncertain just what exactly that response is.”
“Climate scientists believe factors such as aerosols, changing uses of land and others are playing important roles in climate change, but their influence and exact impact remain highly uncertain.”
“Climate change models allow the simulation of the effects of the buildup of greenhouse gases centuries into the future, based on current understanding of atmospheric physics and chemistry. The typical horizontal resolution of a global climate model is 100–200 km. Combining global and regional models allows finer-scale examination of regional details of change to horizontal resolutions of 10–50 km. Most global models are run on supercomputers, whereas some regional models may be run on desktop computers (often taking six to eight months for a single realization)”, says Science Direct.
According to the United Nations fact check on climate change, Africa is the continent most vulnerable to the impacts of climate change. It noted that the continent is already experiencing temperature increases of approximately 0.7°C, and with predictions that temperatures will rise further, it said that Africa is facing a wide range of impacts, including increased drought and floods. It projected that in the near future, climate change will contribute to decreases in food production, floods and inundation of the continent’s coastal zones and deltas, spread of waterborne diseases and risk of malaria, in addition to changes in natural ecosystems and loss of biodiversity.
IEA recently estimated that under its new net-zero projection, per capita income from oil and gas in producer countries would fall by 75 percent.
“Africa is not a significant source of greenhouse gas emissions. Africa accounts for only 2–3 per cent of the world’s carbon dioxide emissions from energy and industrial sources. According to the World Resources Institute, Africa’s per capita emissions of carbon dioxide in the year 2000 were 0.8 metric tons per person, compared with a global figure of 3.9 tons per person. Nevertheless, African countries can and are pursuing win-win policies that can minimize their greenhouse emissions while tackling urban pollution (with its high health costs) and introducing solar energy and other innovative and cost-effective technologies,” the United Nations said.
At several economic forums on the continent in recent years, including those held in N’Djamena, Chad; Addis Ababa, Ethiopia; Abuja, Nigeria; Rabat, Morocco; New York in the United States, and elsewhere, some Africa’s experts have been expressing their support for green industrialization.
The 2016 Economic Report on Africa titled, “Greening Africa’s Industrialization”, published by the United Nations Economic Commission for Africa (ECA), said: “Green industrialization is the only way for Africa…it is a precondition for sustainable and inclusive growth.”
However, while some experts on the continent are pushing for transition to greener energy sources, others urge caution. This is because oil and gas remain the main source of revenue for most oil producers in Africa. Also, in the last 10 years, hydrocarbons have been discovered in commercial quantity in many African countries. Some experts have argued that with these discoveries, Africa’s priority should be to use these resources to alleviate poverty, provide electricity for its people, industrialize, and create jobs for its teeming youth population.
The argument of those urging caution with regards to transitioning to greener energy holds water considering the recent IEA report. According to the latest edition of the agency’s semi-annual Electricity Market Report released in July, coal-fired electricity generation is set to increase by almost 5 percent this year and by a further 3 percent in 2022, potentially reaching an all-time high. The report noted that gas fired generation, which declined 2 percent in 2020, is expected to increase by 1 percent in 2021 and by nearly 2 percent in 2022.
Failed carbon market
Even when there seems to be formal agreement that emissions should be reduced, how this reduction should come about has been a challenge. The main problem is that emitting greenhouse gases into the atmosphere even though it generates costs, is too cheap. Climate change advocates from the London School of Economics argue that people pay for the diesel that they buy, but not for the climate related costs that are generated from the CO2-emissions that are emitted when they are driving for instance. They note that because carbon dioxide spreads very quickly in the atmosphere, a unit emitted has the same effect on the temperature increase irrespective of whether it is emitted in Johannesburg, Beijing, or elsewhere, adding that if the markets are left unregulated, there will then simply be too much emission.
The advocates are championing for a global policy that increases the price of greenhouse gas emissions, to reduce emissions at the scale and speed that is necessary. A straightforward way to implement such policy they say, would be for countries to agree on a uniform CO2 tax. According to them, such tax would not need to imply any redistribution across countries, as each country could tax CO2 locally and then also use the proceeds locally. They also express optimism that global quotas correctly set in combination with a well-functioning global-emissions-trading system would in all important aspects have identical effects as a global CO2 tax.
Some of the benefits of a global carbon tax, according to the advocates include that it will make coal and non-conventional oil remain untapped in the ground to ensure that warming is contained as well as minimize the costs of reducing emissions. But the argument against a CO2 tax is that it would be difficult to get support for such tax in many countries across the world
no approvals of new oil and gas field development and no new coal mines or mine extensions by this year;
Since its adoption as part of the Kyoto Protocol, carbon market has been a failure. The EU Emissions Trading Scheme, the world’s largest carbon market, has consistently failed to ´cap´ emissions, while the UN’s Clean Development Mechanism (CDM) routinely favours environmentally ineffective and socially unjust projects, as illustrated by case studies of CDM projects in Brazil, Indonesia, India, and Thailand.
While the CDM has led to the registration of over 7.500 projects worldwide, as of 2015, the UN Convention on Climate Change says only 3 percent of these are in Africa, and only 1 percent of carbon credit, or Certified Emission Reductions (CERs) are issued from Africa, which is a worrisome statistic.
Carbon credits, or CERs, are earned from projects that reduce greenhouse gas emissions, with each credit equivalent to one tonne of CO2. These CERs can be traded and sold to users that need them to help meet an emissions limitation target, or that are seeking to reduce their emissions on a voluntary basis.
over the last 300 years, all of Africa has emitted seven times less carbon dioxide than China, 13 times less than the United States, and 18 times less than the combined countries of Europe.
In its report in May on the global pathway to net-zero emissions by 2050, IEA noted that the commitments made to date fall far short of what is required by that pathway.
“The number of countries that have pledged to achieve net-zero emissions has grown rapidly over the last year and now covers around 70 percent of global emissions of CO2. This is a huge step forward. However, most pledges are not yet underpinned by near-term policies and measures. Moreover, even if successfully fulfilled, the pledges to date would still leave around 22 billion tonnes of CO2 emissions worldwide in 2050. The continuation of that trend would be consistent with a temperature rise in 2100 of around 2.1°C. Global emissions fell in 2020 because of the Covid-19 crisis but are already rebounding strongly as economies recover. Further delay in acting to reverse that trend will put net zero by 2050 out of reach,” IEA said.
‘Nigeria should transit to an energy industry’
Speaking at the NOG 2021 on Nigeria’s role in the global energy transition agenda, Professor Yinka Omorogbe, President, Nigerian Association for Energy Economics (NAEE) reiterated that there are major global issues which call for strategic thinking and planning for all survivors as more disruptions will come to fore in this century.
In her presentation, she said three global issues have dominated the 21st century including climate change, sustainable development goals and more recently, the COVID-19 pandemic. According to her, Nigeria’s response to these changes and the calls for a zero-carbon future is very critical, especially as the zero-carbon future is closer than we think.
“One recommendation is for the Nigerian petroleum industry to transit into an energy industry, recognizing petroleum first and foremost as an energy source and a means of diversification and the development we need: and less as the primary revenue earner for the country,” she said in the presentation.
“There should be proper energy planning with an ideal interplay between Policy, Law, and Implementation. Policies must be in place and should be strong and discernible enough to keep us afloat when there are shifts in the international market. There should be both national policy goals and sector policy goals with laws flowing or emanating from them which are administered and enforced.”
Professor Omorogbe further advised that the private sector has key roles to play in driving the energy industry post-COVID.
“Government should create level playing field that is attractive to investors while fulfilling their objectives,” she continued.
“To achieve net-zero emissions by 2050, annual clean energy investments worldwide will need to more than triple by 2030 to around $4 trillion. This will create new jobs, significantly lift global economic growth, and achieve universal access to electricity and clean cooking worldwide by the end of the decade. This change will be driven by finance and technology. Private sector should take advantage of this. Nigeria should take this as a challenge and rise up to it.”
Technology: the game changer
The Managing Director of the Nigeria Liquefied Natural Gas (NLNG), Engr. Tony Attah, while making a spotlight presentation on Train 7 titled “Train 7 – Strengthening Nigeria’s Position Among the World’s Largest LNG Exporters”, at the NOG 2021, noted the importance of technologies in the energy mix.
With the increasing relevance of hydrogen in the energy mix, he argued that probably, technology is the most important factor in the energy mix, because it is the backbone of all ideations in the space.
Represented by the General Manager – External Relations, Mrs. Eyono Fatai-Williams, Attah, however, pointed out that it is clear that renewable energy alone cannot meet the energy demand of the growing population, adding that gas is the next option, and will remain relevant in the energy mix.
The path to net-zero emissions is narrow and staying on it requires immediate and massive deployment of all available clean and efficient energy technologies, according to IEA. In the net-zero emissions pathway presented in its report in May, it said the world economy in 2030 will be some 40 percent larger than today but uses 7 percent less energy.
Nobody protects the environment better than Africans.
“A major worldwide push to increase energy efficiency is an essential part of these efforts, resulting in the annual rate of energy intensity improvements averaging 4 percent to 2030 – about three-times the average rate achieved over the last two decades. Emissions reductions from the energy sector are not limited to CO2: in our pathway, methane emissions from fossil fuel supply fall by 75 percent over the next ten years as a result of a global, concerted effort to deploy all available abatement measures and technologies,” IEA said.
The Agency noted that renewable energy technologies give electricity the edge in the race to zero. “Our pathway calls for scaling up solar and wind rapidly this decade, reaching annual additions of 630 gigawatts (GW) of solar photovoltaics (PV) and 390 GW of wind by 2030, four-times the record levels set in 2020. For solar PV, this is equivalent to installing the world’s current largest solar park roughly every day. Hydropower and nuclear, the two largest sources of low-carbon electricity today, provide an essential foundation for transitions. As the electricity sector becomes cleaner, electrification emerges as a crucial economy-wide tool for reducing emissions. Electric vehicles (EVs) go from around 5 percent of global car sales to more than 60 percent by 2030,” it added.
Application of hydrogen; solar; geothermal; and revolution with batteries, are still minimal and unsustainable globally. It is even at almost zero level in some African states. This is in addition to lack of carbon sequestration technologies and sinks in some countries on the continent. Given this current state, it may be unwise for African oil producers to abandon their oil wells for renewables.
“need to domesticate the oil and gas technology and encourage local content development in the oil and gas industry on our continent.”
Stark realities
Global population is estimated to increase from 7.3 billion in 2015 to 9.2 billion in 2040. The additional 1.8 billion people will mainly come from developing countries, according to the Organization of Petroleum Exporting Countries (OPEC) in its World Oil Outlook 2040 report which showed how this population growth will affect oil demand.
“In the Organization for Economic Co-operation and Development (OECD) region, population is forecast to increase by 116 million people in the period to 2040 partly supported by immigration. The share of the global working age population (that is, individuals aged between 15 and 64 years) peaked in 2012, following a steady increase since 1970. Individuals aged 65 or more are anticipated to account for 14 percent of the world population in 2040, up from today’s level of 8 percent. Children are estimated to represent 22 percent of the population by 2040, down from 26 percent today,” OPEC said.
On oil demand during the period under review, OPEC said, “Reflecting the underlying assumed developments of the key drivers, total primary energy demand is forecast to increase by 96 mboe/d between 2015 and 2040, rising from 276 mboe/d to 372 mboe/d. In relative terms, this represents a 35 percent increase compared to the base year of 2015, with an average annual growth rate of 1.2 percent during the forecast period.”
Similarly, according to IEA in its Electricity Market Report released in July, based on current policy settings and economic trends, electricity generation from renewables – including hydropower, wind, and solar PV – is on track to grow strongly around the world over the next two years – by 8 percent in 2021 and by more than 6 percent in 2022. But even with this strong growth, it added that renewables will only be able to meet around half the projected increase in global electricity demand over those two years.
“Fossil fuel-based electricity generation is set to cover 45% of additional demand in 2021 and 40 percent in 2022, with nuclear power accounting for the rest. As a result, carbon emissions from the electricity sector – which fell in both 2019 and 2020 – are forecast to increase by 3.5 percent in 2021 and by 2.5 percent in 2022, which would take them to an all-time high,” IEA noted in the report.
The IEA also informed in its June Oil Market Report that oil demand is expected to bounce back by 5.4 million barrels a day this year, one of the fastest climbs on record, and by a further 3.1 million in 2022, pushing consumption of crude above 100 million for the first time by the end of next year.
“World oil supply is expected to grow at a faster rate in 2022, with the US driving gains of 1.6 mb/d from producers outside the OPEC+ alliance. That leaves room for OPEC+ to boost crude oil production by 1.4 mb/d above its July 2021-March 2022 target to meet demand growth. In 2021, oil output from non-OPEC+ is set to rise 710 kb/d, while total oil supply from OPEC+ could increase by 800 kb/d if the bloc sticks with its existing policy,” it stated.
Nigeria ought to be careful lest the “gas as a transition fuel” narrative soon becomes a thing of the past.
Despite the increasing demand for oil, access to credit facility is limited for oil and gas exploration, which puts Africa at a difficult trajectory. While banks in western countries are rapidly decreasing their fossil fuel financing, banks in China are leading the chart on fossil fuel financing.
But China may not be a good option for Africa to secure credit facility to harness its untapped hydrocarbons deposit. China has negative image when it comes to loan renegotiation. This is following a report in 2018 that Chinese creditors wanted to take over some Zambian national assets due to loan default.
Africa has a combined Gross Domestic Product (GDP) of $3.4 trillion, which is relatively small compared to what is obtainable in America, Asia, and Europe. Considering that fossil fuel will remain relevant in the energy mix on the continent, a new finance model, that is homegrown, is needed in this regard.
While pressure is mounting on Africa to abandon its oil, king coal is still fashionable in some circles. In 2020, China put 38.4 gigawatts (GW) of new coal-fired power capacity into operation, according to new international research, which is more than three times the amount built elsewhere around the world and potentially undermining its short-term climate goals.
According to research released recently by Global Energy Monitor (GEM), a U.S. think tank, and the Helsinki-based Centre for Research on Energy and Clean Air (CREA), the country’s coal-fired fleet capacity rose by a net 29.8 GW in 2020, even as the rest of the world made cuts of 17.2 GW.
Also in 2020, China approved the construction of a further 36.9 GW of coal-fired fleet capacity, which is three times more than a year earlier, bringing the total under construction to 88.1 GW. The country now has 247 GW of coal power under development, enough to supply the whole of Germany, according to Reuters.
Similarly, the IEA Coal 2020 report showed that in 2019, China, growth in coal-fired power generation, increased steel production, and shrinking coal use in small industrial and residential boilers resulted in an overall increase in coal consumption by 1 percent. It noted that across members of the Association of Southeast Asian Nations (ASEAN), coal use rose 14 percent in 2019, mainly reflecting demand growth in Vietnam and to a lesser extent, in Indonesia.
“Based on the assumption of a global economic recovery in 2021, we expect both electricity demand and industrial output to increase. As a result, we forecast a rebound in global coal demand of 2.6 percent, led by China, India, and Southeast Asia. Higher natural gas prices and electricity demand are set to slow the structural decline of coal use in the European Union and the United States, which both might see their coal consumption grow for the first time in nearly a decade,” IEA’s report revealed.
There is a need for a more realistic net-zero target to be set. Speaking on, “Global Oil Market Dynamics in a Decarbonizing World” at the NOG 2021, the OPEC Secretary-General, Mohammad Barkindo, stressed the need for more dialogue and more cooperation in an inclusive fashion. He stated that OPEC is doing its part through the landmark OPEC and non-OPEC Declaration of Cooperation and will also continue to engage in high-level producer-consumer dialogues with the European Union, China, India, and the United States, as well as with a host of international organizations to meet future energy challenges.
“The achievement of the net-zero 2050 goals would assume that developing countries will receive the required financing and technological know-how they require to build and readjust their energy systems in line with the net-zero ambitions by 2050,” Barkindo noted.
“However, climate financing for adaptation and mitigation is an extremely complex process, and questions continue to be raised as to how the $100 billion per year committed in the Paris Agreement will be secured, much less the even more ambitious $5 trillion annual funding needed globally as set out by the net-zero 2050 plan.
According to the United Nations fact check on climate change, Africa is the continent most vulnerable to the impacts of climate change.
“Another issue of concern is that climate financing is increasingly being administered as loans, which means that developing countries are required to borrow at interest rates that can sometimes be prohibitively high, effectively leading them to defer or cancel their clean energy projects.
“These important factors all point to the fact that an energy transition on such a massive scale and within such a short timeframe will take time and patience to achieve, especially if it is done responsibly, in an equitable and inclusive manner.”
According to the World Resources Institute, Africa’s per capita emissions of carbon dioxide in the year 2000 were 0.8 metric tons per person, compared with a global figure of 3.9 tons per person.
The OPEC scribe also reminded stakeholders at the conference that Goal 7 of the Sustainable Development Goals of the United Nations was established to ensure access to affordable, reliable, sustainable, and modern energy for all people, adding that OPEC firmly believes that nobody should be left behind in the energy transition.
“History tells us, however, that in times of great challenge and crisis, developing countries are more prone to experience social unrest, rising inequality and increased poverty. Thus, it is of utmost importance that this energy transition be both equitable and inclusive. To achieve this, we must work through the multilateral system with the dedication and support of all energy stakeholders.
“OPEC will continue to work closely with its Member Countries to advocate for real change on this topic in all relevant international fora, including the upcoming COP26 in Glasgow.
“It is essential that we use as our energy and climate roadmap in accordance with the core principles of the United Nations Framework Convention on Climate Change, namely equity, historical responsibility and the principle of common but differentiated responsibilities and respective capabilities,” Barkindo said.
Impending danger, conclusion
Although renewables are developing rapidly, the world’s economy is set to double, which requires that all resources will be needed to meet this growing need. Between now till 2045, cumulative investment of $12.6 trillion in the upstream, midstream, and downstream is required in order to meet this need, according to OPEC.
This is in addition to projection that oil will remain the largest contributor to the energy mix up till 2045 with more than 27 percent, according to the latest OPEC World Oil Outlook.
In his speech at the NOG Conference and Exhibition, Barkindo noted that oil and gas investments in 2020 dropped by more than 30 percent, occasioned by the impacts of COVID-19 pandemic, even worse than the dramatic declines seen during the 2015-2016 industry downturn.
This, he said, portends danger as the energy security risk that would result from too little investment would heavily affect both producers and consumers alike. Oil-producing developing countries, particularly in Africa, would be most impacted, Barkindo explained. This is because history has shown that energy insecurity brings about economic insecurity and geopolitical instability.
“Achieving net zero emissions by 2050 is already a great challenge for advanced economies, some of whom have expressed their doubts about the reality of achieving this ambitious goal. And thus, for developing nations, it is even that much more daunting, particularly as they are occupied with ensuring their basic needs are met day in and day out. Each day is a challenge to simply put food on the table and earn a decent living wage,” Barkindo further said.
“There are emerging doubts as to how realistic the net-zero approach is, particularly when considering the unique circumstances of developing countries, especially in combatting another scourge, namely energy poverty.
“Allow me to point out three significant challenges to achieving net-zero emissions by 2050, namely scale and timing, supply chains and the developing world.
A straightforward way to implement such policy they say, would be for countries to agree on a uniform CO2 tax.
“In terms of scale and timing, the 28-year period from now until 2050 is not adequate to achieve net-zero emissions, considering the scale of investments required, the availability of land, the required massive expansion of the electricity grid and a host of nearly 400 milestones that would need to be reached to achieve the net-zero goal. The last transition took nearly 200 years to cycle through, and now we want to achieve an even more ambitious transition in less than 30 years! This is simply not realistic.
“Additionally, a swift transition to clean energy sources would be highly reliant on the steady, robust supply of critical minerals such as copper, cobalt, lithium, nickel, and aluminum, many of which are produced in a geographically centralized area. We must also consider that the amount of mineral material needed to produce energy is higher than with fossil fuels. For example, a typical electric car requires six times the mineral inputs than that required to power a conventional vehicle with fossil fuels, and an onshore wind plant requires nine times more mineral resources than a gas-fired plant of the same capacity. Furthermore, lengthy lead times on mining projects, which can surpass 16 years, could inhibit the sector from responding to increases in demand,” he said.
Global population is estimated to increase from 7.3 billion in 2015 to 9.2 billion in 2040. This means more demand for energy. But in the context of the net-zero 2050 emissions discussions, there have been calls for investments in oil and gas to be discontinued, which is a dangerous and unrealistic scenario, according to Barkindo.
UN Convention on Climate Change says only 3 percent of these are in Africa, and only 1 percent of carbon credit, or Certified Emission Reductions (CERs) are issued from Africa,
“The net-zero scenario assumes that both developed and developing countries will achieve the proposed targets by 2050, with developed countries reaching their targets earlier. However, let me remind you that a staggering 790 million people worldwide did not have access to electricity in 2020, most of them located in Sub-Saharan Africa and developing Asia. Moreover, there were roughly 2.6 billion people who did not have access to clean cooking fuels, 35 percent of whom were in Sub-Saharan Africa, 25 percent in India and 15 percent in China. And let us not forget that these are the very regions that are expected to see the most rapid population growth by 2050,” he noted.
Declaring open the 4th Nigeria International Petroleum Summit (NIPS), which held in Abuja in June, with the theme, “From Crisis to Opportunities: New Approaches to the Future of Hydrocarbons”, President Muhammadu Buhari noted that the outbreak of Covid-19 created a crisis for the global economy in general, and the oil and gas industry in particular, adding that addressing the crisis it created has presented both challenges and opportunities.
“To achieve net-zero emissions by 2050, annual clean energy investments worldwide will need to more than triple by 2030 to around $4 trillion. This will create new jobs
Represented by the Minister of State for Petroleum Resources, Chief Timipre Sylva, Buhari said that based on experts projections, 80 percent of global energy needs between now and 2040, will still come from hydrocarbons.
“Crisis is often an opportunity to redefine objectives, provide the path for great discovery. The crisis the oil and gas industry is facing today was necessitated by Covid-19. It accelerated an unprecedented demand for disruption and supply glut that generated the crisis for the global economy in general, and the oil industry in particular. Addressing this crisis has presented both challenges and opportunities. The immediate challenge is that the global agenda for energy transition has slightly taken the back seat. Governments across the world are now more focused on managing the Covid-19 pandemic and its impacts on economies than the quest for the energy transition.
“However, energy transition is real. Renewable technologies are getting cheaper, and investors are increasingly conscious of environmental issues and are beginning to turn their back on hydrocarbon investment. But history has shown that human beings have insatiable appetite for energy, which renewables do not have the capacity to cope with, in the foreseeable future. Experts project that about 80 percent of the world’s energy needs till 2040, will still come from hydrocarbon. Fossil fuels will continue to be the source of dozens of petrochemical feedstock that companies will transform to versatile and valued materials for modern life. Thus, hopefully, the hydrocarbon industry will still remain a multi-trillion-dollar industry in the coming decades.
“For us as a country with vast hydrocarbon retention, that’s an opportunity. How we exploit that opportunity is a matter of strategy. Developing that strategy is at the heart of the core objective why in 2016, the Federal Executive Council of this administration, approved the establishment of the Nigeria International Petroleum Summit (NIPS),” he said.
Going forward, African oil producers need to understand that energy transition is not about moving from fossil fuel to renewables, but about creating the right balance.
technology is the most important factor in the energy mix, because it is the backbone of all ideations in the space.
