We need a pragmatic and realistic approach to energy and climate challenges

In an exclusive interview with ADIPEC News, His Excellency Haitham Al Ghais, OPEC Secretary General, shares his views on the vital role of hydrocarbons in terms of energy security, the energy transition and a low-emissions future, the danger of underinvestment in hydrocarbons that could trigger oil market volatility, the positive contribution of the industry to COP28, and how this year’s ADIPEC theme recognises that no energies can be deemed surplus to requirements, and no relevant technologies can be discarded.

What are your thoughts on global energy demand that is forecast to rise by over 23 percent through 2045?

Energy is central to our daily lives. It is the engine that drives the global economy and it is clear that demand will expand further in the decades ahead, with the global economy doubling in size and the world’s population reaching 9.5 billion by 2045. Moreover, as we all know, there remains a critical need to bring modern energy services to those billions that continue to go without basic energy access in many parts of the world.

At OPEC, we see no credible way to address this without utilising all available energy sources, and with energy market stability as a guiding light. Renewables will play a much greater role, and contrary to what some may say, OPEC Member Countries are already investing significantly in this area. Gas, hydro, nuclear, hydrogen and biomass will also expand, but in our World Oil Outlook (WOO), oil is set to retain the largest share of the energy mix by 2045, at 29%.

Every data-based forecast that I have seen shows that oil is irreplaceable for the foreseeable future. In our WOO 2022, we see global oil demand rising to around 110 million barrels a day (mb/ d) by 2045, but there is clear potential for this to move higher given the recent pushback on net zero policy actions and targets, which will be explored in the upcoming WOO 2023.

What role do you see oil playing in terms of energy security, as well as the energy transition and a low-emissions future?

The scope, expertise and ingenuity of the oil industry is vital for global energy security, energy transitions and a low-emissions future. Energy security for all, energy transitions that take account of national circumstances and reduce emissions must go hand-in-hand. This requires global cooperation, utilising all energies and technologies, and investment on an unprecedented scale.
From the perspective of OPEC, let me stress that our Member Countries are determined to play their part in ensuring the world’s energy needs are met, in a way that continues to reduce the industry’s environmental footprint.

They are investing in upstream and downstream capacity. They are mobilising cleaner technologies and our vast pool of human expertise to help decarbonise the industry. They are making major investments in renewables and hydrogen capacity, carbon capture utilisation and storage, and other technologies, as well as promoting the circular carbon economy to improve overall environmental performance.

We need a pragmatic and realistic approach to the energy and climate challenges before us. This requires us to recognise the integral role oil has played in shaping modernity; the role it continues to play in daily life; and the benefits it can bring in helping shape a sustainable energy future for all.

ADIPEC is vital in bringing industry stakeholders together. It is globally renowned and offers a platform to discuss some of the key issues, challenges and opportunities facing the industry in the lead up to COP28. I feel the key word in this year’s theme, and one that unites everything else is “together”. We need to recognise that no-one can be left behind, no energies can be deemed surplus to requirements, and no relevant technologies can be discarded.

You have repeatedly highlighted the danger of underinvestment in hydrocarbons that could trigger oil market volatility. Could you elaborate further?

This is an incredibly important issue. It cannot be overstated. Both producers and consumers have a shared interest in sustaining oil market stability and ensuring long-term investments.

For the oil industry alone, cumulative investments in the WOO 2022 are projected at around $12 trillion in the period to 2045. Recent annual levels, however, have been significantly below the annual requirements. Underinvestment imperils the entire energy system, and in turn, the products and resources we can often take for granted on a daily basis.

Take oil, for instance. Imagine a world without oil and the multitude of essential daily products that are derived from it: gasoline, heating oil, jet fuel, kerosene, toothpaste, deodorant, soap, cameras, computers, car tyres, upholstery, contact lenses, the asphalt for paving roads, artificial limbs and hearts, many types of medicine and much more.

Essential services people depend on would vanish, transportation would grind to a halt, many homes would be without heat, people’s health would suffer, global food supply chains would be upended and energy poverty would rise further. It does not bear thinking about it.

All industry policymakers and stakeholders need to work together to ensure clear and transparent investment signals, with sufficient finance available for all energies. This needs to be based on the energy realities the world sees before it, one of which is that oil will be here for many decades to come.

The world needs to focus on ensuring that rising energy demand and the issue of climate change do not conflict with each other. It is and, not or. The world should act with determination to ensure that emissions are reduced and people have access to the energy products and services they require to live a comfortable and prosperous life.

COP28 next month will take place in an OPEC Member Country, the UAE. How does OPEC view these negotiations?

It is extremely positive that we saw a COP in Africa (Egypt) in 2022, and we now have one in the Middle East and an OPEC Member Country later this year. Both are also countries with significant and diverse energy resources, underlining the importance of this and having all voices at the table.

The UAE is a global leader in helping meet the challenges related to energy, climate and sustainable development. It assumes this leadership role, not only through its words, but also by its actions with huge investments into renewables and technologies focused on reducing emissions.

COP28 President-Designate, His Excellency Dr. Sultan Ahmed Al Jaber, has also been a major innovator in the renewable energy space, as Chairman of Masdar, and has decades of experience as the UAE Special Envoy for Climate Change and from past COP meetings. His objectivity has been praised by global leaders, with his emphasis on just energy transitions that leave no one behind.The OPEC Secretariat offers its full support to the UAE in the build up to COP28. We all know we have to get this right. We need to be pragmatic and realistic.

The approach to energy transitions must be guided by trust and inclusivity, consider the particular circumstances, capabilities and priorities of developing countries, and ensure a low-emissions future in which every person has access to energy.

It is extremely positive that we saw a COP in Africa (Egypt) in 2022, and we now have one in the Middle East and an OPEC Member Country later this year… The UAE is a global leader in helping meet the challenges related to energy, climate and sustainable development. It assumes this leadership role, not only through its words, but also by its actions with huge investments into renewables and technologies focused on reducing emissions.

How critical is the role of ADIPEC in uniting the industry to accelerate a clean energy future under its theme this year, ‘Decarbonising. Faster. Together.'?

ADIPEC is vital in bringing industry stakeholders together. It is globally renowned and offers a platform to discuss some of the key issues, challenges and opportunities facing the industry in the lead up to COP28.

I feel the key word in this year’s theme, and one that unites everything else is “together”. We need to recognise that no-one can be left behind, no energies can be deemed surplus to requirements, and no relevant technologies can be discarded.

There is clear evidence that there is no one-size-fits-all solution to tackling energy security and reducing emissions; instead, equity, fairness and poverty eradication should be key elements for countries across the world. Each nation and people have their own energy transition pathway. The energy transition agenda cannot be dictated by a select few. Rather, it requires that all voices are heard, and the differing perspectives taken on board.

I have no doubt that ADIPEC will be a channel to present the energy facts, as a means to help deliver an energy future that is just, inclusive and realistic for all.