Defining a realistic energy transition: Amin Nasser, Mohammed Barkindo, John Defterios, and EY
There is no question that the oil and gas industry must act on climate change, but are the expectations of policymakers and society realistic? Industry leaders and stakeholders weigh in.
With climate change protests around the globe, youth activists in the spotlight, and the World Energy Congress (WEC) making headlines, sustainability has been at the forefront of public conversation this month.
"We talk a lot about the transition," said CNN anchor and emerging markets editor John Defterios in an interview following WEC. "I think it is accelerating, and there is a future for oil and gas in the transition, but we are not matching the priorities of the entire energy sector with the demands of climate change."
On the other hand, industry leaders like Saudi Aramco CEO Amin Nasser say the demands of energy policymakers are not always realistic, and neglect the complexities of the energy sector. Defterios' new series on CNN, The Global Energy Challenge, explores what a realistic energy transition means; he calls it a "reality check".
"In general, the energy sector needs to educate society about what is realistic in the energy transition, and which technologies are available," Defterios said.
For example, suddenly switching power generation to renewables would not be possible; in an interview with Oil & Gas Middle East, EY's global leader for oil and gas, Andy Brogan, noted that renewables still require a baseload complement, and that "natural gas has a natural place in the mix."
Equally, the sense of urgency and alarm to switch over to renewables come from a genuine place. "In my nine months of researching and starting to produce the [Global Energy Challenge] series, what has shocked me is that no one thinks we are going to cap global warming at two degrees by 2040," Defterios said. "They are all equally alarmed, from the hydrocarbon sector to the renewables sector."
The real challenge is not the intention to change, but the pace at which change takes place. OPEC Secretary-General Mohammed Barkindo was quick to point out, in a WEC panel hosted by CNN, that OPEC has no climate change deniers among its ranks, and they have all signed the Paris Agreement.
But making the kinds of wide-reaching changes that would be necessary to curb emissions and make a dent in climate change takes time and money.
"Even when we have genuine breakthrough moments, they take time and massive investments to commercialize and roll-out across the global energy network," Nasser said in his keynote speech at WEC. "In addition, all energy transitions (including this one) take decades, with many challenges along the road."
Climate change is just one energy problem that needs solving; it exists against the backdrop of energy poverty, with almost one billion people having limited access to electricity on a daily basis.
In the first of four documentaries as part of The Global Energy Challenge, Defterios visited India, where he found that coal makes up approximately 50% of the nation's energy mix, and peaks at around 70% in the summer months.
"The biggest carbon reduction activity or action that you can take at the moment is to replace coal-fired generation," Brogan said, noting that natural gas should have a role in that transition.
Still, some analysts see cause for optimism; in a roundtable hosted by Boston Consulting Group, Patrick Herhold, a managing director and partner at the firm, noted that several key indicators—including increasing transparency and shifting public sentiment—point towards a two-degree scenario as a realistic possibility.
"When there is a target that has been declared, innovation takes place," Defterios said. "I think the innovation that we are seeing with electric vehicles, and the revolution of the smartphone, can be applied to the energy sector."