Damian Ryan: Black gold, green economy?
- 21 June 2012
Damian Ryan, The Climate Group's International Policy Manager, delves into the latest sessions from Rio+20.
The idea of an oil exporting country arguing for greater use of renewables seems somewhat oxymoronic. A case of turkeys voting for Christmas, if you will. This, however, was the basic thrust of a side event in Rio yesterday hosted by Norway and the United Arab Emirates (UAE) – the 6th and 7th largest producers of gas and oil, respectively, in the world.
Major fossil fuel producers are generally not known for their progress views on climate change action. OPEC members in particular have a track record of opposing any measures in the UNFCCC that might impact on their ability to export oil and gas. And the failure to strengthen action to eliminate fossil fuel subsidies in Rio has left a bitter taste in the month of many when it comes to the sincerity of governments to act decisively on cutting carbon emissions. Scepticism of oil and gas exporters who claim to embrace green growth is thus perhaps understandable.
The side event brought together an impressive panel of experts, including Bloomberg New Energy Finance’s Michael Liebreich, Phillipe Benoit, Head of Energy Efficiency and Environment at the IEA, Bader Al-Lamki, Director of Clean Energy and Carbon at Masdar, WWF’s Global Head of Climate, Samantha Smith, plus government representatives from both Norway and the UAE. The discussion was moderated by Jose Maria Figueres, the head of the Carbon War Room and former Costa Rican President.
Both Norway and the UAE made good cases for the efforts they are taking. In Norway’s case, its technology focus is on carbon capture and storage (CCS). In May it opened the world’s largest CCS testing facility, which it hopes will provide the learning and data needed for full commercialisation of the CCS technology. Norway’s long-term use of a carbon tax – first introduced in 1992 – was also highlighted as a key driver of emission reductions. The tax imposes the world’s highest carbon price, around 80 euro per tonne of CO2 – more than ten times the current price of carbon in the EU emissions trading scheme (EU-ETS).
The UAE’s efforts were broader in scope, with investment going into transport, buildings, and education. The country has a target of sourcing 7% of total energy from renewable sources by 2020 (NB: the EU by comparison has a 20% target), while the target for electricity is 30%. Investment is also occurring overseas, with some $350m going into renewable energy projects in developing countries. The Masdar initiative meanwhile is working to develop and commercialise low-carbon technologies.
WWF’s Smith firmly grounded the discussion by noting that if the world wanted to keep global temperature rise below 2oC, then 2/3 of the fossil fuels now in the ground needed to stay there. New technologies, such as CCS, were not in fact needed as a zero carbon world could be delivered through renewables and energy efficiency improvements.
Benoit, from the IEA, stressed the urgency for global action, noting the disconnect between what was required by science and what was happening politically. The world didn’t have five or six years to act, which seemed to be the working assumption. He also made that point that fossil fuels would remain an important part of the global energy mix, but that CCS deployment was critical to making this use sustainable.
BNEF’s Liebreich highlighted the $283 billion global investment in renewables in 2011. This was still only 1/3 of the level that was ultimately required, but the growth and trajectory were promising, especially in emerging markets which were now picking up the slack created by investment uncertainty in Europe and the US. Interestingly, Liebreich also spoke of the sincerity of Norway’s and the UAE’s efforts in renewables and decarbonisation – a not insignificant compliment from a clean tech expert who rarely pulls his punches on such matters.
Masdar’s Bader Al-Lamki give perhaps the most insightful perspective on the UAE’s strategy. The interest in renewables and sustainability was very simply a matter of securing long-term economic prosperity. While the UAE was an oil and gas exporter now, it saw a future where the global energy supply was mixed. It was therefore building the knowledge base and expertise to ensure it remained a leading energy provider. This view was also backed up by belief that the UAE should lead on clean energy “because it can, and because it should”.
So, was this Rio delegate convinced? Are the turkeys really preparing for their own festive dinner? Well, yes and no. It is clear that both Norway and the UAE represent the, enlightened, progressive end of fossil fuel producers and are taking concrete steps to match the political rhetoric. But, it is hard to imagine Saudi Arabia, Iran or Russia joining them on the podium anytime soon. Recent gas and oil finds in places like Africa and South America also suggest that the two countries could remain a minority for some time, as others seek to maximise the benefits of new reserves. The fact that both Norway and the UAE have managed their oil and gas revenues wisely also marks them out from many other countries who have often been cursed by an overabundance of natural resources.
However, the very fact that two leading oil and gas exporters see a future with far less fossil fuel use is encouraging in itself. And the fact that both are investing in the technology to make it happen, opens a path for the other major exporters to follow. The question now is whether there is the political will and leadership to make this happen.