If the world were to follow the International Energy Agency’s controversial road map, which said investment in new fields would have to stop immediately to achieve net-zero carbon emissions by 2050, “the price for oil will go to, what, $200? Gas prices will skyrocket,” said the Russian Deputy Prime Minister Alexander Novak at the St Petersburg International Economic Forum, addressing the much-anticipated decision-making at the upcoming OPEC+ conference set for August 2021.
Saudi Arabia and Qatar seconded that dire assessment, vowing to continue expanding their oil and gas facilities while pointing the finger at the climate activists for seeking to starve industry cash. The “euphoria” around the transition to clean energy is “dangerous,” Qatar’s Energy Minister Saad Sherida Al Kaabisaid at St Petersburg. “When you deprive the business from additional investments, you have big spikes” in prices, he stressed further.
IEA’s recently announced roadmap set out in the Paris Accords for achieving net zero carbon emissions by 2050 requires reducing emissions as much as possible then offsetting the rest with “carbon removal” plans financed by carbon credits.
However, economists the world over are expecting global growth to expand at even faster rates in the coming years, thanks to the infusion of stimulus prompted by the pandemic. It follows that energy demand will also increase more quickly. Despite improvements in energy efficiency and the shift to renewables, global energy demand will be around 8% smaller than it is today in 2050.
Saudi Energy Minister Prince Abdulaziz bin Salman also dismissed the IEA road map, which would limit the average increase in global temperatures to 1.5 Celsius, calling it a “la-la-land scenario. When asked if oil is dead, he responded by saying the kingdom is increasing its production capacity.
Chronic underinvestment in oil and gas supply while operational oilfields mature would lead to a supply crunch and a spike in oil prices down the road, Big Oil top executives also warned.
Last week, Brent crude futures touched their highest price since September 2019 at $71.99 a barrel, with the international benchmark gaining 1.6 per cent.