Fossil fuel companies stand at a crossroads: Adapt or die

9News Nigeria

Sep 4

Less than three months before COP28, the message to the energy and transport companies is clear: decarbonisation will happen, and there is no way out, Prof Vicente López-Ibor Mayor writes.

The time has come to reach a Climate Deal that will only be accessible to companies that decarbonise. Those that fail to decarbonise will not meet the standards required by the Climate Deal and the energy sector of the future.

That goal must be a central feature of the UN COP28 climate talks in Dubai. After all, the world needs rapid decarbonisation.

From oil to hydrogen, gas to biofuels, coal to nuclear, solar to wind, and buildings to transport, only companies that make clear commitments to decarbonisation should benefit from regulatory incentives, financing, fiscal support for innovation, and beyond.

The International Energy Agency (IEA) recently reported that by 2025, renewables will fuel 35% of global electricity generation, dethroning coal as the world's largest power source. In the US, solar power alone will account for over half of the new capacity in 2023.

These aren't just predictions – they're realities in motion.

Adapting to decarbonisation demands will be key

Indeed, the IEA's findings could be conservative. According to a major study published last year by the University of Exeter's Global Systems Institute, the world may have already passed a "global solar tipping point", where "solar energy gradually comes to dominate global electricity markets, even without additional climate policies".

At current exponential growth rates, solar, wind and batteries will supply over 80% of global electricity by the 2060s. Though impressive, the Intergovernmental Panel on Climate Change (IPCC) says this is not fast enough.

In 2018, the IPCC found that to keep global warming within the 1.5 degrees Celsius safe limit agreed upon by world governments in Paris eight years ago, we need to not only eliminate carbon emissions but start removing 5 billion tonnes a year of carbon dioxide from the atmosphere by 2050.

So, while we need to accelerate the build-out of renewables faster than the current rate, with fossil fuels supplying about 78% of the world's energy needs, it is reasonable to foresee that we'll continue relying on oil and gas production for decades to come.

Therefore, it's imperative that fossil fuel industries adapt to the demands of decarbonisation — a view shared by US Climate Envoy John Kerry who just last week called on global oil and gas industry leaders to bring concrete plans to the upcoming COP28 UN climate summit for reducing emissions and investing in renewable energy by 2030.

Dominance of clean energy ecosystem is inevitable

But for COP28 to deliver a new Global Climate Deal that incentivises and compels the fossil fuel industry to decarbonise will require three things.

Firstly, we need to accelerate the build-out of global renewable energy infrastructure as fast as possible.

The dominance of the new clean electricity ecosystem based on solar, wind, storage and some other clean energy solutions — utility-scale and in local markets — is inevitable, but we have to bring it forward dramatically.

This requires prioritising climate financing to help decarbonise emerging countries with the greatest need to industrialise.

Secondly, given that we will still rely on fossil fuels during the energy transition, we need to ramp up the economic and technological viability of carbon capture and storage (CCS) technologies to decarbonise them as much as possible.

By partnering with renewable energy to power CCS, fossil fuel companies can bring the economic and energy costs down dramatically, and scale it up faster.

COP 28 should consider launching an expert commission

Thirdly, we need to accelerate both carbon withdrawal technologies and nature-based solutions that can draw down billions of tonnes of carbon from the atmosphere every year. Any technology that contributes to the net-zero deserves to be studied and, where appropriate, welcomed.

Despite some scepticism, Dr Al Jaber's presidency at COP28 proposes several ambitious goals, something that should be particularly considered.

Admittedly, these proposals may not be fast enough to avoid dangerous climate change.

But if this upcoming COP fails to ratify even these proposals, we will have missed yet another unprecedented opportunity to create a firm foundation for even faster action which we can demand at later summits.

That is why I believe COP28 should launch an International Commission of High-Level Experts possessing knowledge in the scientific, economic, legal, technological and social fields to lead, supervise, and ensure the fulfilment of a new Global Climate Deal on these terms.

Make no mistake: decarbonisation will happen

The implications are profound. Energy companies need to accelerate their 'just transition' journey or face disruption.

Environmental, social and governance (ESG) criteria will soon be insufficient, and the companies incorporating them will not be pioneers, but merely compliant. Companies that ignore them will be left out of the market. Either industries move rapidly into net-zero, or they'll face deterioration of assets and profits.

Finally, it is important to note that energy is now not only a market for goods but also for services. For this reason, the leading companies will be those with the greatest capacity for innovation.

Less than three months before COP28, the message to the energy and transport companies is clear: decarbonisation will happen, and there is no way out. And if you choose to be part of it, you'll not only be saving your industry, but saving our planet too.

Professor Vicente López-Ibor Mayor is an energy and climate expert. He was a founding Member of the European Council of Energy Regulators, a Special Advisor to the European Commissioner of Energy, Transports and Institutional Affairs, a Special Advisor to UNESCO's Energy Programme, and a Commissioner of the National Energy Commission of Spain.

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