- Without trying to predict US November elections outcome, the likelihood of a Joe Biden win can only hasten transition to low carbon energy.
- His green election manifesto promises a return of US official political voice and leadership on climate change, quite necessary in sustaining global green momentum.
- The oil and gas industry has gone through a demand and supply crisis which has continued to discourage investments.
When Donald Trump became US President four years ago, he ridiculed the Paris Climate Accord and promised to get USA out of the Agreement. However, his presidency has in essence not slowed down global momentum to increase renewable energy and reduce use of fossil fuels (coal, oil, gas). Research and technology have continued to deliver more renewable energy at reduced production costs and improved investor economics, critical success factors for transition to low carbon economies.
Without trying to predict US November elections outcome, the likelihood of a Joe Biden win can only hasten transition to low carbon energy. His green election manifesto promises a return of US official political voice and leadership on climate change, quite necessary in sustaining global green momentum.
Notwithstanding, a lot has been happening over the past four years. The oil and gas industry has gone through a demand and supply crisis which has continued to discourage investments. This was even before Covid-19 prompted a decline in oil demands as travel patterns and lifestyles changed. Some of this demand destruction may be permanent, meaning less carbon emissions.
Significant progress towards electrification of road transport has been made as battery storage research and technology continues to improve affordability of electric vehicles (EVs) which in the next ten years are expected to move into mass production. A Biden presidency would be expected to accelerate US uptake of electrical vehicles. So far it has been Europe, China and the other Far East industrial nations that are driving transition to EVs.
Further, coal and fuel oil have continued to give way to renewable power generation, especially wind, solar and nuclear. Across the world, lower carbon natural gas has also continued to replace higher carbon coal. Trump’s election campaign four years ago had pledged to revive US coal industry and its associated jobs, but this has not materialised, as poor coal economics have dictated otherwise.
Climate lobby activism has also become more effective. The lobby groups have used shareholding in oil and gas corporates and global banks to drive their green agenda especially in annual general meeting forums. Increased global funding for green lobbies has increased their impact around the world. Here in Kenya lobby groups have virtually stopped coal investments in Lamu and Kitui counties.
Over the past four years, global multilateral and commercial banks have taken a common stand to stop funding high carbon projects, especially coal and thermal oil power generation with priority funding destined to renewable generation. This is a new norm for energy projects funding. And as the new decade progresses, it will be oil exploration, production and refining projects that will face similar funding predicaments.
When the banks, lobby groups, industrialised nations including USA, and multilateral agencies adopt a common approach to reducing carbon footprints around the world , it will be a matter of time before we find ourselves in a totally different energy scenario, where renewable electricity sources replace coal and petroleum.
The call to leave fossil fuels (coal and oil) in the ground, will in years ahead gain credence, as renewables move full steam ahead. This is a scenario that Turkana and even Uganda oil sponsors would have difficult assimilating, but possible nonetheless. Global markets for oil will gradually diminish, while netback prices reduce below production costs.
Global oil majors are adopting sustainability plans that will see them invest more and more in renewable energy as they prepare to transition from Oil Companies to Energy Companies. It is a matter of “change or sink”. In fact, they have formed the Oil and Gas Climate Initiative (OGCI) to collectively increase the speed, scale, and impact of their actions to address climate change. This is a new language by oil majors unheard of four years ago.
USA is the world largest economy and second largest carbon emitter. Whoever occupies the White House in January 2021 will have a major influence on climate change momentum.
In Kenya, we are doing well in renewable energy adoption as all planned incremental generation is renewable. However, we need to prepare for electrified road transportation as we slog through the 2020s.