The climate change messaging for reduced emissions has indeed been drowned by political urgency to increase oil production and supply to rein in inflation.
The timing is certainly not right for climate change debates and policies, unless these specifically focus on decreasing oil demands.
The US government appears to have gone slow on its climate agenda to respond to high oil pump prices and inflation caused by low oil supplies.
COP26 climate summit in Glasgow end of last year concluded with a strong appeal to nations to reduce carbon emissions from their energy menus.
Today, four months later, the world is deeply pre-occupied with taming rising oil prices and inflation, with appeals to nations to produce more oil to meet growing demands. The climate change messaging for reduced emissions has indeed been drowned by political urgency to increase oil production and supply to rein in inflation.
The timing is certainly not right for climate change debates and policies, unless these specifically focus on decreasing oil demands.
Campaigns to reduce oil production and investments is illogical unless there is corresponding replacement of oil demands with renewables or destruction of oil demands with energy use efficiencies.
Climate lobbies will need to alter emissions reduction messaging to focus more on effective energy transition, while correctly balancing oil supply with demand. Supply cannot be reduced ahead of demands.
The US government appears to have gone slow on its climate agenda to respond to high oil pump prices and inflation caused by low oil supplies. This has become an urgent economic and political issue, with the government now releasing oil from strategic stocks and appealing to OPEC to produce more oil.
In Europe, immediate preoccupation has similarly been with energy sufficiency and costs, with energy transition experiencing reduced priority. The ongoing oil and gas supply panic created by the Russian/Ukrainian crisis has magnified Europe’s energy transition dilemma.
The world definitely missed an opportunity to correctly estimate the speed of economic revival and associated oil and gas demands in a world that was recovering from a two-year economic stagnation caused by Covid pandemic.
The pandemic may have permanently destroyed some oil demands, but the bulk of demands continue to grow awaiting transition to renewable energy when it happens in the future.
Also ignored was the fact that when oil prices collapsed in 2014, fuel-producing companies and countries correspondingly reduced capital injection in new oil production around the world, with many marginal upstream projects being abandoned.
In 2020, the pandemic-induced oil demand destruction further discouraged investments in new oil production. These factors explain the current oil supply/demand imbalance which has to be corrected to permit global economies resume focus on climate debates.
In the region, Kenya was quick to abandon its Turkana oil project when oil prices collapsed, while the neighbouring Uganda struggled on with its oil projects and is now blessed with high oil prices and revived global oil demands.
Activists cannot justifiably challenge Uganda on the climate agenda when the world is definitely looking for more oil. Until such time that the world genuinely transitions away from oil, Uganda will be an oil exporter.
Back to oil supply/demand balancing. Since most of global oil is used in transportation, future oil demands will mostly continue to be defined by the pace of electrification of various modes of transportation — road, railway, air, marine.
Climate lobbies should therefore focus on policies, accelerated technologies and investments to fast-track transition to electrified transportation. Focus should therefore be more on the demand-side as opposed to supply side of oil. It is oil demands that will guide pace of emissions reduction.
Further, expertly projected oil demands should advise levels of production to avoid crises similar to the ones we are experiencing. Demands projections should not be left at mercy of market speculators.
The oil companies, cognizant of the energy transition future impacts on oil demands, are cautiously investing only in those projects with high and quick returns.
US oil companies appear to focus more on paying cash back to shareholders instead of new investments, while European counterparts are diversifying investments into renewable energy.
In the midst of ongoing energy supply deficit and mounting energy inflation, climate lobbies pressure on banks to reduce funding for fossil fuels projects, has apparently gone down.
In the meantime, we have various ESG programmes which include latest green ideas, apps and technologies being rolled out and funded by NGOs and donors to reduce emissions.
Climate activists should ride on these programmes to motivate wider citizen participation, for indeed they are in total making an impact on emissions reduction.
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