As government officials, corporate leaders and other elites at the World Economic Forum grapple with how to confront climate change and its devastating effects, a central question is emerging: to what extent can oil and gas companies be part of a transition to lower-carbon fuels?
In different times the question could have been academic, but today it’s both practical and urgent, as Russia’s invasion of Ukraine has forced many countries that depended on Russian oil and gas to make swift changes to energy supplies.
The debate comes as examples of acutely felt impacts of climate change multiply, including recent heat waves in Southeast Asia to flooding in parts of South America. Meanwhile, the world’s top climate scientists have repeatedly warned that increased investment in fossil fuels are hurting chances to keep warming to limit warming to 1.5 C (2.7 F), and thus avoid even more devastating effects.
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On Tuesday U.S. climate envoy John Kerry will join climate-related panels at the summit, while NATO Secretary-General Jens Stoltenberg and European Commission President Ursula von der Leyen will give addresses. Attendees will discuss several other high-priority issues, like the Russia-Ukraine war, the threat of rising hunger worldwide, inequality and persistent health crises. But whether these discussions will yield substantial results remains to be seen.
On Monday, the first day of the forum held in the Swiss ski village of Davos, the head of the International Energy Agency said the urgent energy needs of the moment should not turn into an excuse to make long-term investments in fossil fuel exploration and extraction.
“We are not living in a dream world,” said Fatih Birol, speaking on a panel on energy outlook. “The immediate response should include more oil and gas to the market. But the response should not depend on fossil fuels for long.”
Instead, Birol argued the emphasis needed to be a fast shift to renewable energies, an increase in nuclear where possible, stopping leaks of methane, one of the most powerful greenhouse gases, and lowering personal consumption, like turning down the thermostat a few degrees.
“Some people may use the invasion of Ukraine as an excuse for fossil fuel investments. That will forever close the door to reach our climate targets” to reduce emissions that are heating up the planet, he said.
Vicki Hollub, CEO of Occidental Petroleum a major oil company, countered that oil and gas industries had a central role to play in the transition to renewable energy.
Instead of talk about moving away from fossil fuels, Hollub said the focus should be on making fossil fuels cleaner by reducing emissions. She said Occidental had invested heavily in wind and solar energy and planned to build the largest direct air capture facility in the world in the Permian Basin. Direct air capture is a process that pulls carbon dioxide out of the air and buries it deep in the ground.
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“The U.S. can provide ample resources to the rest of the world. However, it’s becoming more and more difficult to do that because of the fact that we are getting a lot of headwinds,” she said. “One is the belief that we can end the use of oil and gas sooner rather than later.”
Joe Manchin, a U.S. senator from West Virginia who has opposed a major bill on climate change proposed by President Joe Biden, said fossil fuels were key to ensure energy security, and America had the resources to help ensure such security for the world.
“We can’t do it by abandoning the fossil fuel industry,” said Manchin, a Democrat, adding that no transition could take place until alternatives were fully in place.
Many energy experts argue that viable alternatives are already in place. For example, the cost of wind and solar have come down considerably in recent decades while efficiencies of both have dramatically increased. At the same time, other more nascent technologies have promise but need massive investment to develop.
A partnership between the U.S. government, World Economic Forum and several industries is working to bridge that gap. The First Movers Coalition, launched last year during the United Nations climate summit in Glasgow, Scotland, includes several major companies that have committed to buying low-carbon fuels across their supply chains.
Antonia Gawel, head of the World Economic Forum’s climate strategy, said the idea was to send large market signals to major industries through purchasing contracts. At the same time, for the companies, that include behemoths like Amazon and Apple, it made long-term business sense.
“They see that actually not tackling climate change poses a competitive disadvantage and therefore they are committed to actually driving these types of innovations and solutions,” she said.