Haitham Al Ghais: Future energy policies must be based on reality, not ideology
It is easy to take energy for granted. Flicking a switch, driving a car, heating and cooling our homes — these are just some of the routine aspects of our day-to-day lives that are underpinned by energy. This means we should not take it for granted, and should be cognizant of the discussions taking place that will shape our energy futures. We do not want to wake up one day to find the energy we rely upon is not there.
Our energy future needs to be viewed holistically, not from a single vantage point. Yes, we need to reduce emissions, but at the same time we need to ensure energy security and availability. It is an “all approach,” where nothing and no one is dismissed. It is not a future where energy ideologies have a place; it is one where energy realities must take centre stage. To highlight this, allow me to make four key points.
First, global energy demand is set to grow. OPEC ’s World Oil Outlook sees it increasing by a staggering 24 per cent in the period to 2050. There are many reasons for this, including a rise in population , expanding urbanization, growing energy-intensive technologies and data centres, as well as the need to bring energy to the billions of people that still go without.
Second, we need all energies to meet this demand. Some might dismiss hydrocarbons as part of the past, but this does not tally with what we see before us.
Hydrocarbons make up about 80 per cent of the global energy mix and help power a wide variety of sectors and industries. These huge contributions to energy security have remained largely unchanged since the 1980s.
By 2050, we still see oil and gas making up over 53 per cent of the global energy mix, and demand for oil alone is expected to rise to more than 120 million barrels a day (mb/d), from around 104 mb/d today. Simply put, there is no peak oil demand on the horizon.
To place this in some context, according to the International Energy Agency (IEA), the world has invested around US$17 trillion in ‘clean energy’ over the past decade. Yet wind and solar currently supply less than four per cent of the world’s energy, and electric vehicles (EVs) have a total global penetration rate of around three per cent, with significant challenges remaining in terms of electricity grids, critical minerals and battery manufacturing capacity.
This is not to undermine the importance of renewables or EVs, especially as their market share will increase. Instead, it is to highlight the scale of the broad energy challenges we face, particularly for those who have rashly called to stop investing in new oil and gas projects.
This brings us to the third point: the need for massive investments, today, tomorrow, and many decades into the future. OPEC estimates oil investment requirements of US$17.4 trillion, or US$640 billion annually, out to 2050.
Given the importance of funding, particularly in a capital-intensive industry with long lead times, it is vital to have consistent messaging on this issue to enable the necessary investments to be made.
As OPEC has consistently and repeatedly stated, inadequate investment is a critical matter; it endangers energy security. It could result in huge volatility that would severely hamper key sectors such as transportation, emergency services, construction, manufacturing, food production, healthcare and infrastructure, to name but a few.
The fourth point is related to energy poverty. Regional imbalances, specifically related to energy access, underscore the need to strike a careful balance between delivering the affordable energy products and services that people require, and reducing emissions. We need to keep in mind the principle of “common but differentiated responsibilities,” and the fact that every country has its own future energy pathway.
Let me stress that OPEC member countries are investing across the board, in both renewables and oil, as well as in other energies, to meet consumer needs. They are also improving efficiencies, implementing low-emission solutions and mobilizing cleaner technologies like carbon capture utilization and storage.
My recent visit to Alberta , through the kind invitation of Premier Danielle Smith , was an opportunity to share views on all these issues and discuss how we see our global energy future. There is much we have in common, and we believe that our shared perspectives mean there is great potential in intensifying co-operation in the future.
We admire and respect what the oil industry in Alberta has achieved, in terms of production growth, becoming an increasingly global supplier of oil, as well as in the realm of technological innovation and global leadership in carbon management techniques to help reduce emissions.
Alberta’s success fits with the inclusive all-energies, all-technologies and all-peoples energy futures that OPEC continues to advocate for — one based on realities, not ideologies such as unrealistic net zero targets that have fixated on deadlines and dismissed certain energies. Because it is reality, not ideology, that must drive future policy.
Haitham Al Ghais is the secretary general of OPEC.