Oil and Money – a slippery mix
5th October 2023
In 2019 the Oil & Money conference was renamed the Energy Intelligence Forum. Reuters at the time reported “One of the world’s leading oil and gas conferences, Oil & Money, will change its name to the Energy Intelligence Forum to reflect the world’s shift to cleaner energy in the fight against climate change, its organisers said on Tuesday.”
The Forum in relation to its remit says “We are proud that the conference has been a platform for open and unbiased debate for the energy industry since 1979, …The world needs energy, but the energy industry must find ways to meet those needs in a more sustainable way. The mission of the Energy Intelligence Forum will be to provide a place where energy leaders can come together to debate, collaborate and find low-carbon solutions for the world’s energy challenges.” (1)
However looking at their web site for this year’s conference, whilst one of the main issues being addressed is the effect of climate change on the energy business, it is not with a view to finding low carbon solutions. Rather the objective would seem to be maintaining the profitability of those supplying fossil fuels. Speakers are almost universally from the oil industry or have close links.
Some of the particular topics of discussion includes the following agenda items (my numbering):
i. “Climate Divisions and COP – Can The World Move Forward Together (and What Happens If It Doesn’t?)
“The Western world has driven much of the climate agenda to date, but will a more assertive East and Global South change the debate? Is the COP process still relevant or has technology and country-level policy come to the fore? Who will pay for the transition and how?”
ii. “Building the Future- Constructing Tomorrow’s Energy System Today
“How will the world construct an energy system that can deliver reliable, affordable and clean energy in the next 30 years? What might look the same and what will have to evolve as we think about energy sources as varied as fossil fuels, renewables and nuclear power? Is there enough industrial capacity and raw materials to realise our grand ambitions?”
iii. “The Changing Face of ESG* – Will Net Zero Remain the Standard?
“How are public and private capital looking at exposure to carbon, and what does this mean for companies in the energy business? Will “net zero” remain the touchstone for climate-focused investors or will it be replaced by other metrics? How will ideas about sustainable approaches to investment change, as we move through a rocky energy transition?”
(*ESG – environmental, social and governance)
iv. “Winning Energy Strategies – How Best to Navigate Climate, Supply Security and Shareholder Returns
“How can oil and gas companies best navigate the competing priorities of supply security, transition, shareholder demands and portfolio limits? Can companies move faster through the transition than consumers? Should they get more involved in shifting demand? What do shareholders and stakeholders want from incumbent energy players?”
v.“The Geopolitics of the New Energy Economy – The emerging contests, opportunities and risks of the low-carbon transition
“The low-carbon transition is reshaping global geopolitics as nations jostle for position in the energy economy. How will tensions between the US and China, and between producers and consumers, play out? Will demand for minerals, metals and other materials create new tensions? What happens to countries that are left behind? What other sources of instability could arise, like migration?” (2)
These are all important topics which ought to be discussed with a broad spectrum of participants including those from the fields of renewable energy, climate science and biodiversity, as well as participants from across the globe. It is important to consider the role and importance of non-western countries in determining the climate agenda. Especially so when we are considering who is going to pay for the costs of transitioning. Climate justice campaigners have long called for the greater burden to be born by the richer countries both to reimburse those most affected by the adverse affects of the crisis and to create a level playing field for the future.
‘Constructing tomorrow’s energy system today’ is what all countries should have been doing for the last 50 years. Here governments have been most remiss leaving these decisions to those in the industry with the most power (the fossil fuel producers) rather than evening out the power balance to enable smaller, newer, renewable producers to have a viable voice. Too often governments have only listened to the voices of the big oil producers rather than listening to climate scientists and those developing alternative energies.
It is important that ‘net zero’ remains the standard for that is the only coherent target that provides a pathway to reducing carbon emissions to a safer level. It must remain a constant, unchangeable standard if it is both to be effective vis a vis the climate crisis, and to provide fairness and stability in a global economy where everyone is looking for the competitive edge. We have just recently seen in the UK that, arbitrarily and at short notice, changing the cut off date for ending the production of cars with petrol engines, is as destabilising for manufacturers as it is for customers – and thus also for investors. Equally we have seen that when the government does not gear its energy subsidies towards net zero, that we end up, in the UK certainly, with government money further subsidising new oil whilst failing to boost wind farm construction.
‘Can companies move faster through the transition than consumers?’ One hopes so, otherwise we consumers are forced to buy unsustainable products. In fact companies are not always keeping up with customers – and again this may be due to lack of government support or encouragement. Recently it has been reported that the cost of insuring electric vehicles has rocketed because the infrastructure for the repair of damaged vehicles and batteries is not yet to scale. This means that the costs for repairs are higher and therefore the cost of insurance cover too is higher. In the area of solar panels and heat pumps, the rate of manufacture and supply is way behind customer demand. Many customers have a long wait or are forced into buying a less climate friendly alternative. In an ideal world energy companies would be pioneering and investing in these industries. Octopus Energy – which is in the business of selling rather than producing energy – by comparison, is currently promoting the sale of domestic heat pumps, starting from £500 for a complete installation.
Where fossil fuel companies are gambling – and perhaps their gamble looks safe given the power of the companies and the lack of government intervention – is that they are continuing to invest heavily in new oil and gas projects where the fuel won’t come on line for 5 to 10 years and for which the pay back period is going to be even longer. Will there still be a strong market for fossil fuels in 20 or 30 years time? Worryingly for the environment, they, at present, seem to be successfully making that case with shareholders that that will be so.
The Geopolitics of the low-carbon transition is relevant not just with regard to fossil fuels, but also in the growing markets for minerals such as lithium and cobalt for the manufacture of batteries. This gives countries with these raw materials the opportunities for increased wealth or more likely, increased exploitation. Just as large oil companies have been able to manipulate and control supply and demand for fossil fuels, so equally powerful mineral companies are able to so the same. Invariably this is at the expense of the environment and of the local workforce and of the rights of indigenous people. The size of the multi national companies and their control over what are becoming key raw materials, seems to prevent any effective global policing of welfare, environmental and safety standards.
And as the agenda blurb suggests, there is a real risk that the shift in geopolitics will lead to conflict between countries or between rival groups within countries. On the last day of the conference one agenda item in particular highlights the close link between the power of large industries, economic power and conflict.
“The New Geopolitics – The Messy Shift Toward a Multipolar World and the New Middle East
“How has the conflict in Ukraine accelerated the geopolitical and economic shifts away from a unipolar world and toward a multipolar order? What does the rise of China mean for US dominance? How will large emerging countries like Saudi Arabia, India and Brazil assert their own independent path, while balancing their traditional alliances. What does this mean for energy companies and commodities which flourished over the past 20 years of steady globalisation?” (2)
Should such self serving conferences as the Energy Intelligence Forum be held without reference to or inclusion of other groups representing the interests of the environment, sustainable development, fair trade, and global well being? The decisions made at the Forum will potentially have major impact on the lives of everyone – and everything – in the world.
A final word from Laudate Deum, Pope Francis’s most recent encyclical, paragraph 23:
“It is chilling to realise that the capacities expanded by technology “have given those with the knowledge and especially the economic resources to use them, an impressive dominance over the whole of humanity and the entire world. Never has humanity had such power over itself, yet nothing ensures that it will be used wisely, particularly when we consider how it is currently being used… In whose hands does all this power lie, or will it eventually end up? It is extremely risky for a small part of humanity to have it”. [Laudate Si 104: AAS 107 (2015), 888-889.]”
(1)https://www.energyintel.com/0000017b-8742-d2d1-affb-f74a076d0001
(2) https://www.energyintelligenceforum.com/2023/agenda
The Green Tau 