With increasing temperatures, rising sea levels, and more aggressive effects of climate change occurring, it is obvious that every country must do its part to achieve the goals of the Paris Agreement of net-zero carbon emissions by 2050. A switch to renewable energy resources is said to be the key to achieving this goal. But international and regional energy experts are quick to point out that the oil and gas sector still has significant value in the world as it is essential in ensuring a smooth transition.
Experts made this salient point during The Great Energy Debate – 2021, an event organised by Shell which was held on Monday. The virtual event focused on whether Latin America and the Caribbean would be able to achieve net-zero by 2050.
“It is clearly urgent that we invest in the energy transition, and indeed, that is why we invest significant amounts of money in wind, solar, hydrogen, biofuels, and electricity storage, and we are building fast because our customers want to transition to net-zero; we have to help them transition but also need to supply them with the energy that they need today,” said Maarten Wetselaar, Shell’s Director of Integrated Gas, Renewables and Energy Solutions.
He stated that in order to keep the world running, Shell needs to supply its customers with the energy that they rely on. Wetselaar went on to add that if producers decided to cut off oil production completely, the demand inevitably increases. This, he noted, leads to a price hike.
“That disproportionately affects the poor people in the world; you get energy poverty and all kinds of social effects. We need a just transition as much as we need a fast transition,” the Energy Director said.
Meanwhile, Jimena Marván Santín, the Executive Director of Chapter Zero Mexico, pointed out that after a year and a half of extraordinary health and economic challenges, the role of the oil and gas industry is crucial to the recovery in Latin America and the Caribbean. However, Santín emphasized that this time, the role of hydrocarbons should be played in a different way as the world moves to achieve net-zero.
Against this background, she said, “The oil and gas sector has the moral obligation to power the economic recovery, not only through oil and gas production but mainly through facilitating the transition to a net-zero economy in 2050. Evidence shows that this transition is possible in Latin America mainly through the production of electricity without carbon emissions, electrification of industries, transport, and improving energy efficiency.”
She added that several Latin American countries have already promoted energy transition policies, and although “very challenging”, that implementation is already on the way.
“This presents a critical opportunity for local and global companies that are committed to fighting climate change and changing the landscape of the region,” Santín stated.
One other panelist, Andrea Heins, who holds the position of Chairman of the Argentine Committee at the World Energy Council, also echoed the position that hydrocarbons are vital to a post-pandemic recovery. She made particular mention of natural gas and its unique purpose.
“Gas has a special role in the energy transition towards decarbonization,” Heins related, “because it is a transition fuel, and a transition fuel can help with the decarbonization of the rest of the world because it is cleaner than coal. But I think that the oil and gas industry should implement urgent measures against decarbonization, methane reduction, increasing energy efficiency, and increasing electrification based on renewable resources.”
Not only are most of these measures in keeping with climate and sustainability goals, but also profitable, Heins noted.
As it stands, the new oil producing country of Guyana is a carbon-neutral sink since the country’s pristine and untouched rainforests are able to offset local emissions. Although a carbon sink, the Guyana Government is sparing no efforts in the fight against climate change and is pursuing an aggressive plan to diversify the energy supply.
Most of Guyana’s energy-producing generators still run-on heavy fuel oils (HFOs), which also play a hand in why Guyana’s electricity costs rank among the highest in the region. With the aim of changing this predicament, the government will implement a renewable energy mix of hydropower, solar, and wind energy, as well as a US$900M gas-to-energy project. By the end of 2024, not only will this energy mix reduce emissions, but will add 500MW of energy to the grid while significantly slashing electricity costs.