It has been almost two weeks since the United Nations (UN) Intergovernmental Panel on Climate Change (IPCC), one of the world’s most respected scientific bodies, put out its 6th Assessment Report (AR6)- a report which many had waited for with bated breath since the last report released eight years ago.
The report which warns of the impending climate catastrophe caused by humanity’s current pathway did not disappoint as it turned out to be very rich, well-resourced as well as firm and unflinching in its conclusions. The almost 4, 000-page document is the first of the four-part report that is to constitute AR6 and has already caused a stir across the world, as its message is both direct and dire – humanity is in trouble and fossil fuels are a big part of that trouble.
Citing some 14,000 studies and prepared by 234 scientists from 66 countries, the IPCC report is unequivocal with proof and consensus reached by the finest minds in scientific inquiry. Yet it is rueful that the message is the same the world was told decades ago. The catch is that this time around, we are out of time.
UN Secretary-General António Guterres calls the report “a code red for humanity.” According to him, “the alarm bells are deafening, and the evidence is irrefutable.” He went further to say “this report must sound a death knell for coal and fossil fuels, before they destroy our planet,” while urging countries to end all new fossil fuel exploration and production, and shift fossil fuel subsidies into renewable energy.
Still, the Organisation of Petroleum Exporting Countries plus (OPEC+), a group of 23 countries led by Saudi Arabia had last month agreed to grant an increase in production quotas by 400,000 barrels per day each month till the end of 2022, with the agreement to allow new output baselines for several countries, including the UAE, Saudi Arabia, Russia, Kuwait and Iraq, and a possible increase for Nigeria and Algeria as well.
This move was in stark contrast to the report by the International Energy Agency (IEA) in May this year, pointing out that in order to achieve net-zero by 2050, all investments in new oil, gas and coal projects had to end in 2021.
With major plans for oil for 2022 and beyond, OPEC does not seem likely to back down on oil despite the IEA and IPCC’s reports. While the IEA had reported last week in its monthly report that rising demand for oil had abruptly reversed course in July and was set to proceed more slowly for the rest of the year due to the spread of the COVID-19 Delta variant, OPEC thinks differently and believes demand is strong.
Even worse, just 2 days after the IPCC report was released, President Biden called for OPEC+ to pump more oil to push down oil prices, dealing a blow not just on the US climate policy but on the global climate agenda, seeing as in the last 7 months, the US has been one of the biggest crusaders of pro-climate energy sources.
The question in all of this is what does the IPCC report portend for the fossil fuel industry, if anything at all, especially in Nigeria?
Industry body Oil & Gas UK (OGUK) has expressed support for the findings and conclusions of the report, praising it for “adding new impetus to the transition to low-carbon energy.” The Texas Independent Producers and Royalty Owners Association (TIPRO), recognizing the impact of the report, has indicated that the US oil and natural gas industry is leading efforts with some of the proposed solutions outlined in the study, including carbon capture, storage and planting trees.
No doubt, fossil fuel attractiveness is paling, yet it seems that its use may continue way beyond the timelines proposed in the IEA report or those suggested by the IPCC report. Still, all is not bleak as the effects of climate change advocacy and clean investments are being felt, with large coal and fossil fuel projects being abandoned in various parts of the world. One important part of driving the kind of ambition to be seen in the coming years is financing.
More private capital and financing from international organisations need to move aggressively towards clean energy projects, carbon capture, greenhouse reduction and everything targeted at net-zero targets across the world, particularly in developing countries.
With more financing committed to clean energy, it will drive more investments in that area, lower costs and make the alternative – fossil fuels – more expensive and unattractive. With the growth of sustainable finance in bank lending, private equity, project finance, capital markets and other structured finance products over the next decade, the prospects for clean energy growth abound.
It is also hoped that the Conference of Parties (COP) 26 in Glasgow later this year will reignite commitments by policymakers and business leaders. One Forbes report has advocated that the IPCC report should be primarily targeted at businesses and not just policymakers, since businesses are regularly using large volumes of energy and involved in production. The Energy Compact introduced by SEforAll under the leadership of Damilola Ogunbiyi, as a precursor to the UN Energy High-Level Dialogue on Energy next month appears to achieve this by ensuring both businesses and country leaderships can commit to clean energy targets and also potentially access financial and technical support to work towards their goals.