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US Special Presidential Envoy for Climate John Kerry began
CERAWeek 2022 by S&P Global with acknowledging that the current
global energy market disruption caused by the Russian invasion of
Ukraine could throw countries off their goal to achieve net-zero
carbon levels by 2050.
Citing the UN's September
2021 report, Kerry said on 7 March at the conference in Houston
the world is on a pathway to achieve global warming of 2.7 degrees
Celsius instead of the 1.5 degrees-target that the Paris Agreement
sought, and the Glasgow Pact affirmed at the conclusion of the
COP26 meeting in November.
At COP26, countries representing 65% of global GDP came out with
plans to reach net-zero levels by 2050 in Glasgow, and 90% of GDP
is now represented by nations with some type of net-zero plan. The
International Energy Agency estimated that these plans if fully
realized would result in a global warming of 1.8 degrees
Celsius.
But that was before the invasion of Ukraine pushed oil prices
above $120 per barrel with natural gas prices reaching record
highs.
"Because of the disruption, we don't quite know where we come
out next year," Kerry said in a discussion with S&P Global Vice
Chairman Daniel Yergin.
He acknowledged that "gas will be key component of energy
transition, not unabated gas though" during the energy transition
from fossil fuels to renewables, especially in African
countries.
Noting that "we're such a litigious society," Kerry said in the
US transmission lines and pipelines have to be laid out to move the
energy transition forward.
It's not just the African continent that is dependent on gas for
lowering its carbon footprint.
At the COP26 meeting, European Commission Executive Vice
President Frans Timmermans
said natural gas would play a key role in helping wean some of
the bloc member countries from dependence on coal.
Oil and gas still needed
In a separate discussion on energy transition at CERAWeek, Hess
Corporation CEO John Hess cited the IEA Net-Zero by 2050 report
that said a net-zero future will require oil and gas investments of
$450 billion a year for the next 10 years to stay on track.
ExxonMobil CEO Darren Woods said the world cannot rely on
renewables alone, agreeing with Daniel Yergin, who also serves as
CERAWeek Chair, that the company is "more about molecules than
electrons." This suggests Woods believes the company's future is
cleaner fossil fuels, rather than renewable power. It will need
solutions like carbon capture and storage, biofuels as well as
hydrogen, Woods added.
He pointed to the company's recently
announced plans to produce up to 1 billion cubic feet per day
of blue hydrogen—hydrogen produced from the steam reformation
process of natural gas that also is equipped with carbon capture
and storage.
Woods said the problem does not lie with the oil and gas sector
that is responsible for providing the products that people use
everyday from cars and cell phones. The problem lies with the
combustion of the fossil fuel products that needs to be addressed,
he added.
Kerry warned that the energy markets would be turbulent for a
while, "and we will have to live with it."
Posted 07 March 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
