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United Kingdom-based energy giant BP’s Chief Executive Officer Bernard Looney on Saturday called for an energy transition roadmap that is “rapid yet orderly”, while underscoring the importance of maintaining requisite investments in the existing energy systems dominated by the oil and gas sector.
Looney’s views were consistent with those of energy-hungry emerging economies like India that are expediting transition to clean energy but are still heavily dependent on fossil fuels.
Speaking at the B20 Summit organised by the Confederation of Indian Industry, Looney said that oil and gas will continue to be key sources of energy for “many decades to come” and it will be critical to maintain a global demand-supply balance, for which, enough investments in the sector will be needed in order to avoid major price shocks. The oil and gas sector accounts for around 55 per cent of the global energy consumption pie.
“We must invest in today’s energy system, while at the same time investing in (energy) transition. If we don’t do that, we see examples of what can happen. Last year, through the (Ukraine) war, we lost 3 per cent of the world’s gas supplies. The result of that was that gas prices went up seven times…That obviously impacts people…It also means that governments turn to other forms of energy that is cheaper, like coal,” Looney said.
“So, what the world needs both in the Global North and in the Global South, is we need an ‘and’ and not ‘or’ strategy. We need to do both. We need to invest in today’s system responsibly and at the same time, we must invest in accelerating the transition,” he added.
A number of European countries, which had earlier been at the forefront of energy transition and clean energy investments, increased use of coal for producing power after gas prices shot up in the wake of Russia’s invasion of Ukraine.
On its part, India has been advocating for necessary investments in oil and gas projects to ensure that enough production is available to meet global demand in the years to come, while also making efforts to accelerate transition to green energy. As the third-largest consumer of crude oil that depends on imports to meet over 85 per cent of its requirement of the commodity, India is extremely sensitive to volatility in the global oil market. The country has also been advocating for more access to clean energy technologies and climate finance for itself and the Global South at large.
Speaking at the India Energy Week in February, Petroleum Minister Hardeep Singh Puri had said that India was “actively conscious” of the need to accelerate energy transition, but it also must insulate consumers from energy price shocks, signalling that India was in favour of a gradual and calibrated energy transition and not a sudden shift. India has set itself a target to achieve net zero carbon emissions by 2070.
There have been concerns over the past few years that with global attention on green energy, the oil and gas industry is at risk of severe underinvestment, which could lead to more frequent energy price shocks. Speaking at the B20 Summit, Looney said that efforts must be made to keep the existing energy systems, which are fossil fuel-intensive, robust to protect consumers and the global economy from such price shocks.
“What we do know is that oil and gas is going to be needed for decades to come. And even in the IEA (International Energy Agency) net zero scenario, the world will be consuming 20 million barrels a day of oil in 2050. So, the key question is how long will the oil and gas be around for and the answer is it is going to be around for many, many decades to come. We must continue to invest in it,” the BP CEO said.
