Policies aimed at divesting from hydrocarbons too soon, without adequate viable alternatives, can put climate and economic progress at risk, according to Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC.
Although record growth in renewables — constituting over 80% of all new power-generating capacity last year — clearly indicates energy transition is gathering pace, but recent events have shown that unplugging the current energy system without building a sufficiently robust alternative puts both economic and climate progress at risk, Al Jaber wrote in his article published in Project Syndicate, an international media organisation that publishes and syndicates commentary and analysis on a variety of global topics.
Divesting from oil and gas too soon is ‘self-defeating’
While the world was already facing a profound energy-supply crunch as economies began to bounce back from the pandemic, Al Jaber noted that the Russia-Ukraine conflict then made a tight market even tighter and forced countries to reassess their urgent near-term strategic energy needs.
“The message for governments should be clear: Policies aimed at divesting from hydrocarbons too soon, without adequate viable alternatives, are self-defeating. They will undermine energy security, erode economic stability, and leave less income available to invest in the energy transition,” Al Jaber wrote.
$250 trillion investment needed
Even though the renewable-energy investment globally exceeded $365 billion last year, the energy transition is estimated to need more than $250 trillion of investment over the next 30 years, Al Jaber noted. Obviously, no single country, much less a single company, can foot this bill.
“But financing isn’t the only issue. Energy transitions take time. While wind and solar accounted for the vast majority of all new power-generating capacity in 2021, they still comprise only 4% of today’s energy mix,” he wrote.
Governments, producers and the private sector must collectively work to make sure that each new unit of output is less carbon-intensive than the last.
“That will require supportive fiscal policies through tax incentives, operational efficiency via technology, greater commitments to reduce methane and flaring, and significantly greater investment in carbon-capture technologies,” ADNOC boss said.