Coming as it does, at a time of advancing energy transition, an upheaval in the world’s economic systems as big as the Industrial Revolution of the past centuries - perhaps still bigger. It confronts policy makers with issues of unparalleled complexities. If and in case it is not yet clear to some energy planners, and to some of those most concerned with the link between energy supplies and climate change advocates, it should soon begin to become so for the right and realistic reasons.

At root, the problem is about matching, and trying to keep a balance between changing patterns of supply and changing patterns of demand. The broad medium term is to describe and envisage, which is to wean the world off carbon- loaded power generation and on to a decarbonizing energy production and consumption system and culture. I would rather call this process as a socio- energy- cultural revolution.

But if this was well- intentioned since the beginning and of course favored by most governments, semi-governmental institutions and Non- governmental organizations, what happened in reality is that it led to a decline of investment in oil, gas and coal production, and if demand for these conventional fuels does not drop as fast as supply, it does not need a gigantic intelligence to figure out how a panic buying would lead to skyrocketed prices, without necessarily leading to much more supply of renewable sources of energy.

Investment squeeze and its impact on capacity built up

In fact, the process of disinvestment started in early 2000 when United Nations entered the environmental campaign scene and began Zero Carbon movements globally. I believe that the pandemic that appeased demand for conventional fuels came to the rescue of drastic supply shortages. Add a few special circumstances and a price explosion never seen and thought before follows, along with intense volatility. That’s what happens when the individual demand for power surges- whether from burning oil, gas or coal as the world recovers from the pan; when China and India, Africa and Latin America turn back to burning more oil and gas and coal and price quadruple when extreme weather patterns distort both supply and demand.

Most important renewable sources of energy such as solar and wind are weather-related. A severe cold in Texas or a wind-less summer in Europe means no electricity. Conventional fuels cannot compensate or complement each other. Renewables are sourced entirely different from conventional. We; therefore, need to find out a middle path for the energy transition. I believe that the issue of energy transition has to be depoliticized and dealt with scientifically. Of course, in the long term the situation should in theory sort itself out and a new and more stable energy and power supply pattern could emerge. The investment which is deserting fossil fuels sector will stream into renewables and into new storage technologies in the next several decades.

Fuel vectors like hydrogen will eventually emerge but carbon capture technologies and de-carbonized natural gas and petroleum products will also emerge and provide not just for a smooth transition from fossil fuels to renewables but as a destination for a better and more efficient usage of natural resources in the universe and available to humanity. I don’t intend to philosophize the subject but would like to quote famous economist Myrdal Keynes who famously wrote that in the long term we are all dead. Certainly whole generations of politicians will be gone. Eventually, if climate extremes are to be curbed and carbon emissions brought to net zero or near net zero, everyone will be happier. However, in the meantime there are lives to be lived by billions who depend utterly on reliable, affordable and uninterrupted energy supplies.

For families in colder climate, home heat is life. For older people the absence of winter warmth is death. Ever higher energy prices, so logically but coldly advocated by economists as means of chocking off demand and improving insulation, become instead the recipe for protest and popular resistance to all climate controlling measures. Injunctions to wear thicker clothes offer no comfort. Even if carbon- free energy becomes generally the cheapest, as it may, there will always have to be other forms of back-up energy to act as swing and stand-by suppliers in reserves. Gas turbines and domestic gas, may be mixed with hydrogen, will continue to play a vital part in blackouts that would follow and the social breakdowns that would follow. All this will require continued investment from elsewhere.

Two salient lessons can be understood from the present global energy turmoil. They are the first that each country or economy, if it is to prosper and to be secure will need multiple energy sources to ensure resistance when some unprecedented and unpredictable events strike. This is even relevant to oil or gas producing countries. Second, the global energy transformation, from the old energy order of the past to the emissions free order of the future, will require pacing and programming with a great deal of patience and care. According to 2020 World Bank report, some 70 percent of African population has no access to any form of modern energy sources. They rely on traditional and often harmful sources of energy derived from animal wastes to wood and vegetation sources that terribly harm the environment. COP approvals now require them to jump into solar, wind, hydrogen or fusion to overcome carbon emitting sources of energy.

Human civilization has benefited from more than 6 thousand products made from oil products and oil derivatives out of crude oil and gas. None of these products were available to humans before 19th century. With no known replacement for crude oil and natural gas in the foreseeable future, environmental organizations and activists demand unrealistic targets to put an end to oil and gas consumption. Virtually, all the components of wind turbines, solar panels, and all forms of transportation are assembled with products made from oil and oil products. Exclusion of oil and gas would mean the elimination of all that we are boldly asking to be discontinued within the next couple of decades.

Global community has demonstrated that they are not going to be mandated and regulated away from using products so essential to their well-being. International climate change advocates are simply disconnected from the reality. In the meantime oil producers seem to have taken sides with the comfort zone. That is to say they don’t speak louder than required. In fact, the United States, Britain and the Western countries, gained global dominance by monopolizing oil production, refining, technology and distribution networks. In later years, most parts of those potentials were taken over by oil producers and OPEC member states. Taking out oil from the world geopolitical map would mean a world without basic pillars of strength.

Iran is the most non-oil dependent country within OPEC and as such least concerned with oil demand for the next couple of decades. Most Middle East is struggling to diversify economies away from oil, but the focus of attention to the Middle East is oil-related and not necessarily for what they might or might not achieve in the coming years.

NOCs and Environmental issues

Iran is the pioneer of renewable energy in the Middle East. Iranian organization for New Energies was established some 27 years ago when climate change advocates were not in the scene. Iran currently produces the highest percentage of its energy from renewables, though still quite meager. Nevertheless, sanctions and twisted conceptions from sanctions have diverted the country’s energy strategy from playing the leading role it deserves in energy transition path.

National Iranian Oil Company as a leading NOC that has pioneered large scale R&E in several fields of downstream and upstream is set to play an active and decisive role in helping NOCs to establish a thorough and comprehensive plan of action towards a balanced and unbiased energy transition. The United States of America has tried to weaponize environmental issues as it has done so with oil industries in various countries during the last several years. National oil companies need to be aware of the risk of politicization and militarization of climate change.

Fereydoun Barkeshli,

President, Vienna Energy Research Group

Courtesy of Iran Petroleum