War in Ukraine gives oil producers greater leverage in negotiations

Bloomberg — Oil producers have always been easy targets at the annual United Nations climate summits. This year, with Russia’s war in Ukraine fueling demand for fossil fuels, they are preparing to fight back.

As Western economies desperately seek alternatives to Vladimir Putin’s exports, many are working to increase the supply of energy, clean or not. US President Joe Biden has ordered an unprecedented release of emergency crude, while Poland has signaled that it wants to use coal beyond the European Union’s 2050 target date to achieve net zero emissions.. British Prime Minister Boris Johnson visited Saudi Arabia to ask for an increase in oil production.

UAE Energy Minister Suhail Al-Mazrouei summed up the industry’s turnaround at a conference in Dubai last month. “Oil producers felt unwanted at COP26, they felt we were in a corner,” he said. “Now we are like superheroes.”

The UK banned oil companies from participating in sponsorship deals at the Glasgow meeting last November, claiming its net zero emissions targets were not credible. It was a victory for environmental activists who had criticized Poland for allowing coal companies to mark all the COPs it hosted, in 2013 and 2018. The decision also shocked leaders in the oil sector, including the director General of Shell, Ben van Beurden, who complained of not feeling welcome before. talks last year.

The industry is unlikely to face the same resistance this year.. Egypt, which will oversee COP27 in the resort town of Sharm el-Sheikh in November, has historically aligned itself with a group of developing countries that have resisted pressure to do more to cut emissions. It is argued that African countries should not be deprived of the opportunity to exploit their oil reserves and gas, stressing that the priority of this year’s meeting should be to get rich countries to pay more to help them transition to clean energy.

While the United Arab Emirates, host of the 2023 meeting, has been a relative leader in the region on climate policy, becoming the first Persian Gulf oil producer to set a net-zero emissions target last October. , they are still totally in favor of continuing to use fossil fuels. The country wants to change the COP narrative so that hydrocarbons are seen as part of the solution, rather than part of the problem, according to a person familiar with the country’s strategy.. Officials from the United Arab Emirates and Egypt are already working closely to ensure the two conferences are aligned, the person said.

There are also signs that the next two COPs risk being co-opted by oil interests due to the close relationship between Saudi Arabia and the host countries.. Saudi Arabia has pledged $15 billion to support Egypt as its economy is strained by war in Ukraine, depositing the first $5 billion last month.

The Saudi government has said it will invest more in solar and wind power and rely heavily on carbon capture technology.. At the same time, the nation has said demand for oil will remain strong for decades and is spending billions of dollars to increase production capacity.

While the war will force nations to take a more realistic approach to tackling climate change, it should also help them realize that their national security depends on switching to local clean energy.says Christiana Figueres, architect of the 2015 Paris Agreement. “What I hope to see from this year, and the rest of the decade, is a change in tone that really has to do with national security, even for the West,” said .

Even so, the current geopolitical environment means that the November COP meeting is unlikely to end with consensus on the need to phase out oil and gas consumptionaccording to Alden Meyer, long-time COP participant and senior associate of the E3G research group. All countries must agree on the outcome document at the end of the summit, which means that any nation can derail the whole process.

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