The climate change conference in Paris started to great fanfare earlier this week – but what does it mean for our oilers and coal consumers? Here Stewart Dalby takes a closer look at the ramifications.
fuels had a bad opening few days while the much vaunted UN sponsored climate change conference, known as COP21, started in Paris.
The opening day of the talks attracted delegates from 195 countries, including over 150 country leaders.
The Daily Telegraph citing economists at estimated the greenhouse pledges that could be made by the US, China the EU and other countries at COP21 could mean that the fuels industries of coal, gas and oil could forfeit US$34trln in the next quarter a century – a quarter of their income.
By then the coal industry could become virtually extinct if decarbonisation targets are met. Crude oil consumption would fall to 72mln barrels a day, half the projection of the Organisation of Petroleum Exporting Countries (OPEC).
The next day the Wall Street Journal reported that the leading light of OPEC, Saudi Arabia, has opened a second front on its price war against American frackers in order to protect its global market share. This war has been a main factor in the collapse of the oil price by 60% since this time last year.
Now the WSJ has said the Saudis this month have started supplying Preem AB, Sweden’s largest refining company for the first time in 20 years. The Saudis are also looking at supplying Poland in order to service the Baltic States, in an attempt to undercut Russian dominance of the markets.
Russia and Saudi Arabia are the two largest oil exporters in the world and with this latest Saudi move virtually makes it certain there will be no production cuts when OPEC meets on December 4
The agreed UN goal is to cap the rise in global temperatures to 2 degrees above pre-industrial levels by 2100 levels, if we are to avert devastation to parts of the planet and the people on it.
Climate negotiators say there will have to be drastic decarbonisation to bring this in sight, with negative emissions by 2070, perhaps facilitated through schemes such as reforestation.
There is a much greater sense of urgency about the Paris meeting than in other climate summits, perhaps because the task is now perceived as more urgent.
But there is not yet a done deal on how the 2 degrees C target is to be achieved. One problem is the US has said there cannot be a binding treaty on targets because it would never get passed by the Republican Congress in the US.
However, President Obama seems to have come around to the UN and French view that a series of tough reviews every five years could be made enforceable and drive down the trajectory of CO2 emissions.
Another problem has been highlighted by Prime Minister Narendra Modi of India, which after China, the US and the EU, is the fourth largest carbon emitter in the world. Modi has said the ‘advanced countries powered their way to prosperity on …
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