Oil and gas projects come back strongly in several countries – 04/11/2023 – Environment

When the Joe Biden administration gave the green light to the $8 billion Willow oil project in Alaska’s North Slope last month, many criticized the move as a betrayal of America’s pledge to move away from fossil fuels to fight climate change.

But an analysis of global data shows that Willow represents a tiny fraction of the hundreds of new oil and gas projects approved last year around the world, including many more in the United States. And it is expected that in the coming months more dozens of projects will be approved.

The data reflects a booming fossil fuel industry that has recovered to pre-pandemic growth levels. Although in recent years many countries have instituted policies that encourage renewable energy, demand for fossil fuels remains high.

Russia’s invasion of Ukraine sent oil prices soaring, contributing to record profits for fossil fuel companies as governments struggled to secure their energy supplies, sending prices soaring.

“It’s a full recovery,” said Espen Erlingsen, a partner at Rystad Energy, the research firm that provided the data. “The future of that growth depends on policy. If the world wants to limit warming, it will have to limit demand for oil and gas, because that industry can supply that kind of volume for many decades to come.”

Much of the growth is taking place in traditional oil and gas producing nations such as the United States, Saudi Arabia and Norway. Gas, in particular, is booming. Qatar plans to open the world’s largest gas production facility in 2025.

In the United States, shale fracking for gas is experiencing a resurgence, representing many times the level of investment and extraction of a project like Willow.

While gas causes less greenhouse gas emissions than oil, expanding gas exploration is inconsistent with commitments nations have made to limit emissions, according to the Intergovernmental Panel on Climate Change (IPCC) , the preeminent group of scientists who study global warming.

The IPCC says fossil fuel production must start to decline sharply now to avoid the most catastrophic effects of climate change.

Vast new oil fields have also been approved for exploration by western multinational companies in Guyana, Brazil and Uganda, among others. Some developing countries have argued that income from fossil fuels —essential to the prosperity of the industrialized world—is also their right, and that mitigating climate change is largely the responsibility of rich countries.

Ghanaian President Nana Akufo-Addo made that point clear to Kamala Harris, the US Vice President, who visited him last week. Fossil fuels are a resource “that my government is trying to use as a foundation to transform its economy,” he said, standing next to Harris. Extracting them would help his country break free from dependence on foreign aid, he said.

Western countries have pooled loans for major coal-dependent countries such as South Africa, Vietnam and Indonesia to help them develop renewable alternatives. But while coal development has been slowing across the world (with the notable exceptions of China and India), the economies of many countries, rich and poor, remain dependent on fossil fuels.

Coal is a particularly dirty fossil fuel, and burning it remains a major producer of planet-warming greenhouse gas emissions.

The prospects for the oil and gas industry were decidedly different when the devastating effects of the pandemic on the global economy became clear in 2020. After many years of steady growth, companies have revised growth downwards and postponed or canceled projects.

The cost of renewable energy sources such as wind and solar was also rapidly decreasing to levels competitive with fossil fuels. Progressive climate policies in Europe and, later, the United States added to uncertainty about the role of fossil fuels in everything from power grids to transportation.

As the global economy picked up again, however, so did the demand for oil and gas. Amid the record profits that fossil fuel companies have made over the past year, some have also extended production schedules into the future, essentially reneging on promises to transition their businesses, albeit slowly, to renewable energy.

Trillions of dollars are being invested in fossil fuel infrastructure, said Michael Lazarus, scientist and director of research at the Stockholm Environment Institute, a scientific research group that tracks fossil fuel projects.

“A lot of this development is set to happen later in this decade, when we really need to be on a fossil fuel decline path,” Lazarus said. “Oil and gas companies are essentially betting that demand will remain as high as it is today.”

Without a policy that directly seeks to limit both fossil fuel production and demand, he said, there is a greater chance that the companies’ gamble will pay off.

Even in the United States, where the Biden administration’s historic climate legislation last year is freeing up hundreds of billions of dollars for the renewable energy sector, production and demand for oil and gas is set to grow.

“It’s not like the United States is one of many players; it has become the world’s largest producer of oil and gas,” Lazarus said. “All the signs are that Washington intends to maintain that position. Is it showing climate leadership? Here’s a fundamental contradiction that needs to be highlighted.”

_{Translated by Luiz Roberto M. Gonçalves}