Age of oil not dead, says UAE Energy Minister

(Picture credit: EMA)

Setting the context for the discussion, moderator Richard Mably, Global Editor (Commodities and Energy), Thomson Reuters, said the debate on climate change and energy security usually took place on parallel tracks. However, a connection between the two was needed because the world was getting richer even as the population kept growing.

Amb Richard Jones, Deputy Executive Director of the International Energy Agency (IEA), felt that while the era of fossil fuels was over, oil would still be required for transportation and emerging markets, natural gas would play an increasingly important role in the energy mix, and coal would remain the backbone of many markets. The possible reduction in nuclear energy would also likely drive up demand for fossil fuels. The world was moving in the right direction, he said, but the pace of change was not fast enough.

A sustainable oil production

"The age of oil is not dead," argued UAE's Minister of Energy Mohammad bin Dha'en Al Hamili, adding that the UAE was investing in long-term sustainable oil production. However, he acknowledged that hydrocarbons were finite resources, and given the UAE's unprecedented economic growth the UAE was also investing in nuclear and solar power, and hoped to become a global hub for renewable energy.

Dr Michael Levi from the Council on Foreign Relations believed that both energy security and climate change could coexist with minor concessions made to achieve the long-term goals of a sustainable energy future. However, with respect to climate change, the world was headed in the wrong direction, with the lack of progress in international negotiations due to shortfalls within individual countries.

Dr Vince Cable, UK's Secretary of State for Business, Innovation and Skills outlined the UK's climate change and energy policies, highlighting the targets of 15 percent of electricity from renewable energy and nuclear energy by 2050, and a legally binding reduction of 80 percent of carbon dioxide emissions by 2050, with most of the reduction from the energy sector. Secretary Cable recognised that localised actions were not sufficient, and that regional cooperation was required for a sustainable energy future.

Technology a panacea"Technology has the ability to change the system rather than perpetuate the system."

On whether there was an appropriate range for the price of oil, Minister Al Hamili felt that higher oil prices gave greater incentive to ramp up oil production.However, he conceded that production continued both when oil price dropped to US$10 a barrel during the Asian financial crisis, and also when it hit US$147 a barrel. Amb Jones stressed that high oil prices did not necessarily drive the uptake of renewable energy, as higher energy expenditures by the government would lead to fewer funds available for investment in renewable energy.

Dr Levi's view was that sudden fluctuations in oil prices were the killer rather than consistently high prices.

On how energy security and cooperation could exist together with national interest, Minister Al Hamili said the UAE and oil-producing countries in the Middle East are working together towards greater energy relations and continuous dialogue. Referring to the stable state of the energy market in the 1960s and 1970s, Secretary Cable said that energy nationalism had led to increased energy insecurity. Looking forward, greater cooperation was needed to secure global energy security.

BY : Nicholas Koh & Rachel Wong, Energy Analysts, Energy Studies Institute