War gives oil producers greater clout at global climate talks

London

Oil producers have always been an easy target at the United Nations' annual climate summits. This year, with Russia's war in Ukraine boosting 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 supplies of energy - whether it's clean or not. US President Joe Biden has ordered an unprecedented release of emergency crude, while Poland has signalled it wants to use coal past the European Union's 2050 date to reach net-zero emissions. UK Prime Minister Boris Johnson travelled to Saudi Arabia to ask for an increase oil production.

United Arab Emirates (UAE) Energy Minister Suhail Al-Mazrouei summed up the industry's change in fortune at a conference in Dubai last month. "Oil producers felt unwanted in COP26, felt like we were in a corner," he said. "Now, we're like superheroes."

The United Kingdom banned oil companies from sponsorship deals at the gathering in Glasgow last November, saying that their net-zero targets weren't credible. It was a victory for green campaigners who had criticised Poland for allowing coal companies to plaster their branding all over the COPs it hosted in 2013 and 2018.

The decision also struck a nerve with oil executives, including Shell chief executive officer Ben van Beurden, who complained about not feeling welcome ahead of the talks last year.

It's unlikely the industry will face the same resistance this year. Egypt, which will oversee COP27 in the resort town of Sharm El-Sheikh this November, has historically aligned itself with a group of developing countries that has resisted pressure to do more to cut emissions. It has argued that African countries shouldn't be deprived the opportunity to exploit their oil and gas reserves, and stressed that the priority of this year's meeting should focus on getting rich countries to pay more to help them transition to clean energy.

While the UAE - the host of 2023's meeting - has been a relative frontrunner within the region on climate policies, becoming the first Persian Gulf oil producer to set a net-zero goal last October, it's still squarely in favour of continuing to use fossil fuels. The country wants to shift the COP narrative so hydrocarbons are seen as part of the solution, instead of the problem, according to a person familiar with the nation's strategy. Officials from the UAE and Egypt are already working closely to make sure the two conferences are aligned, the person said.

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

"The Saudis have perennially been a spoiler in this process since the beginning," said Alden Meyer, a COP veteran and senior associate with research group E3G. There's a long list of complaints from scientists and diplomats about the country's pushback on global agreements to cut emissions and reports from the UN's Intergovernmental Panel on Climate Change summarising latest scientific findings.

Meyer says the Saudis led the fight to downplay a groundbreaking 2018 IPCC report that stated the devastating impacts of warming beyond 1.5 degrees C. Its officials earlier this month successfully lobbied for a major report on strategies to cut emissions to place more emphasis on carbon removal technologies which would theoretically allow for the continued extraction of oil and gas, Climate Home News reported.

Experts say efforts should focus on cutting emissions first. In a recent submission to the United Nations, the Kingdom warned rich countries that reducing fossil fuels could backfire by cutting prices and boosting demand in developing nations.

OPEC Secretary General Mohammad Barkindo has also urged Egypt and the UAE to redefine the conversation on oil. "These two COPs have the potential to address these challenges - energy inclusiveness and investment," he said. The meetings can be a "reset" and show that oil and gas production and climate change goals aren't "mutually exclusive", he said.

Another way of looking at the situation is that while the war will force nations to take a more hard-headed approach to tackling climate change, it should also help them realise that their national security depends on switching to homegrown clean energy, says Christiana Figueres, an architect of the 2015 Paris Agreement. BLOOMBERG