Name: Fortune Global Forum 2023: The Global Energy Transition
Uploaded: 2023-11-28
Duration: 18 min 30 s
Description: Majid Jafar, Chief Executive Officer, Crescent Petroleum Francesco La Camera, Director-General, International Renewable Energy Agency In conversation with: Peter Vanham, Executive Editor, FORTUNE; Co-chair, Fortune Global Forum

Majid Jafar, Chief Executive Officer, Crescent Petroleum Francesco La Camera, Director-General, International Renewable Energy Agency In conversation with: Peter Vanham, Executive Editor, FORTUNE; Co-chair, Fortune Global Forum  

Fortune Global Forum 2023: The Global Energy Transition 

Conferences

Majid Jafar, Chief Executive Officer, Crescent Petroleum Francesco La Camera, Director-General, International Renewable Energy Agency In conversation with: Peter Vanham, Executive Editor, FORTUNE; Co-chair, Fortune Global Forum 

Majid Jafar, Chief Executive Officer, Crescent Petroleum Francesco La Camera, Director-General, International Renewable Energy Agency, Peter Vanham, Executive Editor, FORTUNE

So let's stay on the topic of climate and sustainability. A recent report put together by the United Nations found that if current projections hold 20 major fossil fuel producing nations will make approximately 100 and 10% more fossil fuels in 2030 than the quantity consistent with limiting global warming to 1.5 °C. The UN Secretary General says these governments are doubling down on fossil fuel production and that spells double trouble for both people and the planet. While the goal of limiting global warming is a challenging one, it's not impossible to reach. So let's talk about the innovative forms of renewable energy that are emerging in an effort to keep combating climate change whilst serving all stakeholders. Joining Fortune, executive editor and Fortune Global Forum, co-chair Peter Bum. For this conversation are Majeed Jaffa, Ceo of Crescent Petroleum, which is the oldest and largest private sector energy company in the Middle East and Francesco La Camera, Director general of the International Renewable Energy Agency which works to promote and accelerate the adoption of renewable energy sources worldwide. Please welcome them to the Fortune Global Forum. Well, hello, it's good to see everyone here and I must say, of course, we are going to address in this debate, obviously the elephant in the room. And I think you all know what the elephant in the room is for the gentleman here, which is tie or no tie. And you can see uh that we have two contestants here. Uh uh Francesco, you went for the tie in Madrid. You did not uh do you care to comment? Well, I don't have a cool shoes as Francesco. So neither of us does I have a few things in the, in the day where I need to have a tie. So I signed an agreement today and you know, just a photo, you must have a tie. We, we appreciate that. Now, I want to move to the actual elephant in the room, uh which in the energy transition debate, of course, is the role of oil and gas, fossil fuels versus renewables. And we're in a great place to talk about that here and have great guests to talk about that. I want to start with you Francesco because you know, you represent the International Renewable Energy Agency which obviously uh is advocating renewables. And you are also based here in Abu Dhabi. The offices are here. I think some of us actually passed by if you remember that this morning in Masdar City at your beau beautiful headquarters. So tell us how you see the role of oil and gas producing countries and companies in this transition towards renewables. So we have to set the scene for saying what could be the role. So for us, our Bible is the I PV C report only 1.5. So this means that uh at 2030 we have to decrease our co two emissions by 43%. This is global, global and naturally, this means that the fossil fuel sector is to decline for having less a mission there. In the same time, we have not to create a disruption in the uh in the energy market. So the gap between supply that should decline, the fossil fuel and demand should be covered, right? And this is what is renewable energy is from in this particular moment. And this is the reason also for us for calling on the triple of renewable solar capacity until 11 terabytes and 2030. So this is a number that is just a translation or what is the IPCC report in time of gigabytes? That's a scientific, you know, sort of consensus declined by 43% CO2 emissions. Now, obviously different countries and different companies will have different interests in, in that equation. Uh But are you confident? Are you um do you believe it's probable that everyone will be pulling at the same side here in, in that joint ambition for 2030 you know, the the the climate change puts everyone in front of the same question. So there is no one that can do something different from the others. So we have a, this is a common goal. We have to contribute to the goal and naturally country and their sector should contribute differently based on their circumstances. It just also the language of the Paris Agreement. II, I wonder if your previous life, you were a politician, Francesco because you treaded that needle very carefully. But we actually have somebody here who can talk about their particular interests, which is Majid. Um you know, you run a company which is called CRE Petroleum. Um So does that mean that by 2030 your company will be called Crescent Sun Winds and water or how do you see that transition for your company? So, first of all, I think we step back, we've only been given 20 minutes to cover global energy. It's which is an important topic and obviously I'm biased, but without energy, which is the lifeblood of the economy, none of the other panel sessions would have anything to talk about. So I think that's an and I encourage all of you as leaders understand energy, more understand where your own energy comes from, for your businesses, for uh even in your homes. Uh I think that awareness out there outside of our sector is lacking and that's important. If we look at the world today, we have at the moment, more energy used by the 1 billion people in the OECD in the rich countries than the rest of the world combined by the other 7 billion. And we still have nearly about 2.5 billion people without clean cooking solution, 859 100 million without electricity and that number is still rising. So we must remember the needs, the development needs of those developing countries. So it's not actually that is where that is where the net increase is coming from for emissions. It's not in Europe or the US where emissions have actually been falling. And that's where the more of the investment and the finance is needed. And the trebling of renewable energy is now a common goal. The UAE has called for President Xi and President Biden more recently. In reality, to replace the current system, you would need 100 times more, not three times more. And so far renewable energy and it's very important and it's contributing more and more and the costs have come down. Although there are limits set by physics to how far they can come down has been a supplement, a compliment. It has not, it has not met the total increase in global energy demand. It's just about now in the last year met the increase in electricity demand. I think important use has been at an all time high in 2022. So I think we need to recognize that we will continue to need. Now, when is it going to peak the demand of oil? Is it now already peaked or is it in a few decades? The reality is we lose 5 to 7 million barrels a day annually from decline rates of oil fields. So you need to add a new Saudi Arabia every two years just to maintain the current demand. A natural gas is playing a fundamental role, backing up renewables when the sun is not shining and the wind isn't blowing, you need something and it's 200 times more cost effective than using batteries, for example. Right. So I want to talk about that because I think you want to distinguish between oil and coal, of course, and then the use of natural gas is a fossil fuel. Why do you find that so important to highlight the role of natural gas in a transition towards a net zero economy? So I think uses of energy are what defines the difference. So gas is for power as is renewables and coal. Unfortunately, by not investing in gas, we've seen more of coal in developing countries, namely China and India, which uses the two countries use 70% of the world coal, which is why emissions have been going up and the cost was going up and we had energy supply shocks last winter. So we were failing on all three legs of the sustainability affordability availability that the so called energy trilemma oil. On the other hand, even if you replace light transport, we still have trucking, shipping and air and people are working on cleaner solutions for those and you have petrochemicals, everything the transition is relying upon whether it's the solar panels or the wind turbines or the electric cars themselves from their tires to their interiors is actually made of oil and medicines. And the reliance in the food sector. I think these are underappreciated, the different uses of energy and the continuing needs through the energy transition for the different forms of energy. So I think it's not a versus as you said, it's all of the above and a lot more and a key area where I'm not seeing enough investment is also in the grids and in particular, in transmission distribution, there's a focus on the generation only and there needs to be a lot more investment on that. If there's gonna be more electrification briefly before I get back to Francesco. When he talks about those 2030 goals, you know, decline of 43% of global Co2 emissions. Is that an ambition that you share that you understand that you stand behind on a global level. So I think for us as an industry, first of all, understanding how what we produce contributes positively. So we are in the developing countries, we're not in rich countries. We are here in the Middle East and we went from 50 years ago, an oil producer. Now we are 85% of the gas producer, the gas we produce in this region by displacing diesel for power generation avoids more than 5 million tons of co two a year, which is more than all the Teslas in the planet. But how we produce must be cleaner. So we've spent seven years reducing our emissions, reducing flaring to basically zero and then offsetting the remainder supporting wind power projects in China and Mongolia and places like that to achieve carbon neutral production two years ago. And we've sustained that. So how we use it is going to change and how we produce it must be decarbonised, right? Um But so do you support that analysis that we need to decline our dependency on? I mean, that that is a global, you know, uh target set by different organizations and there's debate and an upcoming in cop, there'll be a lot of work by governments on that. What I'm talking about is the role of us as private sector companies in our own businesses. Um Francesco, so now we've heard from somebody who obviously uh produces oil and gas. You advocate obviously for renewables, what are for you the most promising renewables? Acknowledging, of course, this other reality that we're going to ramp up production have to ramp up uh uh uh capacity. And that so far renewables have only played what Majid says is a complementary role. Uh So, first of all, uh concerning the complementary role, the fact is that in the last year, the last year, 83% of the new standard capacity was renewable, electricity, power, energy power. And concerning the a sector, uh the most uh clean way to, to to to manage it is through hydrogen. And the green hydrogen mainly and concerning transport along shiny biofuel also hydrogen could be used. So I is for you one of the most promising renewable, you know, I don't like this kind of question in which sense, all the type of renewables, I wish I could take it back. But unfortunately, with my Children, you know, and I always like to, to look at those as an uh uh uh answer to the problem. So for example, country that have a long hydropower uh capacity, so they have the the na the best natural battery in the world so they can arrange the system of vessel debt. So it depends on the character is that a country where wind is blowing, where the sun is shining. So what is important? And I think he completely agree with him if I can react on what they say that we have to post a lot of more attention to the grid, the the interconnectivity, the balancing the flexibility of the grid, but also the suit also the port will change nature. If you go to the Buy Port, you will see how this port is changing its nature to be ready for the next energy system, not to the past one. And do you believe because you've been focusing on, we've been focusing on 2030 which is almost, uh, six years away only. Um, do you believe that hydrogen can become widely available in six years? I don't think we bring me to the usual anecdote that I want to, to present here. Uh, it was 2021. So less than two years ago when Bloomberg come to during the summer, say that hydrogen was going to be competitive at 2050. Well, finally can be produced with $2 per ton. No far away. Of course, yes, we, we came later and said it was going to be competitive in 2030. Now, this country is already exporting hydrogen and it's there to be competitive. So this, I make this anecdote for showing how dramatic are the changes. You remember that uh renewables a few years ago was still considered niche. How is that what it is? No 81% you said last year, always a cap for power naturally. Um But if you hear that, you know, this incredible advances in technology prices coming down essentially, um you know, we can imagine of course, that you would be starting to invest also in renewable energy. If you do that, do you have the ability beyond your financial ability? Do you have the ability to do that with the people that you have and with the uh capacity that you have? So there's a lot of debate in the oil and gas sector. Should you also be a renewables? Company or should you focus on doing what you're doing? But decarbonize it and, and that debate is somewhat across the Atlantic now between the US companies that are more in the latter camp and the European companies that are transformer. My own view is it's quite a business renewables is more of a utility and it's a finance game and it's a different kind of risk reward balance. I'm not convinced that oil and gas companies can be the most effective in that sector. However, they do need to focus on decarbonizing their own products. We do as a group as the Crescent group invest in clean energy companies. I'm personally an investor in renewables, also in in hydropower in uh in Europe. So as a whole, those investments uh need to happen, right? But also recognizing, I mean, you mentioned about cost hydrogen today, it's cost prohibitive. And unfortunately, despite the amazing investments that are being made by Adnoc or a MCO and others, the market is not there. They have tried in Europe and elsewhere, people are unwilling to bear that cost, but there are these pilot projects trying to bring them down, including here, including here, energy is not however, like digital, you're not going to have more slow and dropping of costs, right? We are getting close to the physics limits for um both solar and wind. We're not gonna have 10 times the cost reductions. For example, we will still have some cost reductions but the big challenge is on storage, right? A battery battery today to store uh you know, a barrel worth of oil and energy is about $200,000 worth of batteries and it would weigh 20 tons, right? And, and, and that is a significant challenge. So there does need to be more investment as Bill Gates and others say in the technologies of the future, not just the incremental improvements in the technologies of the last century, which is what we're living with today. So you're doing that, separate your investments in renewable and your investments in oil or in gas particularly. Uh because you see a very big difference finally uh because we're going to wrap up uh Francisco, you're laughing because you know why uh you get the last question, that means the last 60 seconds, you know, um stresses on you. Um Can we do that? We're going to talk about it at COP 28 in a week's time. Can we see that ramp up in renewables or is it going to be more like Majid says we are not there yet. Uh We will see the COP 28 will come with a strong call for renewables. I have no doubt. Uh I think the president's designators already make this very clear and we are working on, on that. And what is good that the call of the president come on the basis of our number, our analysis and our outlook for we are so we are very proud of uh of that. Naturally, we have seen also some progress in the loss and damage. So we are quite confident that uh this and is inevitable. So I want to make this very clear. We have no choice. The question is not. If we have to do or not, we must do. It's a different thing. We have to reimagine our world where the ratio that there is today between renewables and the rest will change because it has to change and it will change. So no one can stop this process. The only aspect that is there and closing is the speed and the scale. That is the challenge. It is not where we are going, right. We have to ramp that up. We have tried to cover this debate in the time that we had and we hope of course, that the energy world will follow in the time that they have, which is about six years until 2030. We want to thank both of you for joining in the debate and thank all of you for listening to us. Thank you so much.