. US climate envoy tasks Nigeria on emission reduction
Multinational oil companies looking to develop deposits in Africa need to consider the significant risk of regulatory action as on other continents, as the world moves to tackle climate change, a U.S. climate envoy said on Friday.
U.S. Deputy Special Presidential Envoy for Climate Jonathan Pershing, speaking from South Africa, urged Western investors to consider whether fossil fuels were a good commercial opportunity anymore in Africa or anywhere else, Reuters reported.
Pershing said: “There is the risk in particular that climate change will make an operation more difficult, and as a company looks at those kinds of physical risks, it is going to have to assess whether the product is worthwhile. But there is another risk, and that is a risk of regulatory action and a risk of financial action, and I believe that is getting more and more explicit.
“We are seeing around the world as countries develop and implement policies on climate there is an increasing implicit or, in some cases, explicit carbon price.
“They are looking to move even away from oil and gas and into an alternative future-leaning view that is zero-carbon.
“So if you are a company looking to invest in oil and gas, you have to ask yourself, is the world moving in a way that will open that door to being a commercial and an opportunistic investment, or am I going to be left with a stranded asset? I would not bet very strongly on a fossil fuel future if I were an investor.”
Reduce carbon emissions
Pershing’s warning comes even as he tasked the Nigerian Government on emission reduction particularly from gas flaring.
He was quoted in a statement: “Interestingly, while it’s got a huge economy and the largest population, Nigeria is not in the G20. But the idea of having an African conversation and not engaging the Nigerians didn’t make sense, so clearly you want to bring that very large voice to the table.
“And there is some very interesting work going on there both in thinking about what’s happening on adaptation in the north, how they’re thinking about managing significant constraints around their oil and gas production which has had both economic benefits but huge damages, and a transition could be an opportunity for them, and at the same time they can minimise the emissions from the methane coming out of the flaring from those oil and gas activities. So, huge windows for Nigeria.”
His comments come despite the United States itself being a major producer and exporter of oil and gas, with recent growth driven by output from shale fields.
There is the risk in particular that climate change will make an operation more difficult, and as a company looks at those kinds of physical risks, it is going to have to assess whether the product is worthwhile. But there is another risk, and that is a risk of regulatory action and a risk of financial action, and I believe that is getting more and more explicit.
Pershing is visiting several African countries as part of efforts to raise global climate ambition ahead of the U.N. COP26 Climate Summit in Glasgow, Scotland next month.
African nations are seeking financial assistance from the West to switch to renewables.
Africa accounts for just 3.8% of greenhouse gas emissions, according to the non-profit Carbon Disclosure Project, but Pershing noted it was the fastest-growing continent. It could, he said, “leapfrog” older carbon-based technologies and embrace renewables, just as it skipped wired telecoms in many places and went straight for wireless.
“Africa doesn’t need to move in the direction of the West’s high-carbon intensity. It can move directly beyond that,” he said.
On Tuesday, South Africa, the continent’s biggest greenhouse gas emitter and the world’s 12th largest, owing to its reliance on coal-fired power, told the envoys that it needs major support for its energy transition.
British COP26 envoy, John Murton, told journalists in South Africa late on Friday that Britain could offer technical assistance and bring in private investors. They had, he said, discussed issues besides coal, including a net zero carbon transport sector, better energy efficiency and green hydrogen.
South Africa produces over 80% of its power from coal and its indebted state power utility, Eskom, needs billions of dollars to replace it with cleaner alternatives.
“We’re all agreed the transition of the energy sector has to be the leading edge,” Murton said. “We’re here … to partner with South Africa to see how we can manage that transition.”