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The tantalising prospect of a global decarbonisation alliance 

Cop28 has the chance to change perceptions of the hydrocarbon industry

A worker at a BP field. The company aims to capitalise on oil and gas exploration opportunities in Egypt BP plc
A worker at a BP field. The company aims to capitalise on oil and gas exploration opportunities in Egypt

The UAE’s presidency of Cop28 has invested a lot of behind-the-scenes diplomacy in the concept of a “global decarbonisation alliance” to enhance its environmental credentials.

For a while, the plan – which could be a game-changer in how the world sees the oil industry – struggled to gain traction in the two constituencies that matter most: the environmental lobby, and the hydrocarbon industry itself.

Dr Sultan Al Jaber, president of Cop28, first floated the idea of a common commitment to “green” principles in an interview with The Guardian in April.

The idea was for the leading hydrocarbon producers – such as Exxon Mobil of the US and the UAE’s Adnoc (of which Al Jaber is also chairman) – to sign up to a clear set of targets.

These targets would mirror the aims of the Cop itself: net zero emissions, a big expansion of renewables, eliminating methane emissions altogether and other such sustainability measures.

Billed as a “flagship initiative”, it would be deeply symbolic on two levels: as the first time the hydrocarbon industry had acted collectively on sustainability goals; and as a groundbreaking alliance of the independent oil companies (IOCs) of the west, and the national oil companies (NOCs) of the Global South, mostly represented by Opec.

A more recent report on Politico, the US politics and policy website, said the initiative “has already been dismissed by environmentalists, who have been critical of Al Jaber”.

No surprise there. The militant wing of the green lobby, backed by mainly European activist policymakers, seems determined to reject any proposal, regardless of its merits, from the UAE purely on the grounds that it is an oil producer, shrieking all the time about “greenwashing”.

More significantly, Politico reported that the NOCs “have not been engaged” and that it is “not yet clear whether industry will respond”.

A spokesperson for Cop28 told Politico: “This forms part of the Cop28 president’s action agenda to fast-track a just and orderly energy transition and the need to disrupt business-as-usual and decarbonise the energy system of today while we build the low-carbon solutions of tomorrow.”

It is an ambitious plan, whatever the environmentalists say.

NOCs and IOCs all operate in the hydrocarbon industry, of course, but their economic and commercial imperatives are different.

Most IOCs have to respond primarily to shareholders and other financial stakeholders as members of the private-sector business infrastructure.

NOCs are for the most part government-owned and operate as instruments of national economic policy.

Some – such as Saudi Aramco and Adnoc – have taken steps to conform more rigorously to private-sector benchmarks, but most Opec members are still run as arms of their respective governments.

Even within the IOCs, there are big divergences between their stances on sustainability issues.

For example, Shell has stated bluntly that it aims to become a “net zero emissions energy business by 2050”, while Exxon – although it does lay out a steady path to emissions reduction – has made no such pledge.

The challenges in reaching agreement within the hydrocarbon-producing group also highlight another crucial aspect of the sustainability debate that environmentalists have difficulty grasping.

The “just stop oil” lobby believes that if you put enough pressure on the shareholders of IOCs they will eventually cave in and cease all new investment in oil and gas.

On the basis of results so far, they have some justification in that belief.

Most IOCs have moved away from simply being hydrocarbon producers. Take the transition from “British Petroleum” to “beyond petroleum” on the part of BP for example.

NOCs – whose ultimate stakeholders are citizens whose economic livelihoods depend on hydrocarbon revenues – are not susceptible to the same pressures (some would say blackmail).

For all these reasons, bringing together this disparate band of oil pumpers in a global decarbonisation alliance, as Dr Sultan intends, has been a real challenge. But there are indications that his quiet diplomacy is about to pay off.

Assuming all goes to plan for Dr Sultan, an agreement on the framework of a global alliance for decarbonisation – with participation from both producers and consumers – could be presented with a flourish in week one of Cop28.

Let’s see how that flies with the environmentalists.

Frank Kane is Editor-at-Large of AGBI and an award-winning business journalist. He also acts as a consultant to the Ministry of Energy of Saudi Arabia

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