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Slash Oil Demand, Not Supply, to Tackle the Climate Crisis

Slash Oil Demand, Not Supply, to Tackle the Climate Crisis

Halting production in one part of the world will simply push it elsewhere if consumption isn’t curtailed.

 

Welcome to our guide to the energy and commodities markets powering the global economy. Today, oil strategist Julian Lee looks at the climate challenges facing the next UK government. To get this newsletter in your inbox, you can sign up here.

Tackling the problem of carbon dioxide emissions from fossil-fuel combustion must come from the demand side of the balance, not supply. The sooner pressure groups and political parties understand that, the quicker we can pursue real solutions.

The only way to take meaningful steps toward net zero is to reduce the consumption of polluting fuels or deal with the greenhouse gases generated by burning them.

Without that progress, any attempt to halt production in one part of the world will simply push it elsewhere to meet unabated demand.

In the UK, the Labour Party’s assertion that new exploration licenses “will only accelerate the worsening climate crisis” is just plain wrong.

Atmospheric carbon doesn’t recognize international boundaries, so any reduction in UK emissions resulting from dwindling North Sea output is just an accounting trick that does nothing to solve a global problem.

Yet fears that a Labour government — which looks almost certain to be with us in less than a month — will shut down Britain’s oil and gas industry are overblown.

“Labour will not revoke existing licenses and we will partner with business and workers to manage our existing fields for the entirety of their lifespan,” the party says in its manifesto.

That actually gives a lot of scope for future production.

In addition to the 3.5 billion barrels of proven and probable oil and gas reserves, there are another 6.5 billion barrels classed as “contingent resources.” That covers accumulations discovered but not developed.

The bigger challenge is to transition energy use away from fossil fuels. Electrification can only be a solution with a much more robust power grid and local distribution network, no matter how many new wind farms are built.

The cables serving my street in London can handle demand from the relatively small number of electric cars charging up each night — probably about 5% of the vehicles parked there.

But once that rises to even 50%, they’ll be under serious strain.

Read the latest issue of the OGV Energy magazine HERE

Published: 20-06-2024

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