Bank of Japan head warns of climate threat to global economy

Saudi Arabia could enjoy revenue “feast” from changing oil demand: energy expert

DUBAI: One of the world’s leading energy experts believes that oil producing countries like Saudi Arabia could enjoy a “veritable feast” of oil revenues for many decades before changing patterns of energy use reduce global demand for crude.

Jason Bordoff, director of the Centre on Global Energy Policy at Columbia University and a former White House energy policy adviser, said: “it is the lowest-cost producers — such as Kuwait, Saudi Arabia, and the United Arab Emirates — that will be able to keep selling their oil the longest.

“What’s more, stronger climate policies should focus not just on the greenhouse gases emitted by burning a fuel, but the carbon intensity of the entire production cycle. Most Gulf Arab states are very efficient producers,” he added.

Writing in Foreign Policy magazine, Bordoff predicted that low cost producers like the Kingdom could consolidate their dominance of global energy markets. “With easy-to-extract barrels, less methane leakage, and lower flaring rates, they have some of the lowest life cycle emissions associated with their oil. Therefore, even as oil demand declines, OPEC’s share of global production could rise as a result of its members’ lower costs and emissions, strengthening the cartel’s grip on a market that will remain sizable for some time,” he said.

His view, which comes as some independent oil companies are drawing back from crude production because of climate concerns, is a retort to some critics of Middle East energy policymakers who have predicted economic and financial problems for regional oil exporters as global demand for oil declines because of the COVID-19 pandemic.

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“The narrative of collapse and chaos in a post-oil world has taken over the pundits’ imaginations. More likely, however, is that during the many decades needed to achieve the climate goals of the Paris Agreement, petrostates could enjoy a veritable feast before the famine,” Bordoff said.

He also suggested that oil-exporting countries could use their energy revenue wealth to spark the move to cleaner energy technologies.

“Saudi Arabia, for example, has abundant, low-cost solar power, just announced a $5 billion project to turn renewable energy into hydrogen, and has also sent Japan the world’s first blue ammonia shipment,” he said.

The KIngdom has launched the strategy of the Circular Carbon Economy as a way of mitigating harmful greenhouse gasses by eliminating emissions of carbon dioxide in the atmosphere. 

Bordoff’s contribution comes amid the growing debate about climate change and its global implications. “National security leaders must anticipate and prepare for the new geopolitics of clean energy—not only to mitigate new risks, but because a robust climate agenda will not succeed unless they do,” he said.


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