Tension and inquiries were in the spotlight during ARPEL’s event demanding “a fair and inclusive energy transition” as well as regulatory standards that promote investment in the hydrocarbons industry, in the midst of a global scenario determined to prioritize renewables over fossil fuels.
ISSUE 112 | 2022
Vesna Marinkovic U.
Highlighting the tension between satisfying the growing demand for energy and addressing climate change, Carlos Garibaldi, Executive Secretary of the Association of Oil, Gas and Renewable Energy Companies of Latin America and the Caribbean (ARPEL), explained the situation of the hydrocarbons industry, recognized as the most powerful on the planet, during his interventions in Lima Peru.
Garibaldi said that: “In these days we also found out that the world has exceeded 8 billion inhabitants, which exerts more pressure for energy demand; Therefore, there is a certain tension between our duty to addressing climate change as well as satisfying the growing energy demand.”
In front of approximately 500 leaders of the most important industries in Latin American and the Caribbean, he remarked, at the end of the event, that the region already has an energy matrix with a high percentage of renewables and at the same time, the cleanest in terms of power generation. Therefore, “the region has the right and duty to develop its hydrocarbon resources to address both economic poverty and energy poverty.”
He said that this intersection between energy security and energy transitions-which must be assumed in a particular way by each of the countries in response to their own contexts-provides challenges and opportunities, as pointed out by several of the exhibitors who met at ARPEL 2022, exposing a complex scenario, but determined to continue supporting the industry, with greater emphasis on the environment, human rights, technology and sustainability.
“As a regional industry, we are very clear about the urgency of energy transition, we are actually facing those challenges, we are decarbonizing our operations and diversifying our energy portfolios with the incorporation of renewable energies,” he said, pointing out that two thirds of those who participated in the interactive surveys during the event, are confident that “a fair energy transition” is achievable, as well as accomplishing the objectives of the Paris agreement.
However, he said that this position also leaves a notable degree of skepticism, remarking that actually, the national contributions trends do not show a significant decrease of fossil fuels usage by 2030, which is not correlated with the objective of preventing a global temperature rise above 1.5 to 2 degrees Celsius. , as part of an effort to curb the global climate crisis.
In this context, he said that business associations such as ARPEL and its allies play a leading role in the transformation of the industry to accelerate energy transitions through cooperation and exchange at a technical and strategic level, between their companies and also at the governments level with the coordination of their peers in hydrocarbons.
TENSION AND INQUIRIES
“One of the main challenges is to achieve a fair and inclusive transition process that at the same time reduces energy poverty, considering each national context,” Garibaldi said, highlighting that there is no single path towards energy transition, aimed at stopping or at least mitigating the consequences of climate change. At ARPEL 2022, the hydrocarbons industry showed the significant pressures and challenges it is facing in the midst of a global scenario determined to prioritize renewables over fossil fuels.
IT IS A TRANSITION AND NOT A REPLACEMENT
At the closing of the sixth edition of ARPEL, Garibaldi said that “for better or for worse we are not facing the end of oil and gas because this is a transition and not a replacement.” The oil and gas industry influenced the progress of countries such as Brazil, Argentina, Colombia, Guyana and Suriname that positioned Latin America as a key player to satisfy the growing demand for accessible, safe and sustainable energy.
Garibaldi said that at this intersection between energy security and energy transition, natural gas fits quite well, highlighting recommendations that the region should address issues such as the market; clear regulatory frameworks for investment; and refining, which must incorporate new products with greater added value.
He said that the central issue is sustainability, which, as a “political” concept, includes improving the operational efficiency of processes supported by digital transformation, preserving the industry’s digital assets as well as physical assets with cyber security.
So, for Garibaldi and several exhibitors during the event, this implies maintaining and renewing the social license, involving respect for the environment, culture, and human rights. At the same time, it demands transparency, compliance and financing to develop new exploratory prospects and attract the human element to an industry that for the moment must fight the stigma of “polluting”.
Garibaldi remarked that energy transitions must be embedded in organizations and linked to a governance structure, with an emphasis on communication.
“…the oil and gas industry has not ceased to be the world’s backbone in spite of “a very serious lack of investment.”
THE GREENEST REGION
Highlighting that Latin America has shown a strong commitment to decarbonization and climate change mitigation, since a third of its energy matrix comes from renewable sources and its greenhouse gas emissions barely reach 8% of the world’s total, Alejandro Stipanicic , Chairman of the Board at ARPEL, agreed with Medardo Cadenas, Director of Studies, Projects and Information at OLADE, saying that “Latin America is the greenest region on the planet.”
“We are the greenest region in the world, since it contributes barely 8.3% of global emissions. However, developed countries are demanding that we should contribute even more, which is an opportunity, a challenge, but also an injustice,” he said, during the closing of ARPEL 2022.
“They talk to us about the energy transition but they forget that the current energy sources have to continue to be produced,” he remarked. On the other hand, he highlighted that years of high intensity in Offshore exploration are coming, as a reminder that the oil and gas industry has not ceased to be the world’s backbone in spite of “a very serious lack of investment.”
“However, the industry outperforms itself, since technology is making it possible to produce cheaper wells with remarkable production yields,” said Stipanicic. Thus, the event made it possible to emphasize that the industry is on its way towards a responsible energy transition where natural gas mainly fosters governance and credibility that is necessary to underpin region’s development processes while fighting against disinformation with data.
In this context, a fair energy transition, in a region with little impact on global emissions as a whole, with significant hydrocarbon resources that must be exploited to address both economic poverty and energy poverty, were the most important topics discussed during the event at a time where even international organizations are reluctant to finance its sustainability.
Therefore, ARPEL 2022 did not fail highlighting the importance of sustainability, human rights and care for the environment, ensuring that “these are no longer options, but rather requirements to operate legitimately in the industry.”
Still, they highlighted the importance of having a “license to operate” as the hydrocarbons industry remains the most reliable energy provider in times of transition that will require substantial changes to the energy system over the next 30 years.
