More cooperation will be essential as energy producing and consuming countries deal with economic growth, climate change, and the inevitable transition to renewable sources, International Energy Forum Sec.-Gen. Sun Xiansheng said.
Reducing emissions and waste, making clean energy access universal, and reducing markets’ volatility will be the biggest challenges, he said during a June 28 discussion at the Center for Strategic & International Strategies.
The only certainties for the rest of 2017 are that crude oil prices won’t climb above $100/bbl or fall below $20/bbl, and that investments, which may recover to capture some growth if demand and prices hold steady, won’t reach what they were when prices were $100, Sun said.
Unconventional oil and gas production technology is continuing to improve, “but the real news is in vehicles and power plants that use renewable technologies,” he said. “The energy transition will take time. But we could start seeing turning points in some countries as soon as 15 years from now.”
The recovery will take time because producers tried to control exploration costs, long-term investments, and labor and other operating costs while guaranteeing earnings for investors after the 2014 price plunge, he said. They also tried harder to reduce workplace accidents because their only alternative if they did not was to sell assets, Sun said.
“By 2016, it was apparent that prices would be lower longer,” he continued. “Surplus supplies and lower demand were certain. Balanced marketers and technology breakthroughs weren’t. By 2016, consuming countries around the world had reduced their demand. An increase looks possible now, but not to any extent that would balance the market.”
Oil prices are the main uncertainty now because they depend on members of the Organization of Petroleum Exporting Countries and non-OPEC producers working together and US shale production and inventory levels, Sun said. “Demand, technology, and transition policies could increase uncertainty by 2030,” he said.
Sun said governments should work to increase transparency and information under the Joint Organization Data Initiative, fully use IEF and other forums for dialogue and cooperation, and act in the long term to address green, low-carbon, efficiency and sustainability trends.
“The 2015 Paris agreement provided a new forum to discuss ways to address climate change,” he said. “However, the recent US withdrawal announcement created problems because this country is a global technology leader. China, Europe, and others will need to carry on, but it won’t be easy.”
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