Changing The Mix: Renewable Energy and the Continuing Need for Fossil Fuels

1
Changing The MixRenewable Energy and the
Continuing Need for Fossil Fuels
Article 49
By Alvaro Silva Calderon

• By Yu Sato, Alauna Wolfe, Jessica Krantz,
  Philippe Duclos

2
(No Transcript)
3
OPEC

• OPEC, Organization of Petroleum Exporting
  countries, consist of 11 countries
• Algeria, Indonesia, Iran, Iraq, Kuwait, Libyan,
  Nigeria, Qatar, Saudi Arabia, UAE, Venezuela
• It is established in 1960
• Headquarter is in Vienna, Austria

4
OPEC (cont)

• Member countries are united by
• Their common desire to nurture their collective
  interest as oil-producing
• Developing sovereign states
• Implicit commitment
• Ensuring order and stability in the international
  oil market
• Reasonable price
• Secure supply
• Fair returns to investors

5
Give the market what it wants

• Give the market what is wants
• The nature of market
• Time horizons
• Capabilities
• Attitudes
• regulation

6
Revisiting Rio

• Agenda 21 is the program of UN related to
  sustainable development.
• In next 20 years, energy demand for developing
  countries will grow 3 to 4 times
• Industrialized country should provide advanced
  technology not to pollute environment for
  sustainable development

7
Developing Strategies

• The special situation of oil-producing developing
  countries (particularly OPEC members) accounts
  for the addition of 3 more dimensions of
  providing the market what it wants
• Historical opportunism
• Third World solidarity
• Integrity assertion

8

• These developing countries are currently
  well-endowed with crude oil, which is highly
  prized in the modern industrialized world
• OPEC countries possess almost 80 of global crude
  oil reserves and nearly 50 of the natural gas
  reserves
• This period of wealth extends only as far as the
  supply of crude oil
• These countries must ensure that every
  opportunity is taken to derive maximum benefit
  from their reserves

9

• These countries are very aware of other members
  of the developing world
• OPEC member countries have provided considerable
  assistance to these poorer nations
• OPEC Fund for Intl Development, 1976
• Total financial commitments of 6.7 billion

10

• Local and regional relationships with neighbors
  stretch back centuries and even millennia
• Despite disputes, these relationships have a
  durability bonded by geography which will outlast
  the petroleum era

11

• OPECs other hurdle to overcome involves
  misperceptions
• OPECs members stood up to the worlds
  established industrialized powers in the 1970s
• This action has left scars that are still visible
  today

12
OPECs Future

• OPEC World Energy Model (OWEM) sees global real
  GDP growth averaging 3.3 annually in the period
  from 2000 to 2020
• Overall average of 4.7 for developing countries
  being well over double the Organization for
  Economic Cooperation and Development average of
  2.1
• The Soviet Union lies at 3.1

13
OPECs Future, cont.

• These projected growth rates imply strong future
  demand for energy
• OWEM predicts average world energy demand growth
  of around 2 per year up to 2020
• Demand in developing countries will rise at
  between 3 4 times the rate of industrialized
  countries
• Fossil fuels will remain dominant, meeting more
  than 90 of world energy requirements until 2020.

14
Crude Necessity

• Share of oil in world energy use
• 2000 40.1
• 2020 38.4
• The use of gas will double over the next 20
  years.
• 2000 23.3
• 2020 28.0
• Least negative environmental impact
• Reliable highly efficient
• Cheap to produce

15
Crude Necessity

• OPEC with low-cost abundant reserves will
  continue playing a major role
• World oil demand
• 2000 76.0 million barrels per day
• 2010 89.3 million barrels per day
• 2020 107.3 million barrels per day
• OPEC member countries will satisfy most of the
  demand

16
Crude Necessity

• OPEC production
• 2010 35.9 mbd 40.2
• 2020 52.1 mbd 48.6
• OPEC is committed to the cause of sustainable
  development
• Poverty eradication
• Economic social development
• Protection of environment

17
(No Transcript)
18
Production Decline
19
Crude Necessity

• World summit call with a sense of urgency,
  substantially increase the global share of
  renewable energy sources
• Renewable energy technology is still in its
  infancy stage
• The setting-up of an infrastructure is still too
  expensive, therefore, while developing renewable
  technology the suitable resources must be
  accessed, enhanced and utilized.

20
Royal Oil

• Advances in petroleum technology continue to make
  oil and gas cleaner fuels
• Carbon dioxide sequestration technology will
  ensure its use compatible with sustainable growth
• Energy markets are too important to be left to
  the free market alone, and developing countries
  need solutions that will guarantee that poor
  communities can receive energy at affordable
  prices

21
Needed Future Investments

• OPEC countries
• US 100 billion by 2010
• US 209 billion by 2020
• Non OPEC producers
• US 600 by 2010
• US 860 by 2020

22
OPECs mission

• OPECs mission is to coordinate unify the
  petroleum policies of Member Countries ensure
  the stabilization of oil prices in order to
  secure an efficient, economic regular supply of
  petroleum to consumers, a steady income to
  producers a fair return on capital to those
  investing in the petroleum industry.

23
Mining for Allies

• Guaranteeing secure demand requires cooperation
• Between OPEC and Non-OPEC producers
• Between Producers and Consumers
• Among Energy Companies Financial Institutions
• Many non-OPEC producers have been allowed to
  observe Ministerial Conferences

24
What Meetings?

• Ministerial Conference
• The Ministerial Monitoring Sub-Committee (MMSC)
  was established in February 1993 by the 10th
  Meeting of the Ministerial Monitoring Committee
  in order to monitor oil production and exports by
  Member Countries. The MMSC comprises three Heads
  of Delegation and the Secretary General.
• OPEC Conference
• Supreme authority of OPEC
• Meets twice a year March September
• Formulates General Policy of OPEC
• Directs the Board to make policy or requests on
  any interest of OPEC

25
Fostering Relationships

• Permanent Secretariat of the International Energy
  Forum
• Initially Producer to Consumer Dialogue only
• Now set up in member country, Saudi Arabia

• IEA OPEC mending
• High level bilateral meetings
• Joint Press Confs
• Joint Workshop on Oil Investment Prospects
• Meetings Seminars with Energy Treaty Secretariat

26
Fostering Relationships

• OPEC, the UN and the WTO work closely together to
  deal with the environment, climate change and
  sustainable development

27
A Wealth of Resources

• Why is OPEC so passionate about all the worlds
  energy sources?
• For 11 member countries oil gas is more than a
  direct commercial benefit
• Its a historic opportunity to develop their
  economic and social infrastructures on a
  sustainable basis

28
OPEC as Role Model

• OPEC member countries can be seen as the role
  model to developing countries
• OPEC demonstrates the potential for developing
  countries to assert themselves on the issues of
• Global importance
• National Sovereignty
• Economic Welfare in General

29
OPECs Johannesburg Pledge

• OPEC is committed to sustainable development
• Goal to gain access to advanced forms of energy
  services
• Pledge to a substantial switch toward renewable
  energy sources

30
In Summation

• It is reasonable to expect an orderly
  evolution of the world energy industry in the
  coming decades, from which the world at large
  will benefit.
• OPEC has a central role to play in this
  transition, but requires the cooperation and
  partnerships of all producers and consumers
  involved in the energy industry.

31
Questions?