CERAWEEK-‘Houston, we have a problem’-Energy industry grapples with climate fight

(C) Reuters. Top energy executives and officials from around the world gather during the CERAWeek 2023 energy conference in Houston, Texas, U.S., March 6, 2023. REUTERS/Callaghan O’Hare

By Stephanie Kelly and Sabrina Valle

HOUSTON (Reuters) – Top global energy executives and officials on Monday grappled with how to transition the global economy from fossil fuels to renewables quickly enough to prevent climate disaster without disrupting strategic oil and gas supplies.

“Houston, we have a problem,” two top executives told some of the most powerful figures in global energy in the capital of the U.S. oil industry, using the same famous line from an astronaut in the damaged 1970 Apollo 13 spacecraft.

Sultan al-Jaber, chief executive of Abu Dhabi National Oil Company and president-designate of the COP28 climate summit, used the line to urge conference participants to do more faster to limit global warming, which the fuel produced by most of energy companies present had accelerated.

Earlier, Petronas CEO Tengku Muhammad Taufik used the same phrase in a panel discussion on the challenge of balancing the need for energy security and affordability.

Jaber’s call for energy companies to work toward the transition was an unusual moment at an event that has long been a mainstay for fossil fuel producers, who have previously viewed such calls as a threat to their business.

Last year, many climate activists balked at Jaber’s appointment as COP28 president, saying Big Oil was hijacking the world’s response to global warming. Others welcomed it as a sign the energy industry would get involved in the transition.

Russia’s invasion of Ukraine sparked an energy crunch that disrupted fossil fuel supplies to industry and consumers. Rising fuel prices fueled decades-high global inflation in 2022.

Many in the industry viewed the disruptions to Russian supply as a reminder to avoid policies that cut off or drive up prices for fossil fuels. Chevron (NYSE:CVX) Chief Executive Mike Wirth told attendees that maintaining secure and affordable supplies while managing the energy transition to the low-carbon economy was “one of the greatest challenges of all time.”

A disorderly energy transition could be “painful and chaotic”, Wirth said.

“We have to be very careful about turning system A off prematurely and depending on a system that doesn’t yet exist and hasn’t been proven,” he said.

Disruptions of gas supply to Europe, which has hurt the largest economy on the continent in Germany, have accelerated the transition, said German state secretary in the economy ministry, Patrick Graichen.

“If you are used to cheap Russian gas and you wake up in this world, there are some fundamental questions that need to be answered,” he said. Germany needed to fast forward electrification and build a green hydrogen supply, he said.

“If we can speed that up and fit it together – it’s not about securing the old world but speeding up the transition to the new world.”

Top U.S. oil firm Exxon (NYSE:XOM) said each country would take a different path to energy transition, depending on the resources available. In some countries, gas would be a transition fuel, said Liam Mallon, the president upstream oil and gas at Exxon.

Mallon called on policymakers and international and national oil companies to map out the transition together.

“We cannot do this alone,” he said. “This takes policymakers regulators, innovators, NOC these IOC is all working together to create the right incentives to progress through this energy transition”

U.S. energy envoy Amos Hochstein said the hardest part of the energy transition was coordinating the timeline for change.

“I think if you’re going to go through the greatest transformation that the world has seen in over 100 years, of unplugging from one energy system and creating a whole other one, you can’t just do it without planning it out,” Hochstein said.