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Column: Oil and coal sectors think more fossil fuels are the solution.


LAUNCESTON, Australia, Sept. 29– If there is one thing that both the oil and coal industries can agree on, it is that more fossil fuels are the answer to the current energy crisis.

This was the main point of the two industries’ biggest annual meetings in Asia, which took place this week in Singapore for oil and gas and last week on the resort island of Bali, Indonesia, for coal.

It was the first time the Asia Pacific Petroleum Conference (APPEC) and Coaltrans Asia had been held in person since 2019. They gave the energy industry a chance to talk about the current state of energy in the region and around the world and what they think the next steps should be. 
Even though it’s natural for people in the industry to “talk their book” and support what would be good for them, the two events showed that there is a growing gap between the fossil fuel industries and other players in global energy, like policymakers, investors, bankers, and utilities.


The Russian invasion of Ukraine on February 24 has caused people in the energy business around the world to rethink their priorities. For the oil, gas, and coal industries, the problem is that they keep not putting enough money into new oil and gas fields and mines. 
The solution to these problems is clear: if you want to make sure you always have enough food, you need to put more money into making sure there is more food on the market and the infrastructure to process, transport, and store it.

In other words, the solution to the current fossil fuel crisis is more fossil fuel, but this time from more reliable countries instead of Russia.

The oil and coal industries are thinking, in a nutshell, that it is more likely than ever that Russia will lose much of its natural gas, coal, crude oil, and refined products to Europe. This shows how important it is to get more supplies from other countries. 
But policymakers and financiers were also at the two events, and their views were almost the exact opposite of each other.

Even though everyone agrees that energy security is more important than climate change right now, they have very different ideas about how to deal with the problems.

Since the Russian attack on Ukraine, there has been a lot of chaos in the global commodity markets and flows. If there is one thing that energy-importing countries in Asia, like Japan, India, and China, have learned from this, it is that relying on fossil fuel imports is now inherently risky.

Several policymakers and bankers said in off-the-record conversations at the events that European governments will try to move away from fossil fuels as quickly as they can.

More money will be put into renewable energy sources like wind and solar, which will be backed up by batteries or other ways to store energy, like pumped hydro, and maybe even new technologies.


Realistically, Europe and many Asian countries are still dependent on fossil fuels, and they have little choice but to pay the high prices that are now in place to make sure they have enough, especially before the northern winter.

There is also the realization that the energy transition can’t happen so quickly that crude, natural gas, and coal won’t be needed for many years.

But the point is that fossil fuel alternatives are likely to make more money faster.

The trick for the global energy sector is to make sure there is enough money to keep crude oil, natural gas, and even coal burning while renewable energy and other solutions are scaled up.

There is also an understanding that switching heating and light transportation to electricity doesn’t mean the end of oil and gas. Heavy transportation, petrochemicals, and important goods like fertilizers will still need oil and gas.

The oil and coal sectors think more fossil fuels

But it is thought that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries (OPEC) will have to do most of the work to keep oil and gas running. These countries have what are called “National Oil Companies” (NOCs), which are state-owned and mostly monopolistic companies (OPEC).

While the NOCs keep making fossil fuels, the big oil and gas companies in the West will switch to building renewable and alternative energy sources with the help of government policy and easy access to capital to pay for the energy transition.

In theory, it all makes sense and seems possible, but events like Russia’s attack on Ukraine show how quickly plans can be turned upside down and the way forward can be completely changed.


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