Climaterisk

OPEC announced on thursday a plan to push for a fund to study Carbon Capture and Sequestration (CCS) technology.

“Saudi Arabia and Opec are concerned about the environment,” Mr. Naimi, the Saudi oil minister said. “We need to work on emissions. Technology is available to reduce emission and Saudi Arabia is willing to participate.”

Yvo de Boer, the executive secretary of the UN Framework Convention on Climate Change explained that Adnan Shihab-Eldin, a former Opec secretary-general, had proposed a fund to which producing countries could contribute $1bn.

Mr de Boer want on to call such a fund “very constructive”, and explained that: “With appropriate technology development and deployment, essential fossil fuels can and will continue to play their role.”

“International action on climate change is a war against emissions, not a war against oil.”

While the Financial Times (and others) seems to think that this indicates a shift in policy by OPEC,

“Opec’s approach is a significant departure from its previously sceptical attitude to the climate change de-bate, when it worried about the potential impact of alternative energies and energy savings on oil demand.”

“The cartel is also expected to seek from consuming countries assurances that the global warming fight will not jeopardise crude oil demand while Opec nations are investing in capacity.”

I think that it is actually an attempt to address the above stated worry, OPEC is positioning its products (fossil fuels) so that they can compete with alternative energy in a carbon constrained world. Successful and economical CCS technology will put fossil fuels on even footing with alternative energy from an emissions standpoint. Lowering the risk of decreased fossil fuel demand in a carbon constrained world.