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  Yahoo News 18 Sep 06
OPEC casts a dark eye on the greening of energy
by Peter Capella

VIENNA (AFP) - Despite forecasts that show no end to rising demand for crude over the coming decades, oil-producing nations are casting an uneasy eye on the growing number of measures being taken to tackle climate change.

"The main long term challenge is definitely the necessity to reconcile oil with environmental demands," Claude Mandil, executive director of the International Energy Agency, told a recent conference organised by OPEC to examine the industry's future.

Mandil also hinted that the 11 Middle Eastern, African and Asian nations in the Organisation of Petroleum Exporting Countries could not afford to ignore concerns about climate change, which are even winning over once sceptical consuming nations.

Several US states broke ranks with federal policy over the past year to set up stricter emissions standards. Between 1990 and 2002, carbon dioxide emissions from burning fossil fuels such as oil and coal rose by 16.4 percent, mainly due to industrialised countries and China's rapidly expanding economy, according to the IEA. Carbon dioxide is one of the greenhouse gases blamed for artificially warming the planet, triggering potentially hazardous changes in global weather patterns.

The recent rise in oil prices, which are expected to stay at relatively high levels due to strong demand and supply bottlenecks, has coincided with growing demand for cleaner fuels.

Alternative energy, such as biofuels made from agricultural crops, or renewable sources like solar and wind power, has become economically more competitive and is attracting more investment.

Andris Kenteris, one of the people responsible for drawing up the European Union's new energy strategy, told oil producers in Vienna that combatting climate change was "one of the main hooks on which to hang our energy policy."

Kenteris, top adviser to EU Energy Commissioner Andris Piebalgs, underlined that the strategy to be unveiled in January would resort to a broader range of energy sources, including renewables, nuclear power and clean fossil fuels.

"Twenty percent of savings are I think definitely realistic by 2020," Kenteris told the oil industry.

That kind of message irritates the world's top oil producer, Saudi Arabia. "Without a doubt, the world still needs contributions from a wide range of energy sources and regions to meet the growing energy demand of a rising world population in the future," said Saudi Arabian Oil Minister Ali al-Nuami. "However, impractical energy policies, unrealistic timeframes to bring some alternatives on stream, or the inefficiencies that come with inputting more energy to produce some of these alternatives... do nothing to secure the world's energy future," he added.

Yet, oil remains "the leading fuel in the global energy mix for the foreseeable future," said OPEC acting Secretary General Mohammed Barkindo.

The IEA's World Energy Outlook predicted that demand for crude oil would break through the 100 million barrel a day mark before 2020, compared to nearly 85 million barrels per day at the moment Oil's share of expanding world energy supply fell from 45 percent to 34 percent between 1974 and 2004, according to IEA data released last month.

But that decline was largely due to the faster growth of gas, while renewables supplied a near stable 10 to 11 percent of global energy needs.

The distribution is expected to remain largely stable through to 2030 while total energy supplies grow by more than 40 percent.

Biofuels like ethanol made from sugar cane are "a rapidly growing competitor but not a big threat" for oil, Mandil said.

Oil producers are also concerned about new anti-pollution regulations that not only aim to drive down consumption, but also oblige oil companies to supply more costly, highly-refined "cleaner" fuels.

"Some government policies which artificially curtail demand, and create demand uncertainties irrespective of market signals, will have economic ramifications that could jeopardise (the) global energy future," Nuami complained.

The trend for cleaner petrol (gasoline), diesel or household fuel coincides with warnings that there is little or no spare capacity to refine crude oil while limited investment is directed to upgrade refineries.

"Investment in these technologies is fundamental for the security of our supply," Kenteris said.

OPEC, meanwhile, is placing its faith in technology to mitigate the environmental impact of consuming oil, partly through carbon capture or storage. That would involve pumping carbon dioxide produced by power generation or industry into the ground -- including empty oil wells -- to stop it being released in the atmosphere.
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