2. Role of Oil and Gas industries in climate change
3. Saudi Arabia and UNFCCC conference
This report presents the effects of measures taken by United Nations Framework Convention on Climate Change (UNFCCC) and its effect on oil and gas industry of Saudi Arabia. The Conference took place in Paris on November 2015 (Morel et al. 2015). The Government of more than 190 countries had joined the conference. The conference was important in the context of growing Green-house-gas (GHG) in the global environment and alarming rate of global warming. The scientists have alerted that, the world temperature is very near to the threshold beyond which global warming becomes catastrophic. The temperature of the world is going to rise 5C in respect of present trajectories. The scientists also added that, the difference between temperature of last ice age and world’s present temperature is only 5C. So, there is urgent need to combat the alarming rate of global warming (Morel et al. 2015). The global oil and gas industry plays a big role global warming. The oil and gas industry produce green house gases. The GHGs are like the major contributor to global warming. The current commitment on GHGs is going to run on 2020 and in this scenario, the measures taken in the Paris conference play a great role.
The measures taken in UNFCCC meeting held in Paris
According to the decisions were taken in the conference the limit of increase in global temperature were set at two degrees Celsius (Morel et al. 2015). This is a long term goal and it depends on notion to make the world carbon-free. The conference has set various "Nationally Determined Contribution (NDC)" to monitor the changes of carbon emission of different countries (Belloumi and Alshehry 2015). It empowered each country to contribute effectively to achieve the goal. It also emphasized on increasing emission cut in each five years with showing progression of cut from the previous year (Belloumi and Alshehry 2015). The agreement mentioned that the achieved target of NDC will act as the benchmark for the other countries and accordingly target of emission reduction will be increased.
This measure will reduce the use of natural resources and will direct countries to use renewable energies. According to Hansen and Sato (2016), this will help to increase the use of renewable energy by 78% and as result will help to decrease the fuel cost. The countries will concentrate on use of electricity, modern technologies and solar or air power. This will make changes in the electricity market, business and financial models.
he countries agreed to invest 100 billion dollars for the year 2020 to 2025 to materialize the goals set in the conference with provision to increase this investment from 2025 onwards (Stern 2015). This will certainly help the countries to achieve the proposed goal. Countries that depend completely on oil and gas industry will be benefited from this financial aid. Apart from that, various countries sent their consent to build strong trading funds for this project. The governments and the investors have to implement various reforms regarding economic, industrial and financial to move from the fossil oil consumers to consumer of renewable energy. This is required a lot of changes and initiatives. The proposed financial support is encouraging in this context.
The conference took decision to support the displaced countries in the process of implementing the discussed measures. They also formulated that the emission reduction of one country will act as a basis for other countries NDC (Al-Kalbani et al. 2015).
The increased global pollution, industrialization, exploration of natural resources creates bad effect on the global environment. In this context, the UNFCCC conference in Paris creates a great impact (Collins 2015). The coordination and participation of various countries and their initiative showed the world wide concern for the climate change. The conference proposed a long-term goal and to make the world environment decarbonized,
Apart from that, it has provided transparency. Every country had come with their proposed plan, strategy and planned outcome. It helped to meet the agenda of the conference to know the positive and negative sides of proposed plan of any countries. It also addressed competitiveness. The agreement by all the countries to invest in implementing the measures taken in conference to make it successful and to increase the amount of investment if required showed the possibility to materialize the goal successfully. These also portrayed the concern of each participating countries about the global climate. The participating countries also accorded to build a global carbon trading to facilitate the investment of the countries in the project. This will facilitate a cost effective measure of global carbon emission reduction.
Role of Oil and Gas industries in climate change:
The oil and gas industries across the world play a big role in global warming. The crude oil and gas play a great role in shaping various demands of global economy (Bulkeley 2015). The demand ranges from the transport industries to various plastic products. The fuels come from the drilling or mining form the underground and then it is burned to produce electricity, fuel for transport etc. When the fuel is burnt, it produces greenhouse gas. The greenhouse gas, Methane has 75 times more potential than carbon dioxide to create heat in the atmosphere in long term. The green house gases reflect the heat to the earth and do not let it get absorbed. As a result, the earth becomes warmer(Bulkeley 2015)
The agenda of Paris conference was to combat the emission of green house gases and control the climate change. The main green house gases are carbon dioxide, methane, nitrous oxide and fluorinated gases. Carbon dioxide is generated from fossil fuels i.e. coals, oil and gas and other combustion like burning of woods, factory operations etc. The methane gas generates from production and transport of coals, natural gases and oils. This gas is most responsible for the global warming. Nitrous oxide is generated during combustion of fossil fuels. This combustion often missing with sulfur create Acid Rain. This is another hazardous effect on environment due to oil and gas production. The Fluorocarbon gases are namely hydrofluorocarbons, perfluorocarbons etc. They have properties of depleting ozone layers. They are the High Global Warming Potential gases. These gases are generated from various phases of industrial process.
Saudi Arabia and UNFCCC conference:
Saudi Arabia is the largest producer and exporter of oil. The economy solely depends on oil and natural gas. Saudi Arabia possesses 18% of world's petroleum reserves and 50% of the GDP comes from the Oil and Gas industry (Adamo 2015). So, in the present scenario of climate change, it is very difficult for the country to stop oil and gas production and move to other secondary resources for the economy. The country was also aware of the global climate change and they started taking measures in 2008. But that was not any drastic steps. The country in the year 2008, worked with Norway to implement carbon capture and storage (CCS) to reduce carbon emission from combustion (Geden 2015). The other initiatives of the Government include National Energy Efficiency Program (NEEP) to reduce the consumption of energy, Saudi Energy Efficiency Center (SEEC) in 2010 to use more efficient energy (Hulme 2016). Also they established King Abdllah City for Atomic and Renewable Energy (KACARE) to shift their dependence from oil energy to atomic and renewable energy (Rhodes 2016). But, the measures of agreement taken in the Paris conference was too early for the country to change. So, the country was not willing to join the Paris agreement at first. But, the leaders of the country realized the importance of it and also it abides by Islamic rules, that is why they decided to accept the agreement of UNFCCC agreements.
On 10th November 2015, Saudi Arabia submitted its Intended Nationally Determined Contribution (INDC) to adhere to the agreement taken on Paris conference. According to the report, Saudi Arabia decided to reduce the emission annually 130 MtCO2 by 2030(Sultan et al. 2015). They will take measures in economic diversification along with reduced green house gas emission and measures to tackle climate change. Saudi Arabia created another provision to change that target between 2016 and 2020 if economic situation demands them to do so (Sultan et al. 2015). They also mentioned that the measures will be taken based on their economic growth.
According to Rogelj and Knutti (2016), Saudi Arabia did not specify the base of INDC i.e. the basis on which the rate of carbon emission will be measured. According to Climate Action Tracker, who tracks the carbon emission of 52 countries, the base level of emission in 2030 will be 1160 MtCo2e. This represents the 132% increase above the 2010 levels. So, according to this the INDC of Saudi Arabia is not as per the proposed agreement. But, Saudi Arabia proposed that, they will determine the base line based on the two scenarios if the more oil is consumed locally or it is exported.
Saudi Arabia is at the edge of the impact of global warming. The reason behind is its dependence on oil production. According to Fawcett et al. (2015), by the year 2040, Saudi Arabia will face severe dryness and end of the century. There is huge demand for oil in the world market as well as in the domestic market of the country. But, increasing exports of oil from Iran and other countries reducing the dependence on Saudi Arabia. As a result, of that the oil prices of Saudi Arabia is decreasing. It also delayed the implementation plan of Saudi Arabia to generate 54GW renewable energy and 17 GW Nuclear energy by eight years (Subyani and Hajjar 2016). This was planned to be implemented by 2032. This delay has resulted to increase in the global warming further. As a result of this the proposed plan for INDC is not appropriate.
The INDC submitted by Saudi Arabia depends on robust oil export revenue. They mentioned a provision to change the plan accordingly. But for the long run, the country will implement several measures on energy efficiency, carbon storage and refining of green house gases, cost efficiency, dependence of nuclear energy and on other renewable energies. Theses will change the revenue of the country from oil exports. They did not specify any specific measures for the investment and bases for the measures of the gas emission. This made their proposal inadequate.
Apart from that, Saudi Arabia is facing challenges from domestic market also. As the households of the country depends on the fossil gas for electricity even. For them keeping pace with global context of climate change is difficult. They are well known for the fact that the natural oil reserves are going to end soon. But, they did not take any serious step to diversify their economy. Even if we look at the initiatives to help other countries to achieve Green Climate Fund, there are no contributions from the Saudi Arabia. The other Islamic countries are looking forward to implementing the changes as decided in Paris Conference. However, according to Robbins (2016), the county is rankling that effort.
The report represents that the significance of the UNFCCC conference held in Paris in the scenario of changing global climate. It represents the details about the conference, the various measures taken in the conference and financial and strategic initiatives. The report also discusses green house gases and its implication on the environment. Green houses gases were the main concern of the conference. In this context, the report portrays the change in environmental policy of Saudi Arabia. As Saudi Arabia is the largest exporter of the fossil oil, its economy depends on the oil and gas industry only. At the same scenario, the climate effects on the country are alarmingly high. But, there is apathy of the government to take sound initiative to take necessary measures as required in the agreement of the conference. But, the country is trying to take necessary steps as it is really difficult for them to decide to diversify their economy. So, the report concludes that participation of Saudi Arabia in the conference is itself a great measure for the company.
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