The UAE’s energy minister told CNBC that JPMorgan’s demands for a “reality check” on the global energy transformation goals and roadmap are “sensible.”
“We need always, whenever we put up predictions, especially long term ones, to have a reality check,” Suhail Al Mazrouei said to CNBC’s Dan Murphy during the World Economic Forum.
JPMorgan cautioned that the global transition from fossil fuels to renewable energy needed a “reality check” and that it might take “generations” to achieve net-zero emissions. The warning was made in a recent note to clients.
According to the report, attempts to cut back on the usage of fossil fuels like oil, coal, and gas are being hampered by rising interest rates, inflation, and the ongoing conflicts in the Middle East and Ukraine.
Al Mazrouei remarked, “I think it’s a very sensible article.” The minister did point out that each nation will have different conditions and financial resources when it comes to achieving the aims of the energy transition.
“The world is not the same … Some can afford it. They worked on fiscal changes, they adjusted their energy costs. Others have not, [they] cannot afford to do it,” he added.
In the 2015 Paris Climate Agreement, world leaders committed to keeping the average global temperature well below 2°C above pre-industrial levels and to pursuing efforts to keep the rise in temperature to 1.5°C. In order to accomplish that, emissions must be cut by 45% by 2030 and completely eliminated by 2050.
According to a new statement from energy consultancy Wood Mackenzie, the world’s journey to a net-zero global economy is becoming more expensive in an environment with increased borrowing rates.
Nuclear and renewable energy are disproportionately impacted by higher interest rates, according to Wood Mackenzie’s head of economics, Peter Martin. He also noted that future projects will be at risk due to high capital intensity and low returns.
“The higher cost of borrowing negatively affects renewables and nascent technologies, compared to more established oil and gas, and metals and mining sectors, which remain somewhat insulated,” he said.
The Scottish government abandoned its 2030 climate objective just last month, citing “out of reach” as the reason given by Net Zero Minister Mairi McAllan.
“Severe budgetary restrictions imposed by the UK government,” she continued, contributed to the retreat. The nation made a commitment to reduce greenhouse gas emissions from 1990 levels by 75% by 2030.
This year, major oil firms like Shell and BP also reduced their climate objectives.
The United Arab Emirates is among the nations that have committed to tripling global nuclear energy capacity by 2050.