Journalism from the center of the world

Petrobras platform vessel. As the state-owned oil concern celebrates its 70th anniversary, CEO Jean Paul Prates says Brazil is ready to be the world’s last oil producer. Photo: Tânia Rêgo/Agência Brasil

The boiling point is the moment when a liquid reaches such a high level of pressure that the bonds between its molecules break, forming a vapor. It is as if a subdued, calm substance were quietly storing up energy until it could no longer contain itself and then set itself free in an explosion of movement.

Interestingly, technological innovations follow this same pattern. They start out slow, reach a turning point, and then grow exponentially.

From Arab sultans to Brazilian union leaders, there is widespread recognition that we are in the midst of a global energy transition. Anyone who thinks it will be a slow switch from fossil fuels to renewables is mistaken.

Until 2015, no sector of the global economy had mature decarbonization technology. Since then the adoption of the Paris climate accord has altered expectations, and economic agents consequently have felt securer about pushing for more ambitious decarbonization policies and incentives.

In the last two years alone, China, the European Union, and the United States have approved significant investment packages in low-carbon technology. This doesn’t mean these economies are now decarbonized—together, China and the United States account for almost half of global emissions. But as they converge toward the goal of greener economies, these countries ultimately encourage extremely high levels of ecological and commercial competition.

We are “cooking” low-carbon technologies that are capable of transforming life in society—and they are gaining ground faster than we realize.

On the other hand, final consumer sectors still have a long way to go. We’re not seeing any shift toward zero emissions when we light our gas stoves in Brazil, are we? Nor when we turn on the hot water or use gas-powered appliances. Residents of the rainforest continue to depend on diesel oil to travel the river by boat. In “developing nations,” we remain dependent on fossil gas, while oil is our main transportation fuel.

A boom in renewable energy investments has slowed the growth of greenhouse gas emissions over the past decade. But this hasn’t been enough to eliminate the role of fossil fuels in our daily lives nor change the global emissions landscape.

That’s why things seem to be simmering right now. A lot of changes are about to occur, but more pressure is needed.

Oil isn’t going away. And oil consumption isn’t either. But the International Energy Agency projects that fossil fuel demand will peak before 2030. Once this happens, demand is expected to drop as sharply as renewable energies are forecast to rise. Still, industry prefers to cut emissions not production.

“We are going to be the last man standing, and every molecule of hydrocarbon will come out,” said Saudi Energy Minister Abdulaziz bin Salman at a private event.

The world was confronting a pandemic, a barrel of oil was worth very little, and pressure for climate commitments was growing. Even so, the Saudi tycoon saw an opportunity in the shrinking oil and gas investments on the global stage.

In 2023, during an interview to Bloomberg News, Jean Paul Prates, CEO of Petrobras, Brazil’s state-run oil concern, said something similar in a very different context: “We’re ready to be the last oil producer in the world.”

These pronouncements reflect the battle to see who will produce the final barrel of oil in history. The last man standing will be the one who prospers in the face of long-term declining demand.

The scenario is marked by veterans who control much of production and influence prices, such as Saudi Arabia, the United States, and Russia in the case of petroleum; Iran and Qatar in the case of gas; and emerging nations who are seeking to expand their influence and participation, like Brazil. Substantial power is also brandished by major transnational corporations, such as ExxonMobil, Shell, and BP.

These actors are trying to keep oil exploration both feasible and profitable. It has become commonplace for them to invest in efficiency boosting technology and then argue that their oil is “green.” Or tout gas as clean energy because it emits less than coal. Their justification is that the world will always have a marginal demand for oil, and this oil must have a small carbon footprint and low cost.

Arab countries have a natural advantage in the race to be the last existing oil producer. They have access to vast reserves, their production costs are low, and they can go on producing even when oil prices are falling. They began talking about the post-oil future this past decade but nonetheless did not abandon their plans to keep exploring, right down to the last available molecule. They will wage a fierce struggle to guarantee their market share and aren’t shy about wielding political clout to influence global regulations and agreements. This explains why COP28 will be held in Dubai.

Europe questions the participation and proposals of fossil lobbyists in climate diplomacy. On the other hand, European nations were quick to buy gas on the African continent after the invasion of Ukraine, in direct contradiction with their advocacy of fossil fuel phaseout.

Lula, Joe Biden, and Narendra Modi launch the Global Biofuels Alliance: political coalitions are driven by different interests but they know clean energy investments are necessary. Photo: Evelyn Hockstein/AFP

The United States has increased its influence on the world energy market through fracking, which has led to the partial replacement of coal with “natural” gas over the last decade. However, when it was made clear that methane has a large carbon footprint, it became recast as a “fossil” fuel in the eyes of the public. Today, the United States supports decarbonization targets, such as the proposal to triple investments in renewables by the end of the decade. But they are the world’s largest gas exporter and are behind more than one-third of the planned expansion in hydrocarbon production.

China is leading the energy transition by investing in the entire chain of renewable energy sources, from mine to meter. No surprise that the British magazine The Economist dubbed China an “electrostate,” as the largest renewable energy power today. But the Asian giant is also the world’s biggest consumer of oil and gas and at climate negotiations fights phaseout commitments. In a recent speech outlining China’s priorities for COP28, climate envoy Xie Zhenhua cited the principle of establishing the new before abolishing the old, in an allusion to maintaining fossil fuels, despite agreeing with the overall goal of expanding renewables at the next Climate Conference.

Russia is the world’s biggest exporter of fossil fuels. When it comes to climate negotiations, it opposes any acceleration of renewables and of course any phaseout.

India has an interest in sticking with coal consumption. Perhaps this is why at COP27 in Egypt, the country proposed that a decision be made on the elimination of all fossil fuels. From India’s perspective, measures restricting coal alone are discriminatory. The proposal gained the support of more than 80 countries but didn’t pass. According to press sources, Brazil was among those against the measure.

Lastly, Brazil has assumed an aggressive stance on oil and gas projects. It is estimated that by the end of the decade, the country’s oil and gas production will climb 60% and 110%, respectively. The country was outpaced only by Saudi Arabia and Qatar in millions of barrels of oil equivalent where new exploration projects have been approved or are expected to be in 2022 and 2023, according to Rystad Energy, an independent company that does global energy research. Worthy of note is Brazil’s optimism about being as or more competitive than the Arabs.

Brazil is competing in both races, for decarbonization and for continued fossil fuel exploration. The release of the administration’s new Growth Acceleration Plan (PAC) corroborates this ambivalence. The ascendancy of fossil fuels is clear on the list of PAC priorities, whereas Treasury Minister Fernando Haddad (Workers’ Party) declared in his address that a “new Brazil” is being born, where ecology and the economy will come together.

Brazil is not alone. Almost every major country that holds oil reserves or produces fossil fuel has a powerful sector defending the thesis that their oil and gas are green or don’t cause climate change. What’s new at this point in history is that there’s more wind in the sails of pro-decarbonization coalitions than ever before, in Brazil and elsewhere.

No wonder civil society burst on the scene at the Amazon Summit with the document “Amazon Free from Oil and Gas.” We may have arrived at a decisive moment. Brazilian diplomacy has never been under as much public pressure to take a stance on fossil fuel replacement.

Attention must now be paid to how President Lula positions himself in the run-up to the next United Nations conference on climate change (COP28), slated for December in Dubai. At the UN General Assembly in September 2023, he didn’t touch on the subject. But he can hardly remain silent.

The hottest climate topic will be the disconnect between government plans for fossil fuel production and what the planet can take. In climate-speak, this is called the “production gap.” By 2030, it is estimated that fossil fuel production will be 110% higher than the ceiling consistent with the goal of holding global heating to 1.5oC and 45% higher considering a goal of 2oC. By 2040, overproduction will hit ­190% and 89%, respectively. This means that without a definitive reduction in fossil fuel production, the planet will heat up more than anticipated in scenarios considered safe for life on earth, with catastrophic consequences for all species.

The only way fossil fuel production could be compatible with decarbonization targets would be if some magic new technology could capture all emissions produced by burning oil and gas. Industry wants to invent one. There’s no way this can happen in the time we have left. The longer it takes for the last oil producer to fall, the more losers along the way.

This is why tensions are high in the arena of international climate politics. Both at economic forums like the G-20 and in COP negotiations, it has been challenging to advance energy transition plans. It matters less whether one country is catching a ride with the other, in the sense of who is doing more to drive decarbonization towards zero emission. As Michaël Aklin and Matto Mildenberger point out in their article “Prisoners of the wrong dilemma,” no country has monolithic national interests; the pace of the transition is determined by clashes between coalitions, both within and between countries.

This dialectic, as suggested by the researchers Eduardo Viola and Matias Alejandro Franchini, is not only geopolitical but is at the heart of countries. According to the authors, the standoff is between reformists, who see the climate crisis as a crisis of civilization, and conservatives, who resist needed changes.

Thus, geopolitics has yet to absorb the advances of reformist coalitions, which influence technology, investments, and public opinion on renewable energies. But these coalitions aren’t giving up. At COP28, they will seek to advance decisions compatible with International Energy Agency analyses suggesting that if countries want to achieve net zero emissions by 2050 and meet the Paris agreement target of 1.5oC, they must triple their investments in clean energy like solar and wind and double their energy efficiency by 2030.

With Brazil about to assume the presidency of the G-20 and host COP30 in Belém, in the Amazon, in 2025, it is imperative to recognize that fossil fuel investments drain resources from renewables and vice versa.

The Brazilian government will have to face the debate over its own position on fossil fuels while also serving as a global coordinator of this topic over the next two years. Key to this will be making room for transition-friendly actors to help reach the boiling point faster, both nationally and globally.

Natalie Unterstell is president of the Instituto Talanoa, a think tank focused on climate change policies in Brazil. She holds a bachelor’s degree from the Fundação Getúlio Vargas and a master’s degree in public administration from Harvard University.

Fact check: Plínio Lopes
Spell check (Portuguese): Elvira Gago
Translation into Spanish: Julieta Sueldo Boedo
English translation: Diane Whitty
Photography editing: Lela Beltrão
Page setup: Érica Saboya

At the Amazon Summit, in Belém, movements organized protests related to the climate emergency. One item on their agenda was criticism of oil exploration in the Foz do Amazonas Basin. Photo: João Paulo Guimarães/Greenpeace

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