Oil and gas cannot be 'stopped overnight' on path to net zero, says Carney

Mr Carney says it is impossible to «abandon our path to net zero»; Photo: Gina Moon/Bloomberg

Mark Carney said it was “wrong” to expect countries with oil and gas industries to “shut down overnight,” acknowledging that fossil fuels will play a role in achieving net zero.

The former Governor of the Bank of England said it was important for the economy to «create alternatives» before cutting oil and gas production, adding that it was impossible to «give up on net zero».

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Speaking at an event organized by the annual meeting International Monetary Fund in Marrakech, he said: “In economies where there is traditional energy — that is, oil and gas production — you cannot shut them down overnight. It is not right. This is not a just transition.

“You need to create alternatives. You need to work with communities, train people, go through transition, and all elements of that need to be funded. And they are equally worthy.»

Mr Carney, who is now the UN Special Envoy for Climate Action and Finance, added:

«You can't sell your way to net zero, you will have to invest along the entire chain.»< /p>

Earlier this year, in an interview with The Telegraph, Mr Carney said the war in Ukraine showed that the oil and gas system «is not energy secure, it is incredibly unstable» while encouraging manipulation by the OPEC cartel.

“We have a system that is expensive. It's unstable. It's unreliable and unsustainable. This reinforces the importance of not only the sustainability of this energy system, but also energy security,” he said.

His latest comments come as Vladimir Putin told the Russian Energy Week conference in Moscow that oil supply cuts imposed by Saudi Arabia and Russia are «likely» to be extended as OPEC continues to cut oil supplies. the cartel is trying to support prices. This is the strongest signal to date that OPEC+ The supply decline will continue until 2024 and likely beyond. Despite the comments, Brent crude, the international benchmark, fell 1.25% to $86.50 a barrel.

Top City analysts warn that the move to net zero will leave the world vulnerable to new spikes in inflation as falling investment Oil and gas production leaves little free capacity in a limited market.

Royal London Asset Management's Trevor Greetham has warned of a new era of «spike inflation» driven by geopolitical risks, high debt and zero net income. It comes as oil and gas majors cut investment in new capacity due to… for the planned transition away from fossil fuels.

“They don't build a lot of deepwater oil rigs, and as a result they don't have the spare capacity they have for the future to use today. So when there is a big surge in demand, it has nowhere to go, so prices go up,” he said.

“In this transition period, every economic cycle will experience a commodity shock because we are still using fossil fuels , but we are gradually reducing its supply.”

Mr Carney this week supported Labour's shadow chancellor Rachel Reeves at the party conference in Liverpool. Labor leader Sir Keir Starmer has vowed to end oil and gas exploration in the North Sea but confirmed that a Labor government will respect any Conservative decisions to approve oil and gas exploration, including the Rosebank oil field, an underdeveloped oil and gas field in the UK.

Ed Miliband, Labour's shadow energy secretary, criticized the Rosebank oil field in early 2023, calling it «a colossal waste of taxpayers' money and climate vandalism.»

Labour's comments come after the Prime Minister pushed back some net zero last month. policy.

Rishi Sunak delayed a ban on the sale of new petrol and diesel cars from 2030 to 2035, and   delayed a ban on oil boilers from 2026 to 2035.

Department by Energy Security Representative and Net Zero said: “Our approach to net zero eases the burden on hardworking families while ensuring we achieve our goals in a proportionate and pragmatic manner.”

“We support domestic oil and gas. The delivery, which adds £17 billion to the UK economy, supports around 200,000 jobs and will generate £50 billion in tax revenue over the next five years.

“This will help support our transition to cleaner energy, building on on the billions of pounds of investment we have attracted in renewable energy to ensure the UK has one of the most reliable energy systems in the world.»