Nigeria, OPEC, disagree with oil importing nations over green tax

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OPEC HQIt was Nigeria’s first Secretary General of the Organisation of Petroleum Exporting Countries, OPEC, the late Chief Meshack Feyide that said petroleum has become a powerful political instrument which presence or absence determines whether nations would take to war or remain at peace with their neighbours. The meaning of this aphorism has played out in many communities, states and even nations. For instance, major oil consumers have renewed their battles against producers for alleged pollution of the environment. They maintained that it is crude oil and natural gas that are responsible for the pollution of not only their respective nations but also the global community.

The petroleum importing nations that do so through the platform of International Energy Agency, IEA has launched a programme known as, “The Sustainable Energy for All initiative” to boost the development of renewable and eliminate the application of fossil fuels which they alleged to be responsible for pollution in different parts of the world. The Executive Director of the IEA and a member of the Advisory Board of the SE4ALL initiative, Maria van der Hoeven stated that, “The Sustainable Energy for All initiative is a rallying cry to tackle the twin crises of energy poverty and climate change, and this Global Tracking Framework is an important first response,”

The importing nations whose members included: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Slovak Republic, Spain, Sweden, Switzerland, Turkey and United Kingdom stated that: “By measuring the scale of the challenge, it provides a crucial reference against which the partners of the SE4ALL initiative, and all of us, can track progress towards building a cleaner energy system for all. The IEA has advocated stronger action to tackle energy poverty for more than a decade as part of its World Energy Outlook, but more needs to be done to tackle the problem. It is a moral imperative and we cannot afford to ignore it.

The executive director stated that global action is required, but the nature of the challenge differs across countries and, for each of the SE4ALL goals, the report identifies 20 “high-impact” countries that are crucial to making major progress. She stressed that: “The achievement of the SE4ALL goals requires energy investments to increase by at least $600 billion per year until 2030, compared with the level currently expected. But the costs are not spread evenly, with universal access to modern cooking needing an additional $4.4 billion per year and electricity access needing $45 billion per year, while renewables need an additional $174 billion per year and energy efficiency $394 billion per year. This investment must be accompanied by a comprehensive package of policy measures, including fiscal, financial and economic incentives, phasing out fossil-fuel subsidies, and pricing of carbon.

But oil and gas producing nations think differently. The thinking of these nations is captured by the Organisation of Petroleum Exporting Countries, OPEC, which members included the Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, Gabon and Angola.

The organisation made it known that it is not unmindful of the environment. For instance, the cartel maintained that it recognizes the realities of global climate change and supports comprehensive, fair and realistic efforts to reduce the environmental impacts of global energy use. It stated that the Organisation and its member countries have been active participants in the long-standing UN-sponsored negotiations on climate change since they began formally in 1992.

Specifically, the cartel stated that: “In addition, OPEC actively supports the expanded use of the existing technology of carbon, capture and storage (CCS), which has the potential to reduce emissions by 40 per cent by the middle of the century. While several commercial CCS projects are currently underway using existing technology, there is a need to learn more about the CCS process and the different technologies that may be used. The organisation thus advocates further development of CCS technologies and where possible, in conjunction with CO2-enhanced oil recovery.

OPEC which noted that the realities of living in a carbon-constrained world have also led to changes in policy priorities in industrialised countries remarked that it supports the use of resources and technology to reduce gas flaring, which has long been recognized as an environmentally damaging activity. The cartel stated that: “OPEC member countries have already invested billions of dollars over the last few decades to pursue flared-gas recovery projects. These have included either reinjecting associated gas into oil reservoirs or ‘monetising’ associated gas through liquefaction. The net result has been a 50 per cent reduction of the amount of gas flared from each barrel produced since the early 1970s. And OPEC has continued to seek opportunities to form partnerships with other stakeholders — most recently becoming an active participant in the Global Gas Flaring Reduction Partnership (GGFR) sponsored by the World Bank.

The organisation remarked that it OPEC supports the development of stricter product quality standards as part of overall efforts to reduce atmospheric fossil fuel emissions. It stated that making improvements to the quality of products like gasoline and automotive diesel, by limiting their sulphur content, for example, will substantially improve air quality.

It stated: “A number of Gulf countries have already introduced improved product quality specifications. However, significant additional investments — an estimated $30 billion over the next 10 years — are still needed in the region’s refining sector to expand such quality standards. In addition, the organisation urges developed countries to shoulder the historic responsibility for the environmental impacts of industrialisation. To this end, OPEC urges such countries to take the lead in providing cleaner oil products.

The cartel also stated that: “OPEC urges a broad reconsideration of the scope and use of “green taxes” in developed countries. Too often, these taxes are levied solely on oil products and account for around 70 per cent of the final price of products such as gasoline and diesel. Instead, OPEC believes that a more equitable and useful approach would be to adopt a pro rata tax system that levies taxes on all forms of energy — not just oil — according to their carbon content. In addition, the revenues generated by such taxes do not specifically help the environment. Some governments use revenues to subsidise domestic coal production (which produces even more CO2 than oil).

It stated that it is committed to making funds available to support ongoing efforts to achieve cleaner and more efficient technologies in the energy field is also supported by OPEC. The cartel explained that: “At the Third OPEC Summit held in Riyadh, Saudi Arabia, in November 2007, member countries highlighted the importance of financing and promoting R&D collaboration in the petroleum industry. Collaboration with international science and technology centres, and other industry actors, was also sought. To support these goals, several OPEC member countries announced the creation of a special $750 million fund to invest in clean technology ventures. Saudi Arabia pledged $300 million while Kuwait, Qatar and the United Arab Emirates pledged $150 million each.

The Secretary General of OPEC, Abdalla Salem El-Badri stressed that: “And of course, back when OPEC began the issue of the environment was not viewed as central to the energy industry.”

 

Information from Udeme Akpan for the National Mirror was used in this report.