Ridiculous to think we can stop fossil fuel production right away: CEO

Fossil fuels are rooted in the global energy mix, and companies continue to discover and develop oil and gas fields around the world.

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LONDON – CEO of Standard Chartered believes it is “ridiculous and naive” to think that fossil fuel production can be stopped immediately without any consequences, saying that while it may be good for the climate, it would have other adverse effects.

In comments made during an interview with CNBC’s Geoff Cutmore at the City Week forum in London on Monday, Bill Winters acknowledged that most people would subscribe to what he called a “fair transition.”

“Those are two really important words … just mean fair, it also means implementable,” he said. “And transition means transition – it means it takes some time.”

“The idea that we can shut off the taps and stop fossil fuels tomorrow is obviously ridiculous and naive,” Winters said. “Well, firstly, it’s not going to happen, and secondly, it would be very disruptive.”

That would be good for climate change, Winters went on to state, but “bad for wars, revolutions, and human life because you wanted … chaos.” “The ultimate divestiture opportunity” should be taken off the table, he argued.

Winters’ comments come at a time when the use of the term “equitable transition” has become more and more common in discussions related to climate change, energy, the environment and sustainability.

The subject is complex and the concept itself has been defined in a number of ways. The Greenpeace environmental group, for example, has described it as “moving towards a more sustainable economy in a way that is fair to all – including people working in polluting industries.”

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Standard Chartered is a large bank with a presence in 59 markets and is listed in London and Hong Kong. It has made plans to reach net-zero CO2 emissions from its funded activity by the middle of the century.

According to Standard Chartered, its total on- and off-balance sheet net exposure to the oil and gas industry was just over $ 20.65 billion in 2021.

From A to B

Achieving any meaningful change in the planet’s energy mix represents a huge task.

Fossil fuels play a crucial role in developed and emerging economies, and companies continue to discover and develop oil and gas fields in places around the world.

Any transition to an energy system and an economy centered around renewable energy and low-emission technologies will require a huge amount of money.

In addition to the enormous levels of spending required, this kind of shift will also radically change the way billions of people live and work.

Winters, for his part, said “we need to change”, but asked how this could best be achieved.

“How do you balance that,” he said. “What’s the best way to get from point A to point B while making sure you take so many of the world’s broadcasters with you?”

There was no point in “putting a system in place where people just check out,” he said, continuing to explain how he saw the reality of the situation on the ground.

“In many of the markets, in the new markets that Standard Chartered serves, if we tell them that… one, then we are cheating you and [two] you have to pay well for it, they will say fine… we will not be part of that system. “

It did not serve anything, Winters said. “We should rather … bring them in in the most constructive way – oil companies are a part of it.”

“Some of the biggest sources of funding for both the technological changes we are talking about and the protection of existing carbon sinks are the existing producers of fossil fuels,” he said.

“Why would we not allow them to redistribute some of their shareholder capital – and indeed much of their shareholder capital – to the things that can make a big difference? I, for my part, will support it on every occasion.”

A big debate

Winters’ remarks will raise eyebrows and provoke unrest among climate activists and campaign groups, who are pushing for an abrupt end to the era of fossil fuels.

They also come as high-profile bodies such as the International Energy Agency address the role that fossil fuels will play in the future.

In 2021, the Paris-based organization said there should be “no investment in new fossil fuel supply projects and no further final investment decisions for new undiminished coal plants.”

In parallel with the IEA, the UN Intergovernmental Panel on Climate Change’s latest report has also focused on fossil fuels.

“Restricting global warming will require major transitions in the energy sector,” the IPCC said in a press release accompanying the announcement.

“This will involve a significant reduction in fossil fuel consumption, widespread electrification, improved energy efficiency and the use of alternative fuels (such as hydrogen),” the IPCC said.

In a comment on the report, UN Secretary-General Antonio Guterres did not strike a blow.

“Climate activists are sometimes portrayed as dangerous radicals,” he said. “But the really dangerous radicals are the countries that are increasing fossil fuel production.”

“Investing in new fossil fuel infrastructure is morally and financially insane,” Guterres said.

“Such investments will soon be stranded assets – a stain on the landscape and a destruction of investment portfolios.”

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