Although Trump’s decision to withdraw the United States from the Paris Agreement is reminiscent of the beginning of the 21st century when the Bush administration did not ratify the Kyoto Protocol, the social, environmental and geopolitical environment is certainly not the same. An international community aligned and determined to combat the greatest threat of these times for humanity – climate change – will simply continue and reinforce its local and regional goals, thereby improving its energy security and stability, as well as its capacity to adapt to climate change. progress of this scourge.
In Venezuela, the analysis to be carried out is totally different. Although the country only contributes less than 1% of global Greenhouse Gas (GHG) emissions, its per capita contribution is the largest in the Latin American region; and not satisfied with it, it supplies the fossil fuels that countries like the United States, China, and India (which emit the greatest GHG) use to motorize their economy. With this in mind, Venezuela’s emissions are substantially higher than those reported for domestic consumption alone. How old? Difficult to estimate, because the country’s oil basket is not uniform, and is made up largely of extra-heavy hydrocarbons whose processing is extremely complex.
Additionally, Venezuela is the country with the largest proven oil reserves in the world, which indicates that from the point of view of the resource it can be foreseen that the national oil industry will continue to operate in the current way until it is exhausted; however, there is a possibility that a large part of that energy mass cannot be extracted because compliance with the Paris Agreement will imply that emerging and efficient technologies, renewable and alternative energy sources will be supported, as well as an increase in air quality regulations in combustion by-products from stationary sources and vehicles: sulfur, soot, dust, carbon monoxide, etc. Faced with this possibility, the question arises: Will oil be surpassed?
To answer the question, it is first necessary to know what oil is used for. This is not only an energy source for transportation – see article Here – and the production of electricity, but also within the process of oil refining and petrochemical production, the degradation and transformation of the hydrocarbon molecule makes it practically the basis of all human consumption today. So the answer is not simple. Added to this, and increasing the complexity of the question, there are three primary fossil fuels whose effect is the cause of climate change: coal, oil and natural gas (in order of contribution).
According to the International Energy Agency (IEA), coal is used mainly in the production of electricity; while oil in transportation (diesel, gasoline, jet fuel, in descending order) and industry; and natural gas is the energy source par excellence in the industrial sector 1 .
Among the outstanding actions to mitigate emissions are: generation of electricity through renewable sources – see article Here -, use of additives in the mixture of diesel (biodiesel) and gasoline (ethanol) – see article Here -, the capture and sequestration of CO 2 for both companies in the energy and industrial sectors, and energy efficiency – see article Here -. Now, based on the main uses of fossil fuels mentioned above, it is only biofuels that are intended to displace oil, and even they use it as part of the mix.
Electric vehicles remain, then, as a technological alternative, the use of which is becoming more widespread, but it is a process of market gain that has yet to materialize, and even until 2040, according to figures from the US Department of Energy (DOE) 2 their use will be minority.
And what about the market?
For everything described above, oil will hardly be surpassed in the medium term, even with a vision towards 2040, barring an unforeseen technological disruption. For Venezuela and its main source of income, despite this “favorable” scenario, the possibility of placing its product will depend to a large extent on its management in the world energy market, where not only different technologies participate, but also similar energy sources. such as shale oil and gas, as well as new competitors.
It is there that Trump’s decision to withdraw from the Paris Agreement, and his political boost to the use of fossil sources, becomes the main threat to Venezuelan oil, which for more than a decade has been progressively losing ground in its market. natural, the North American, since it has focused on the most distant ones such as the Chinese or Indian, and regional agreements such as Petrocaribe. To this is added the decrease in production that is undoubtedly covered by another competitor, and the current financial problem in which the Venezuelan state company finds itself.
A point that is always important to remember is that the United States is one of the main producers of crude oil in the world, but at the same time it is the largest importer. In other words, its consumption is not covered by its local production, part of which is also exported, and the difference must be imported with foreign suppliers. Nowadays, Venezuela is increasing its internal consumption, having to import more and more fuels, either for the pre-processing of oil from the belt or for final consumption. A scenario for attention is not so much that oil is displaced as a world energy source, but that we are like the United States, a net importer.
In conclusion, there is still a long time to rule out oil as a fundamental energy source, not only because of its energy applications but also because of the production processes to which it is tied. A decrease in their employment will only be linked to the management of the markets due to their saturation with similar products and/or new competitors. The terrain is complex for Venezuela, where it must focus its incentives on strengthening local suppliers, and make the reduction in energy consumption a State policy, not only electricity but also fossil fuels. The economic recovery goes through the reestablishment of production levels, and these, in turn, imply a high energy consumption that, misguided, can lead in the near future to compromising the operation of the national oil industry.
Published in: Venezuelan Commodities Magazine, 21st Edition. pp 16-17. ( See publication )