The debate over climate change is very important for our region ... whether one is a believer or sceptic. Believers are indeed worried as climate change is likely to impact the region disproportionately, not only by the impact of climate change but also by the policies to counter it.

Equally, sceptics are worried about the extent of the policies and how they would affect a region so dependent on hydrocarbons exports. We are indeed an integral part of human existence and should be active in the debate to avoid the catastrophic impact of climate change and also safeguard our interests in sharing the burden of policies to counter the rise of global temperatures.

It is unfortunate we do not find many analytical studies — especially in the Arabic language — specifically targeted at our region on how we should respond to climate change or the policies towards it. This is why I was impressed to read, in Arabic, a review of the decisions made in Paris last December at the 21st Conference of the Parties (members of the UN Framework Agreement on Climate Change) with special emphasis on the impact of policies on future oil demand.

The review was written by Dr Ali Merza, an Iraqi economist, and published by the Arab Centre for Research and Policy Studies. All concerned are well advised to read it in full as I do not intend here to cover all the important points in the study.

The writer discussed the background to the decisions made by the 195 countries meeting in Paris, where many declared pledges to reduce their greenhouse gas emissions by cutting consumption of fossil fuels (coal, oil and gas).

Unintended consequences

The rich countries pledged technology support and billions in aid to developing countries to reach the targets of efficiency and energy conservation and the expansion of renewable energy production and other instruments needed to achieve targets.

However, some policies may have unintended consequences. The writer says that declining oil demand will reduce prices and this will make the cost of alternatives much higher. And, therefore, low oil prices while welcomed by consumers are in fact counterproductive with respect to climate change policies.

If we take the desired target of limiting global temperature rise to 2 degree centigrade by 2100, it looks like a modest endeavour by what used to be thought necessary in 1992, when the debate started in earnest. But let us not kid ourselves as even this target will be a mountain to climb.

I used the latest IEA long term forecast of energy and oil demand projections to discuss the impact on the production of oil producers. The so-called IEA’s 450 scenario is designed to limit the rise in global temperatures to 2 degree centigrade by preventing the concentration of carbon dioxide in the atmosphere to rise beyond 450 parts per million (ppm).

It may be difficult, if not impossible, to see the development by 2100. In any case, we will all be dead. Therefore the analysis goes to 2040 as a stepping stone to the future.

According to current policies, demand for oil in 2040 is forecast to be 117 million barrels a day (mbd). But the IEA believes new policies are being adopted and in the new policies’ scenario, world demand in 2040 is likely to be only 104 mbd.

World energy demand

But extending the argument to the 450 ppm scenario, world demand falls to 74 mbd by 2040. Oil’s share in world energy demand is said to fall from 31.1 per cent in 2013 to 22.1 per cent by 2040.

The Middle East production in the IEA new policies’ scenario is said to rise from 28 mbd in 2013 to 30 mbd in 2020 only to fall to 28 mbd by 2040. It could be much worse in the 450 ppm scenario if the decisions of COP 21 are to be implemented in earnest.

As an Iraqi, Ali Merza is of course concerned about what it manes for Iraq within these scenarios. The forecasts do not directly tell this story, but he gives us an approximate view to guide us. In the new policies’ scenario, he sees Iraqi production at 7.9 mbd and in the 450 ppm scenario at 3.1 mbd.

Iraq’s exports would be 6.8- and 2 mbd respectively. I hope those who signed contracts to raise Iraqi production to 12 mbd by 2017 will read this.

Needless to say that Iraq here is only an example. All Opec countries will suffer a great deal and therefore the COP 21 conference in Paris should be a wake-up call to develop our economies and reduce dependence on oil by diversifying from it.