Climate policies could spark an ‘even worse’ energy crisis, Saudi finance minister says

Saudi Arabia’s finance minister has informed CNBC that an “even worse” vitality disaster could possibly be triggered if the world just isn’t cautious with its local weather insurance policies.

“If we aren’t cautious about what we’re doing to attain our targets, we could find yourself having [a] very severe energy crisis like what we are seeing now, and it could possibly be even worse sooner or later,” mentioned Mohammed al-Jadaan, although he famous that local weather insurance policies are “essential.”

Fuel costs throughout Europe and elsewhere have surged due to numerous elements together with increased demand, low inventories and a lack of wind power generation.

Chatting with CNBC’s Hadley Gamble Wednesday in an unique interview, Finance Minister al-Jadaan known as for steadiness, saying he want to see developments in new applied sciences for capturing, reusing and recycling carbon alongside funding in renewable vitality sources.

Carbon seize refers to know-how that captures carbon dioxide both from the ambiance or as it’s emitted, corresponding to when fossil fuels are burned for vitality. Some see it as a promising technique to cut back greenhouse gasoline emissions, although not everyone agrees.

“I believe we will probably be quite a bit safer in each local weather change and vitality safety” if the best steadiness is struck, mentioned al-Jadaan.

It comes as Saudi Arabia makes an attempt to diversify its economic system away from reliance on hydrocarbons, though the majority of its revenues still come from oil.

Oil worth issues

Brent and U.S. crude benchmarks have each risen greater than 65% this yr, and are hovering round multi-year highs.

Al-Jadaan mentioned the dominion would not need oil costs too excessive or low.

“I do not desire a worth that’s too low, which then will cripple investments and trigger a severe vitality disaster,” he mentioned. He added that “unintended penalties” of insurance policies specializing in renewables in locations like Europe had helped cause gas prices to soar.

A “balanced” oil worth is one that’s good for producers and permits them to proceed investing in provide, however doesn’t derail the world’s restoration from a “very devastating Covid-19 disaster,” he mentioned.

Saudi Minister of Finance Mohammed Al-Jadaan speaks throughout a gathering of Finance ministers and central financial institution governors of the G20 nations within the Saudi capital Riyadh on February 23, 2020.

FAYEZ NURELDINE | AFP through Getty Photographs

Individually, al-Jadaan additionally mentioned he’s involved about inflation, however not stagflation.

Economist Stephen Roach has warned that energy price spikes could affect China’s supply chain and lead to stagflation — the place costs are rising, however financial progress is slowing — within the U.S. and past.

“I am anxious a little bit bit about inflation, and notably in areas the place it pertains to vitality,” al-Jadaan mentioned.

He mentioned vitality worth rises needs to be watched rigorously, and “folks would want to rethink what have we performed to trigger this scarcity … of provide, and attempt to right it.”

Nonetheless, he added that the issues are unlikely to be long run ones, and could possibly be resolved in a single to 2 years.

— CNBC’s Chloe Taylor, Sam Meredith and Stephanie Landsman contributed to this report.

Local weather insurance policies might spark an ‘even worse’ vitality disaster, Saudi finance minister says Source link Local weather insurance policies might spark an ‘even worse’ vitality disaster, Saudi finance minister says

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