Good morning.
Can an oil-dependent nation lead the fight against global warming? That’s the big question hanging over this year’s COP 28 conference, which is being led by the man who runs the Abu Dhabi National Oil Company, Sultan Ahmed Al-Jaber. Former Vice President Al Gore has rallied the critics who say selling oil should disqualify one from a leadership position in the climate fight. Recent press reports also excoriate ADNOC for planning to negotiate new oil deals on the sidelines of the confab.
I’ve spent the last week in Abu Dhabi hosting the Fortune Global Forum, with sponsorship from the government, so some may say my hands aren’t clean in this debate. But I think those who argue profit-seeking oil-producing companies can’t play in the climate effort misunderstand the nature of the challenge.
A new report out from the McKinsey Global Institute puts it in helpful perspective. A successful net-zero transition, the report correctly argues, requires achieving not just one objective—eliminating carbon emissions—but four interdependent ones: 1) reducing emissions 2) maintaining affordability 3) ensuring reliability and 4) supporting industrial competitiveness. A strategy that focuses exclusively on No. 1 while ignoring Nos. 2-4 will ultimately fail. And when you consider all four, the role of oil becomes critical—both to power the transition and to provide resources and knowledge for a successful green future.
But beyond that, it’s also clear to me that pursuit of profit will be the most powerful force driving this change. This morning, I’m at the sprawling and somewhat chaotic Expo City Dubai, where COP 28 will be held for the next two weeks. The COP process is designed for government officials, but these days bustles with prominent business leaders. In the last few hours, I’ve seen the CEOs of IBM, BP, Bank of America, Lazard, IKEA, and State Street, whose CEO Ronald O’Hanley captured the zeitgeist of both the event and the challenge when he told attendees: “Transitions are seldom straight lines. They are messy.”
Numerous reports, including the one I cited from McKinsey, have noted that despite all the progress that’s been made, the world is still far off course to reach net zero by 2050 and under some scenarios may not get there until the end of the century. But messy challenges create massive opportunities. When O’Hanley says it will require $2.4 trillion in financing over the next decade, the dollar signs light up in his business listeners’ eyes. These days, the effort to fix the climate is being driven by the profit motive—and that’s a good thing. The proliferation of CEOs at COP—including those from oil companies—makes me more optimistic about the future, not less.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
