How Gulf Arab states are getting to grips with the energy transition challenge

How Gulf Arab states are getting to grips with the energy transition challenge

DUBAI (RAHNUMA): Even before the Ukraine war began, one thing became clear quickly — that demand for conventional energy was not going away. Now, with Brent crude hovering around $107 per barrel and natural gas costing $6.95 per MMBtu amid heightened risks of supply disruptions, the impending fiscal windfall gives the Gulf Arab states extra resources to accelerate their transformation into “green economies.”

From ambitious “circular carbon economy” and net-zero emission pledges to investments in renewables and electric vehicle production, the past year has already witnessed the launch of numerous initiatives by these energy-exporting countries in response to calls for accelerated action for combating climate change.

At the same time, the Gulf region has made notable progress in the development of utility-scale solar and wind power, including phase three of the Mohammed bin Rashid solar project in Dubai completed last year and the inauguration of Saudi Arabia’s first wind farm at Dumat Al-Jandal.

“These are breakthrough moments which build momentum through knowledge and experience,” Francesco La Camera, director-general of the International Renewable Energy Agency, better known as IRENA, told Arab News.

“These low-cost renewables projects also open the door to the production of cost-competitive green hydrogen. We believe hydrogen will have a pivotal role to play in the decarbonization of the energy system.”

IRENA’s “World Energy Transitions Outlook” shows hydrogen could account for 12 percent of total final energy consumption globally by the middle of the century, up from today’s marginal levels.

“There are already clear signals of intent from the region to capture these market opportunities, which may prove to be a new and important aspect of the transition that the region can apply its hydrocarbon expertise and experience to,” La Camera said.

In the lead-up to the UN Climate Change Conference, COP26, in Glasgow last November, the UAE pledged to achieve net-zero carbon emissions by 2050 and to invest up to $160 billion in clean and renewable energy solutions.

The previous month, Saudi Arabia launched the Saudi Green and Middle East Green initiatives, committing the Kingdom to reach net-zero greenhouse-gas emissions by 2060 and to plant 10 billion trees over the coming decades, rehabilitate 8 million hectares of degraded land, and allocate new protected areas.

More recently, the Abu Dhabi National Oil Company and Abu Dhabi National Energy Company announced they would join the UAE’s state-owned holding company Mubadala as shareholders in the clean-energy company Masdar.

The Gulf enjoys an ideal climate for solar power expansion. (Shutterstock)

The partnership is designed to increase Masdar’s renewable energy capacity to 50 gigawatts by 2030 and to create a global clean energy powerhouse, with a focus on areas such as green hydrogen and renewables.

Similar developments are taking place in Saudi Arabia, including several projects in NEOM — the Kingdom’s smart city on the Red Sea coast — most notably the launch of Oxagon, the world’s largest floating industrial complex.

“The Oxagon project is a revolutionary idea looking at reshaping the way industries work at the gateway of the most popular shipping channel in the world, powered by 100 percent renewable energy, and requiring extensive levels of symbiosis between various industries,” Daniel Gribbin, corporate sustainability lead at WSP Middle East, told Arab News.

“The region’s drive to a more sustainable future is no secret. Levels of transparency and individual consumer behaviors, along with the vision of regional leaders, have accelerated the need to respond and act, so that they can have a seat at the global table.

“Demand for sustainability considerations from international investors has also been a propelling force for raising ESG awareness in the regional market, contributing toward valuation and reputation.”

A view of Jubail Desalination Plant at the Jubail Industrial City, about 95 kilometers north of Dammam in Saudi Arabia’s eastern province. (AFP/File Photo)

The past year has witnessed a sea change in the regional approach to climate action, according to Nawal Al-Hosany, the UAE’s permanent representative to IRENA.

At COP26, for instance, the UAE announced a number of landmark pledges and partnerships to raise ambitions, including the UAE-IRENA Energy Transition Accelerator Financing platform, which aims to raise $1 billion to accelerate renewable-energy transition in developing countries.

The UAE, through the Abu Dhabi Fund for Development, has already pledged $400 million in anchor funding to the platform.

“We also announced the Hydrogen Leadership Roadmap, which seeks to establish the country as a competitive global hydrogen exporter,” Al-Hosany told Arab News.

“Looking ahead to COP27 in Egypt, and COP28 in the UAE in 2023, the impetus for climate action will continue to create a ripple effect across the Middle East.”

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