Trying to attract investors and retain customers, the United Arab Emirates says it will step up its efforts to cut emissions. Let’s read more in the NY Times article.
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He is the chief executive of a major polluter, but Sultan Al Jaber is likely to be well received and maybe even congratulated when he arrives at the COP26 climate summit in Glasgow, which starts this weekend.
Mr. Al Jaber, who heads Abu Dhabi’s national oil company, which provides about 3 percent of the world’s oil, has another job. He is the special climate envoy of the United Arab Emirates and a founder of a multibillion-dollar state-backed company that invests in renewable energy.
For more than a decade, he has tried to position the Arabian Gulf state as a leader on environmental issues, acting at the behest of Abu Dhabi’s de facto ruler, Crown Prince Mohammed bin Zayed.
In the latest of these initiatives, the United Arab Emirates pledged to have net-zero carbon emissions by 2050, the first government in the region to make such a statement. It joins a growing list of countries making long-range commitments that are difficult to evaluate.
“He is a pioneer of climate action,” said Karim Elgendy, a fellow on the Middle East environmental issues at Chatham House, a research organization in London.
Serving as an environmental advocate and an executive selling fossil fuels may appear to be a contradiction. But not, apparently, in the United Arab Emirates, a federation of seven states including Abu Dhabi, whose oil production bankrolls the other six.
The Emirates views the push for green energy not as a threat but as a “unique opportunity” in which it can capitalize on its expertise and financial strength, Mr. Al Jaber said in an interview earlier this year.
Make no mistake: Abu Dhabi’s leadership wants to preserve a market for the Emirates’ enormous oil reserves, which are enough for more than 60 years’ output at current rates.
The Emirates produce about three million barrels of oil a day, mostly through the Abu Dhabi National Oil Company, or ADNOC. That revenue underwrites much of the country’s economy, financing the government and helping support downtowns of futuristic office towers in Abu Dhabi and Dubai.
But the royal families who lead the Emirates appear to have decided that they are better off to be part of the solution to global warming, in partnership with much of the rest of the world – or at least be seen to be. (The country has already offered to host COP28, in two years.)
“A net-zero target has a business case behind it,” said Karen Young, a senior fellow at the Middle East Institute, a research organization in Washington. “It brands a state hydrocarbon producer in a class of the solution finders, rather than the obstructionists.”
Analysts say that hitting the net-zero target, even by 2050, won’t be easy: The Emirates is one of the world’s highest carbon-dioxide emitters per capita, much it from electric power plants. But under the climate accounting used at COP, the oil exported by Abu Dhabi counts as emissions of the customers that burn it, like China and Japan, and not on those of the producing state.
Still, the goal is likely to spur action and investment.
“You need an ambitious target to move things in the right direction,” said Steven Griffiths, senior vice president for research and development at Khalifa University in Abu Dhabi. “The country is in the best position probably of all the Gulf countries to actually do this.”
The Emirates plans to spend 600 billion dirhams, or $163 billion, over the next three decades to reduce the emissions from power plants that now burn enormous volumes of natural gas in part to cool buildings in the fierce Gulf heat. A lot of the money will go into solar farms, which can be set up across the sands of the Emirates. Another source of clean power will be a group of four nuclear reactors recently built by South Korean contractors in Abu Dhabi that are gradually coming online.
Analysts say that spending so much money is bound to have a major impact in a small country of 9.9 million people that is already well ahead of neighboring petroleum exporters like Saudi Arabia and Kuwait in diversifying their economies away from oil. The Emirates, for instance, is a regional hub for finance, logistics and tourism.
And more funding is likely to be forthcoming to support the green agenda, like retrofitting buildings so that they don’t suck up so much power for air conditioning, or converting transportation to electric power or hydrogen. The Emirates is one of those places with the riches and the will to implement “loss-leading projects that are about being at the cutting edge,” said Raad Alkadiri, managing director for energy and climate at the Eurasia Group, a political risk firm.
John Kerry, President Biden’s climate envoy and a regular visitor to Mr. Al Jaber in the Emirates, said in a Twitter message that its commitment was “an example for other energy-producing nations.”
The pledge may have already had an impact. Last Saturday, at a conference in Riyadh, officials in Saudi Arabia, the world’s largest oil exporter and frequent rival to the United Arab Emirates, said it would commit to achieve net-zero by 2060.
Of course, there is an element of image-burnishing here. The announcements allowed the Emirates and the Saudis to look virtuous before the world leaders assembling for COP26. They also provided Mr. Kerry, who attended the Saudi conference, with wins in his efforts to round up pledges.
But these commitments also signal that big petro-states now reckon that the world has shifted, and that they need to participate in measures to tackle global warming.
“There has been a calculation that being at the table will allow you to shape this new world and the new climate economy,” said Mr. Elgendy.
And this new climate economy must accommodate the burning of fossil fuels, these oil states say.
Mr. Al Jaber, along with Saudi officials, asserted at the Riyadh conference that oil and gas would be required to power the world economy for years to come – as well as generate a source of revenue to pay for investments in new energy sources.
The recent price shocks in natural gas and oil, which have caused electric bills to skyrocket and forced some manufacturers to scale back or shut down, resulted from premature cuts in investment in these resources, said Mr. Al Jaber.
“The world has sleepwalked into a supply crunch,” he said. Oil and gas need to remain “mainstream” during the so-called energy transition, he added.
These views run counter to the conclusions of some climate experts who say new investments in oil and gas must stop immediately if the world wants to stop climate change.
ADNOC is one of the few oil companies anywhere that is making substantial investments to increase production. Last summer the Emirates demanded that the Organization of the Petroleum Exporting Countries raise its output quota, leading to a high-profile standoff — since resolved — with the Saudis.
Five years ago, Mr. Al Jaber was named chief executive of ADNOC, and he has attracted private investment through sales of stakes in the company’s infrastructure to investors like the financial management firms BlackRock and KKR, and with oil and gas exploration deals with companies including U.S.-based Occidental Petroleum and Italy’s Eni. Such transactions have brought in around $26 billion in the last five years, according to Colby Connelly, an analyst at Energy Intelligence, a research firm.
In a signal that the oil giant is prepared to adapt to climate needs, ADNOC recently announced that it would join with BP, the British oil company, to build facilities in Britain and the Emirates for producing large volumes of hydrogen, the clean-burning fuel that could be used in the future to power truck fleets or make steel.
Hydrogen may even become a means for replacing oil exports. ADNOC has already shipped hydrogen to Japan, one of the most important customers for Gulf oil in the form of ammonia.
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Middle Eastern oil producers are making a big bet on hydrogen, the clean fuel that has been generating a lot of interest across the globe since the onset of the COVID-19 pandemic. As demand grows, the region seeks to lead the way in hydrogen production.
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