Gulf states commit to ‘Net-zero’

This month there can no longer be any doubt that the global energy transition has reached the shores of the Arabian Peninsula.

The Kingdom of Saudi Arabia (KSA), the United Arab Emirates (UAE) and Bahrain have all pledged ‘net-zero’ emissions targets. The ‘net zero’ pledges come a week before COP26, and in doing so enable the Gulf’s elite to gain influence at COP26 and future climate conferences where climate action policies will be drafted.

Now begins their task of actioning support for climate action to succeed without at the same time destroying the oil market. A somewhat difficult conundrum at first glance. 

Crown Prince Mohammed bin Salman at the Saudi Green Initiative forum committed KSA to net-zero greenhouse gas (GHG) emissions by 2060 and a doubling of planned carbon cuts than previously announced by 2030.¹ A week prior to this the UAE set a mid-century date (aligning to the EU, UK, Norway, the US and several other countries).²

Gulf Arab states pledging net-zero emissions are positioning themselves to be part of the multi-trillion-dollar clean energy industry. National energy companies (previously national oil companies – NOC’s – now rebranded to ‘energy’ companies) like Saudi Aramco, ADNOC and Qatar Petroleum have announced plans to reduce emissions and increase investments in petrochemical products used in fertilizers, plastics, rubber and other polymers:

• Saudi Aramco has announced it plans to be net-zero by 2050 on its operations in Kingdom³
• ADNOC has pledged to decrease its greenhouse gas emissions by 25% by 2030⁴
• Qatar Petroleum has already shipped one carbon-neutral cargo of LNG gas to Singapore and will be incorporating carbon capture technology in its expansion plans⁵

These announcements do not mean that KSA, UAE and Bahrain will stop producing or exporting oil and gas by these dates, or that its emissions will drop to zero. But it does mean that GHG emissions should fall and any remaining will be compensated by directly drawing them from the atmosphere.

Given that recent reports show numerous countries that have committed to similar pledges are already falling short of their goals or have little in the way of plans to address the shortcomings, there will be a large amount of scepticism on the net-zero announcements made by KSA and the UAE in particular. However, we need to realise that KSA and the UAE could achieve their path to net zero a lot easier than many other countries. Unlike countries such as the US and China or for that matter many in Europe, KSA and the UAE do not have legacy infrastructure that hampers rapid change. Instead, KSA and the UAE have the ability to build from scratch, as KSA is showing the world with NEOM and the Red Sea Development Project and with Abu Dhabi’s Masdar city, initiated some 15 years ago.

Indeed, balancing both KSA’s and the UAE’s electricity grid with solar power should be much easier than for Europe’s renewables. The sun’s energy in the Gulf is abundant, predictable, and most available when most needed. Instead of weeks’ worth of storage, batteries with enough capacity to run overnight are good enough. Electricity can be cleaned up entirely with a mix of the new solar and nuclear facilities, batteries, and gas-fired plants fitted with carbon capture and storage or adapted to burn hydrogen. That clean electricity can then be used to power battery cars, metro and rail systems. Electricity also drives the new reverse osmosis desalination plants, more efficient and flexible than thermal methods.⁶

Even if electrification comes at a cheaper price compared to many other parts of the world, Gulf states and the large family holding companies that exist within them will need to rely on a global supply chain that will have its own business imperatives linked to emission reductions. Most notably, the EU plans to impose tariffs on high-carbon imports. Companies such as Microsoft, Siemens, Amazon, British Airways and Ford to name a few, are heavy users of electricity, fuel, cement, steel and aluminium and have their own net-zero commitments. Private businesses within the Gulf will need clear guidance on how to navigate the challenges of developing their own net-zero strategies as well as contribute to emissions reductions within the global supply chain. NETZERO Middle East will continue to provide this support and guidance.

References

1. KSA announces net-zero emissions by 2060 – https://www.theguardian.com/environment/2021/oct/23/saudi-arabia-sets-target-of-net-zero-greenhouse-gas-emissions-by-2060
2. UAE sets a mid-century date for net-zero – https://www.bloomberg.com/news/articles/2021-10-07/uae-sets-2050-net-zero-goal-first-among-major-gulf-petrostates
3. Saudi Aramco has announced it plans to be net-zero by 2050 – https://www.aramco.com/en/news-media/news/2021/ambition-to-reach-operational-net-zero-emissions-by-2050
4. ADNOC to decrease greenhouse gas emissions by 25% by 2030 – https://www.adnoc.ae/en/hse/environment-and-sustainability/2030-sustainability-agenda
5. Qatar Petroleum – carbon-neutral cargo of LNG and carbon capture into expansion plans – https://ihsmarkit.com/research-analysis/qatar-petroleum-commits-to-lowcarbon-lng-in-latest-expansion.html
6. Robin M. Mills – CEO of Qamar Energy, and author of The Myth of the Oil Crisis – October 11th 2021, https://www.thenationalnews.com/business/comment/2021/10/11/why-the-uaes-2050-net-zero-pledge-matters/