How the Gulf oil and gas states will play their hand at COP27 | Manal Shehabi

by Manal Shehabi*

31 October 2022

Gulf oil and gas producing nations will badge themselves as climate leaders at COP27. It’s not as far-fetched as it sounds.

There is little room for grandiose ambitions at COP27. Instead, the 27th Conference of the Parties of the United Nations Framework Convention on Climate Change, hosted this week by the African regional group in Egypt and dubbed the “African COP”, aims to meet COP26 commitments with practical solutions. In fact, the COP presidency’s website named it the “Climate Implementation Summit.”

But what was always a colossal task of landing practical solutions has been made more difficult by the economic, geopolitical, and energy challenges of 2022 such as the weakened international ties following Russia’s invasion of Ukraine and recent OPEC+ announcements.

Among the practical solutions that are likely to be advanced, are those by wealthy oil and gas exporting economies in the Gulf, especially de facto leader Saudi Arabia, that centre around fossil fuels. COP27 may well be remembered as the conference that saw fossil fuels strongly shoulder their way back to the negotiating table.

Prior to COP26, the reliance of Gulf states on oil and gas drove their resistance to the energy transition, which in turn won them the reputation of being climate obstructionists.

Yet in an unexpected and unprecedented policy shift, these states joined pro-climate endeavours in 2021.

The United Arab Emirates (UAE) pledged to reach net-zero emissions by 2050. Pledges by Saudi Arabia and Bahrain by 2060 followed. These states, especially Saudi Arabia and the UAE, have positioned themselves as leaders in providing clean energy globally. Not only do they have expertise in oil and gas, they also have a potential advantage in renewable energy, having some of the best solar and wind resources and, therefore, some of the cheapest renewable energy globally.

Some have welcomed these announcements as major advancements of the climate agenda, especially as the Middle East is warming at twice the global average. Others viewed them as greenwashing. After all, Gulf economies are over-dependent on oil and gas exports, which contribute between 69-92 percent and 60-91 percent of their exports and government revenue, respectively.

They are also among the world’s highest per capita carbon emitters and have been slow to adopt renewable energy. Renewable sources generate around 1 percent of electricity in the Gulf Cooperation Council states, except in the UAE where the share is 12 percent – compared with 20 percent in energy-poor Egypt, 26 percent in Jordan, and 37 percent in Morocco.

But the reality is more complex than that. A key feature of these states’ net-zero emissions targets is their continued production and exploitation of oil and gas, but with a twist: it is coupled with decarbonisation technology.

This feature is explicit in the position of Saudi Arabia, the region’s largest fossil fuel exporter and a G20 economy and leader of the bloc of Arab States. It is also a leader in the Like-Minded Developing Countries (LMDC) Group and the Group of 77 & China, all of which Egypt is a member.

To meet its net-zero targets by 2060, Saudi Arabia launched the Saudi Green Initiative and Middle East Green Initiative to plant 10 billion and 40 billion trees in Saudi Arabia and the Middle East, respectively. This announcement followed it joining the Net-Zero Producers Forum (along with Qatar, Norway and the US) in 2021.

These initiatives support the ‘circular carbon economy’ framework, which was endorsed by the 2020 Saudi-presided G20 in Riyadh as the cornerstone of the country’s solution for decarbonisation, carbon reduction, and recycling. The framework encompasses the production of fossil fuels as well as new energy sources, most notably clean (blue or green) hydrogen, and heavy industries (hard-to-abate sectors). The framework intends to decarbonise all of these industries using carbon capture, utilisation and storage (CCUS) technology.

At COP27, we can expect to see Saudi Arabia and other wealthy oil and gas exporters of the Gulf region position themselves as climate leaders. Saudi Arabia will hold the Middle East Green Initiative Summit and the Saudi Green Initiative Forum in Egypt on the sidelines of COP27, and will invest US$30 million in Egypt.

Saudi Arabia will showcase the Regional Voluntary Carbon Market (recently established by the Saudi Public Investment Fund), which auctioned the largest carbon credits to date (1.4 million tonnes) during the 6th edition of the Future Investment Initiative Summit in Riyadh (also dubbed “Davos in the Desert”) in October 2022.

The Saudi message will focus on a central point: that fossil fuels have a critical position in the global energy market along with other energy sources, but that it is through CCUS technology and the circular carbon economy framework that future energy paths can be pro-climate.

In addition, wealthy oil and gas countries are also likely to support holding advanced economies accountable to their broken promise of channeling US$100 billion in climate finance to developing economies for climate change adaptation and mitigation. Consistent with its assumed leadership position, expect to see Saudi Arabia announce other practical initiatives and solutions at COP27.

This position of keeping fossil fuels at the centre of climate discussions is not unexpected from leading fossil fuel producers. Such a position is also common among other resource-dependent economies, including India, Norway, Australia and others. Beyond these states, the position is consistent with arguments of the least developed countries for which fossil fuels can offer an affordable solution to energy access, especially the 770 million people without access to electricity and the 2.5 billion people without access to clean cooking fuel.

The position will also be supported by many developing economies (especially those in Africa, the Middle East, and Asia) that seek to develop their own oil, gas, hydrogen or critical minerals resources.

Supporters of the ongoing need for fossil fuels will point to a similar argument adapted by Europe in its response to the energy crisis that followed Russia’s invasion of Ukraine. Phasing out fossil fuels has seemingly been abandoned as Europe favoured energy security over climate targets (for which Europe was accused of hypocrisy in Bonn in June during the lead-up talks to COP27).

COP27 will thus set the stage for other fossil fuel exporters to attempt to steer climate negotiations. As the host of COP28, the UAE will naturally assume a similar leadership position. For that, it will refer to being the regional pioneer in establishing zero-carbon nuclear power, expanding renewable expansion and co-funding a Renewable Energy Fund that supports renewable energy projects in developing countries.

It will also refer to being the host of the first Middle East and North Africa climate week in March 2022 and the first Gulf state to announce net-zero targets. As an advocate for technology and an aspirant to host the region’s innovation, decarbonisation technology will be central to the UAE position, but without abandoning fossil fuels.

Whether Gulf oil and gas exporting economies will meet their ambitious renewable energy, net-zero, and hydrogen targets remains to be seen. And whether they will become global leaders in energy transitions which will contribute to putting the world on track to avert the worst climate breakdown also remains to be seen. Indeed, adherence to climate targets is urgent and requires phasing out fossil fuels all together. But the use of fossil fuels will offer energy access and continue to attract support – and increasingly so.

So how can we then globally advance net-zero targets in this environment?

For short-term visions, where fossil fuels will remain central to economies, targets must include plans, finance, and technology to reduce energy consumption and emissions. This can be through nature-based solutions, expandable renewable energy, and decarbonising the fossil fuel supply chain.

Saudi Arabia’s circular carbon economy framework promises to provide this required short-term solution, but the necessary technology is not yet fully available. Therefore, ensuring the world achieves necessary decarbonisation will require technology development by technologically-advanced countries along with adoption across a wide range of industries. Achieving net-zero emissions will also require the adoption of internationally-agreed decarbonisation regulations and measures that can hold countries accountable to their targets and provide a level playing field to all.

Solutions must also target the long-term aim of phasing out fossil fuels and expanding clean energy sources. A collaborative approach is crucial; encouraging all countries to contribute to mitigating climate change given their own resources and economic circumstances. This collaboration will not be possible without adhering to elements of climate justice and of just energy transition.

This is important as the countries most impacted by climate change have historically not contributed to the emissions that caused it. It is these countries that also aspire to access energy and/or develop their fossil fuel industries to achieve economic growth and development.

Without such a collaborative, net-positive sum approach, countries will have neither incentives to comply nor accountability if they do not, and both climate and energy targets will remain merely ink on paper.

(Author: Manal Shehabi is visiting academic at St Antony’s College of the University of Oxford, and Founding Director of SHEER Research & Advisory. Her work focuses on economic diversification, energy transition, sustainability and policy in resource economies, with a focus on the Middle East. She was a contributing author to the Intergovernmental Panel on Climate Change Special report on the ocean and cryosphere, and an expert to the UN Framework Convention on Climate Change)

[Originally published under Creative Commons by 360info.org]