GCC states focused on both oil, green energy at COP27

As the United Nations Climate Summit COP27 comes to a close this week in Egypt’s Sharm el-Sheikh, the conference’s key aim of ensuring full adherence to the Paris Agreement is unlikely to be fulfilled. Since last year’s COP26 in Glasgow, Scotland, “only 29 out of 194 countries [in the agreement] came forward with tightened national plans,” a UN press release stated.  

Yet, while most members are making some efforts to cap climate change, the Gulf Cooperation Council (GCC) states have focused on the need for a two-pronged approach to climate — focusing on both oil and green energy — amid rising energy demand following the war in Ukraine and the nations’ reliance on energy exports as a mainstay of their economics. 

Pointing out the impracticality of the climate goals laid out at last year’s summit, Sultan Al Jaber, chief executive officer of Abu Dhabi National Oil Co., said that the lack of sufficient investment in fossil fuels before alternatives were able to meet the world’s energy needs is “a recipe for disaster.” 

Having economies dependent on fossil fuel, the oil-rich Arab states face serious impediments in reaching a net-zero “green transition” without endangering their national interests. 

Khristo Ayad, a consultant at InStrat, an independent research and advisory platform in Doha, told Al-Monitor, “In the wider context of the accelerating global climate crisis, the GCC’s member states can be seen as in a unique, and somewhat paradoxical constellation. Even if with different starting points, almost all the states have experienced unparalleled rapid development and boom times enabled by their position among the top hydrocarbon energy producers in the world. While at the root of the GCC’s wealth, the continued use of fossil fuels remains one of the main factors behind climate change.”  

In 2021, when the first UN climate conference was held in Glasgow, the Gulf states were pushed to reduce oil emissions as they had a heavy carbon footprint and the same mood prevailed at COP26 with goals to reach net zero by 2050. But this year the ground realities have changed due to the rise in energy demand.  

High-carbon energy sources dominated the global markets, creating a major upset. Basically, Russia’s war on Ukraine caused an energy crisis in Europe and the same countries that were exhorting cuts on hydrocarbons were now asking GCC states to fill in the gap with surplus exports.  

Noting this impact, Ayad said, “The ongoing conflict in Ukraine and its consequences are a sobering reminder that dependency on hydrocarbons is still far from subsiding and energy transition still a work in progress globally. With limited immediate success, European buyers of Russian energy have turned to their partners in the Gulf to explore increasing imports from the GCC. Environmentally hazardous North-American fracking gas imports may be the uncomfortable response to escalating shortages in the European Union. These movements have also shown how intertwined foreign and Gulf energy security interests are, in fact still majorly shaping the GCC members’ international relations.” 

Emboldened by this shift, the GCC has now started working on emission control in tandem with attaining its energy security, even though climate change hit most of these countries with increased severity this year. 

Tobias Zumbragel, researcher at the Center for Applied Research in Partnership with the Orient in Berlin and author of a book on environmental sustainability in Gulf monarchies, told Al-Monitor, “Since several years, the GCC states tend to align their national interests with climate change goals. This is especially obvious in the energy sector. In a world that calls for decarbonization, GCC states are pushing forward endeavors to secure their future energy supplies, as well as maintaining their role as global energy hub. In this regard, it is not really an energy transition but rather an energy addition.” 

To start with, the GCC would be trying out diversified clean energy solutions, and oil and coal-fired plants would not be dismantled or rejected until a sustainable energy transition policy is finalized.  

Zumbragel said, “Hydrocarbons remain important and especially the gas sectors are continuously expanding. Gulf states are also looking for other energy sources such as renewable energy sources or nuclear energy to diversify their energy portfolio. Additionally, aspects such as energy efficiency and introduction of new technologies such as hydrogen or carbon capture utilization and storage are part of this approach.”  

He added, “In their perspective, carbon is not the problem but the associated [fugitive] emissions. They need to be controlled and limited for maintaining the GCC states' economic and political role in a climate-constrained world.” 

Next, investment on hydrocarbons would be encouraged along with climate control programs.  

Practically, Doha has already implemented this bipolar strategy by opening up Qatar’s North Field, the world’s largest liquefied natural gas (LNG) project to investment in billions by France's TotalEnergies and ConocoPhillips from the United States. At the same time, it continues working on the clean energy transition. 

As Qatar’s ruler, Sheikh Tamim bin Hamad Al Thani said at the UN General Assembly meeting this September, “Decades of pressure to stop investing in fossil fuels before having sustainable alternatives [had] led to significant shortage[s] in energy supplies.” Therefore, he said, “We have to recognize that the future of energy will include a combination of energy sources, including solar, wind and hydrocarbon energy.”   

Likewise, though it is speeding up efforts to increase oil production, the United Arab Emirates remains focused on developing clean energy, and it has set up the largest single-site solar park in the world. Recently, Washington and Abu Dhabi have finalized a strategic partnership under which nearly $100 billion will be spent on the development of clean energy by the year 2035. 

Ostensibly, if the GCC stops hydrocarbon investment, they stand to “lose 5 million b/d of oil each year from the current supplies.” 

Ayad noted, “While environmental awareness may still have to improve within GCC societies, their leaderships, particularly in Qatar, the UAE — and since recently also the Kingdowm of Saudi Arabia — have made sustainability a key element of their national development visions for some time already. In light of global warming and the understanding that energy reserves will be depleted in just a few decades, a commonly pursued direction has been to move away from carbon-based economies in a considerable short time.” 

Finally, for the long term, climate regulations could be clamped on businesses as most of the big oil and gas companies have planned a “frightening” expansion globally, which can result in 115 billion tons of climate-heating carbon dioxide gases.  

In the Gulf, Ayad observed, “Lately, a renewed push for climate diplomacy and climate policy can be seen across several GCC capitals, as they observe rising demand for renewable energy and an increasing sense of urgency among the international community. Several GCC countries have pledged to implement national policy to reach climate neutrality by mid-century during the UN Climate Change Conferences, COP26 and COP27. New climate envoys have been appointed, strategies to improve the impact of the Paris Agreement have been suggested.”  

In fact, the GCC could play an integral role.  

He said, “A recent report by the World Bank highlights the opportunity for GCC states to take leadership in the transition toward a low-emission world, by leveraging not only their financial clout, but also already achieved advantages in important green economy sectors, such as solar and other renewable energy sources, green building, sustainable transport and logistics, water and waste management, as well as green finance.” 

According to the International Energy Agency, oil demand may peak further this decade due to the war in Ukraine, and become a driving factor in a more rapid switch to cleaner fuel. If the quest for clean energy continues, quite possibly, the GCC states would be exporting more renewable products and a cleaner fuel mix.