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03 March 2024

'The Economist' highlights UAE's energy transition efforts

By wam

The UAE's energy transition efforts have been highlighted in a detailed article by ‘The Economist', where the renowned British weekly newspaper affirmed that the Gulf national oil companies' investment plans “reveal a genuine—and in some cases rather large—bet on green technologies.”

The magazine referred to remarks by Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and Managing Director and Group CEO of the Abu Dhabi National Oil Company (ADNOC) in his keynote address during ADIPEC, where he said that “ADNOC is making today’s energy cleaner while investing in the clean energies of tomorrow.”

“Some suspect this is greenwash: all soothing noises and toothless targets after years of denying climate science and obstructing efforts to tackle global warming. On this view, the Gulf’s governments are too reliant on the revenues generated by the national energy firms—which account for a big share of state budgets to be serious about decarbonisation. Yet an examination of the leading companies' investment plans reveals a genuine—and in some cases rather large—bet on green technologies,” said the article.

"This is worth scrutinising, because the firms behind the effort matter beyond their region. National energy companies in other parts of the world look to the Gulf behemoths, and especially to ADNOC and Saudi ARAMCO, the Arab kingdom’s oil colossus, as examples to emulate. Where two of the world’s biggest energy firms go technologically and strategically, their state-run peers elsewhere often follow.

“The Gulf oil champions’ approach rests on two pillars. The first is deep brown: it involves doubling down on oil and gas. Bolstered by high crude prices, the region’s energy firms are investing heavily to expand output. Aramco’s capital expenditure in 2022 will come to $40bn-50bn. It is promising even bigger sums in the next few years, as it aims to lift its oil-production capacity from roughly 12m barrels per day (b/d) to 13m by 2027. ADNOC will spend $150bn on capital projects by 2027 with the goal of boosting capacity from roughly 4m to 5m b/d. Qatar Energy will plough $80bn between 2021 and 2025 into expanding production of liquefied natural gas (lng) by two-thirds by 2027.”

The magazine shed significant light on Masdar's contribution to these efforts: "The UAE is eyeing 100gw of renewable-energy capacity by 2030, at home and abroad, up from a cumulative investment in 15gw-worth in 2021. That would make Masdar, a state-controlled clean-energy outfit in which ADNOC has a stake, the world’s second-biggest developer of clean energy.

“Masdar is investing in a $10bn hydrogen venture in Egypt; developing 4gw of green-hydrogen and renewables projects in Azerbaijan; and has invested in a firm working on green hydrogen in northern England.”

The article concluded by stating that given the real risk of an end to the oil bonanza, "Gulf’s green efforts ought to be taken seriously.”