In the intricate dance of global geopolitics and energy transition, the Gulf Cooperation Council (GCC) countries stand at a unique crossroad. Historically tethered to vast hydrocarbon reserves, these nations are now navigating the treacherous waters of climate change imperatives. As the world pivots towards renewable solutions, the GCC’s journey from oil magnates to green energy proponents provides a lens into the future of energy and environmental diplomacy. This exploration delves into this transformative trajectory and the ripples it sends across the global energy landscape.
The Gulf Cooperation Council (GCC) countries, historically renowned for their hydrocarbon wealth, find themselves at a crossroads in today’s climate-conscious era. With hydrocarbons contributing up to 90% of certain nation’s budgets, such as Kuwait and Qatar, the GCC was initially wary of climate policies that seemed to challenge their economic foundation. In tandem with emerging economies, like China, the GCC’s initial strategy revolved around high-tech resilience rather than robust climate change mitigation.
Embracing Renewable Energy
But as awareness grows and global expectations shift, the winds of change sweep across the Arabian Peninsula. A clear indication of this evolution is the introduction of net-zero targets by every GCC country, with Qatar being the sole exception. Green energy, once merely an environmental mandate, is now emerging as an economic opportunity in the region. As reported by the International Renewable Energy Agency, harnessing 80GW of renewable energy by 2030 in the GCC could translate to water savings of approximately 11 trillion litres and a staggering 400 million barrels of oil every year. In the process, this green transition promises to unlock over 200,000 job opportunities.
A Calculated Green Transition
Despite the enthusiasm for green initiatives, the GCC’s Green Transition is anticipated to be methodical. Initially, the focus is on amplifying renewable energy for domestic use, which in turn allows more fossil fuels to be earmarked for export. As the next step, these countries aim to weave green energy into their export portfolio. Such a multi-phased strategy seeks to preserve the existing political-economic landscape, significantly sustained by external rents.
Recent geopolitical events, such as the Russian invasion of Ukraine, have nuanced the narrative around the GCC’s Green Transition. Events like these underscore the pertinence of fossil fuels in the present global energy matrix. In resonance with this perspective, Sultan al-Jaber emphasized at a recent energy conference that “we cannot unplug the current energy system before we have built the new one.” With GCC oil touted as one of the least carbon-intensive globally, there’s potential for the region to carve a strategic advantage in the transitional fossil fuel market.
Emphasizing the importance of innovative solutions, GCC nations are betting big on Carbon Capture, Utilization, and Storage (CCUS) technologies. While the region is home to some of the most prominent carbon capture plants, it meets just 10% of the global carbon capture capacity, signifying room for substantial growth.
The Role of COP28 and International Collaborations
The UAE’s stewardship of COP28 hints at the GCC’s intention to propel green energy investments. With the world’s most cost-effective solar energy system to its credit, the UAE seeks to be a torchbearer in the GCC’s Green Transition. Yet, the transition journey is dotted with challenges. The gap between the GCC’s ambitious green energy goals and their current standing is palpable, necessitating accelerated efforts.
Climate Finance: The Game Changer
A pivotal theme of COP28, under the aegis of the UAE, will be the evolution of the climate finance framework. Highlighting the urgency, the aim is to escalate the financing bandwidth from “billions to trillions.” There’s a conscious effort to simplify the bureaucratic maze, ensuring faster and wider access to green funding. Initiatives like the Sustainable Finance Framework in the UAE and Oman’s renewable energy promotion schemes exemplify the nascent green finance wave in the region. Collaborations with stalwarts like the EU, with inspirations from frameworks like the European Hydrogen Bank, could amplify the GCC’s green finance aspirations.
Conclusion: Charting the Future Path
The GCC’s Green Transition is more than just a pivot from hydrocarbons. It’s about harmonizing global climate aspirations with regional economic imperatives. As these nations meander through this transformative journey, international partnerships, innovative technologies, and robust financing will dictate their success. Only time will unveil the effectiveness of this balancing act.
Feel free to contact the Energy Transition Centre today with questions.
· Julius Moerder, Head of Energy Transition Centre julius.moerder@centurionlg.com
· Oneyka Ojogbo, Head of Energy Transition Centre, Nigeria & West Africa oneyka.ojogbo@centurionlg.com
· Leon van Der Merwe, Head of Energy Transition Centre, South Africa leon.vdmerwe@centurionlg.com
Author: Memoona Tawfiq
