Borderless partnerships critical for energy transition in Middle East

As the Middle East region concludes hosting COP27, there is escalating momentum among member countries to accelerate their energy transition, with countries announcing additional targets to further reduce emissions. A case in point, the UAE now intends to cut carbon emissions by 31 percent by 2030 and achieve carbon neutrality by 2050. Saudi Arabia has set its sights on becoming a global supplier of renewable and low-carbon hydrogen, aiming to produce 4 million mt/year of clean hydrogen by 2030 and achieve net-zero by 2060.

The stakes are high — climate change is a real concern for the Middle East, which is heating up twice as fast as the rest of the world. In a recent blog, the IMF said a one-degree Celsius rise in five of the hottest countries (Bahrain, Djibouti, Mauritania, Qatar and the UAE) results in an immediate decline in per capita economic growth of around two percentage points.

Beyond soaring temperatures which impact lives and food production, rich Gulf nations also face depleted freshwater resources within 50 years, with the outcome worse for poorer states.

Energy transition a key priority across region

With energy transition now ranking among the highest priorities for Middle East policy makers, the key question is what is the ideal pathway to get there?

The UAE’s Climate Change Special Envoy Dr. Sultan Al-Jaber noted at a recent forum that making the energy transition will require a “practical, realistic and collaborative approach to ensure that it is just and addresses the triple challenges of climate progress, energy security and economic prosperity.” Al-Jaber is also the UAE’s Minister of Industry and Advanced Technology and group CEO and managing director of the Abu Dhabi National Oil Company.

In this context, the pressing need to scale up cleantech solutions requires new forms of investment with new incentives. This means rethinking the traditional fossil fuel investment model, where infrastructure and the costs of rigs, refineries and pipeline networks are covered by a return profile that lasts for decades.

Investments in low-carbon solutions such as hydrogen, carbon dioxide capture, utilization, and storage, come with another first for the energy industry – demand grows with supply, adding another dimension to the challenges of developing them to operate at scale.

The Middle East can play a key role in guaranteeing the world’s security of inexpensive gas supply while simultaneously lowering its carbon cost through increased efficiency and reduced emissions. Hydrogen technologies can be increasingly integrated into natural gas infrastructure and be leveraged to further reduce emissions and pave the way for a carbon neutral energy system. These solutions are already being put to work.

And energy players are already launching clean energy projects in partnership with governments across the Middle East.

Energy investments in the Middle East and North Africa have been rising – they are projected to grow nine percent in the next five years to more than $879 billion. About 98 GW of new renewables capacity is planned across the region, with 39 GW due to come on stream by 2025.

The UAE, Saudi Arabia, Egypt and Qatar are also investing in pioneering clean energy projects locally, with the aim of solidifying the region as a hub for the development of clean technologies and a major exporter of hydrogen fuel.

The UAE has invested over $40 billion in clean energy over the last 15 years and has plans to invest $160 billion in clean and renewable energy sources over the next 30 years on the road to net-zero. Dubai is aiming for 75 percent of its energy to come from clean sources by 2050.

Saudi Arabia is also actively working to bolster its hydrogen capacity as a low-carbon alternative to oil, putting itself at the center of global production over the next decade.

Over the past decade, Egypt has embarked on an ambitious energy policy reform program, including a set target to have 40 percent of its electricity come from renewable energy sources by 2035.

However, as these projects will take time to come to fruition, we must embrace interim solutions to assist us in reducing emissions. Natural gas is one approach to achieve this because it emits two-thirds less CO2 than coal when used to generate power.

More specifically, modernizing existing conventional plants or boilers by enabling fuel conversion to natural gas, hydrogen or other carbon free fuels is a practical and important milestone to enable countries across the region to deliver on their ambitious energy efficiency and decarbonization goals. By converting to natural gas, carbon dioxide emissions per kWh can be reduced by 30 percent compared to oil firing. Fuel conversion, with the installation of highly efficient gas turbines with more than 64 percent combined cycle efficiency, can also lead to substantial fuel savings.

Recently, Mitsubishi Power signed a full turnkey contract with Egypt’s Alexandria National Refining and Petrochemicals Company to provide advanced hydrogen fuel conversion technology solutions and support the company in achieving its decarbonization goals. The solution will be installed at the ARNPC refinery plant in Alexandria, which provides 30 percent of Egypt’s gasoline supply for domestic consumption. This will help ANRPC achieve their commercial goals while also reducing their carbon footprint by 22,000 tons annually. This project will enable the plant’s existing boiler to fire up to 100 percent hydrogen by the end of 2023.

Collaborations across nations and companies needed

Providing energy needs and combating climate change will require cooperation across borders and public and private sectors, where all will benefit from implementing the required changes while accelerating their clean energy solutions at scale.

These borderless partnerships will enable the sharing of technology, know-how and skills transfers with governments sharing experiences and lessons learned in the areas of research, pilot projects and others. It will also encourage supply chain integration and reducing barriers for the movement of goods and services when it comes to technologies that are critical to energy transition. It will further enable cost efficiencies when it comes to infrastructure and grid integration and synergies in energy supply and demand profiles across borders.

The UAE government-hosted, inaugural Middle East and North Africa Climate Week 2022 was a case in point. It brought together senior government officials and high-level company executives from across the region and beyond. The various challenges and benefits of the energy transition were discussed at length during the conference, which also had senior UN representatives weighing in. This is the type of constructive forum that will not only help to realize energy transition for nations, but also accelerate it.

In parallel, now is also a crucial time for growing collaborations between the public and private sectors to drive climate technology and innovation, especially in terms of hydrogen.

Recently, ADNOC and the Abu Dhabi National Energy Company announced they would join the UAE’s state-owned holding company Mubadala as shareholders in the clean-energy company Masdar. The partnership is designed to increase Masdar’s renewable energy capacity to 50 GW by 2030 and to create a global clean energy powerhouse, with a focus on areas such as green hydrogen and renewables. Abu Dhabi’s Department of Energy has also announced the development of its hydrogen policy and regulatory framework to further accelerate the UAE’s national hydrogen strategy.

Achieving net-zero will come with a cost to both the public and private sector, but it is a crucial investment to be made today for future generations and more importantly, for our planet.

  • Khaled Salem, President of Mitsubishi Power MEA

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