Rising global temperatures and sea levels have required drastic action by the global community to mitigate the adverse effects of climate change. Ahead of the United Nations Climate Change Conference (COP 26) in the Scottish city of Glasgow in November, world leaders are preparing to secure their economies against climate disasters and step up the pace of the transition away from fossil fuels.
What is the energy transition?
Energy transition refers to the concerted global shift from fossil fuels to zero carbon technologies by the middle of this century. Several countries and companies based on fossil fuels have adopted various roadmaps and tracks to chart their way towards the energy transition.
What is net zero?
The concept of net zero emissions, also known as carbon neutrality, refers to the balancing of total carbon dioxide production through various offsetting methods. The Paris Agreement urges governments to achieve net zero emissions by 2050. Several countries have adopted a policy of net zero emissions. South Korea and Japan pledged to go carbon neutral last year. The United States, the world’s largest producer of fossil fuels, also plans to achieve carbon neutrality.
What is the Paris Agreement?
The 2015 Paris Agreement gives countries the mandate to reduce their carbon emissions to well below 2 ° C above pre-industrial levels, preferably around 1.5 ° C. Capture, use and Carbon storage (CCUS), which is favored by many oil producers to green their processes, is one of the many strategies adopted by governments to achieve their goal. Low-carbon hydrogen production is also at the top of green investment programs.
How much is spent on the energy transition?
Global spending on energy transition hit a record high of over $ 500 billion in 2020, as countries continue to prioritize offsetting emissions and mapping a greener post-pandemic economic recovery, according to the World Economic Forum.
Funding flows in the energy transition reached a record level of $ 501 billion last year, compared to $ 458 billion in 2019, according to the WEF’s 2021 energy transition index.
The index, which examines 115 countries, compares them on the basis of the performance of their energy systems as well as their readiness to transition to a greener energy future.
How are oil exporters preparing for the energy transition?
Oil-exporting countries risk losing nearly $ 13 trillion in revenue by 2040 as global economies continue to decarbonize their power systems, according to Carbon Tracker.
These economies are set to face an existential crisis as countries around the world reduce their carbon footprints and energy companies set net zero emissions targets over the next decades, the think tank said in February.
But some energy producers such as the United Arab Emirates are showing more adaptability to this change.
What are the UAE’s projects for the energy transition?
Several Middle Eastern exporters such as the United Arab Emirates and Saudi Arabia have already made efforts to diversify their rentier economies. The UAE derives income from tourism and manufacturing and seeks to generate half of its electricity from clean sources by 2050.
Abu Dhabi also has a large renewable energy industry, which has recently shifted to hydrogen production. The country’s main industrial and financial players, including the national oil company Adnoc, formed an alliance earlier this year to manufacture hydrogen.
How resilient is the UAE to a net zero world?
Rentier economies based on hydrocarbon-based exports are generally the most disadvantaged in terms of decarbonising energy systems. However, the UAE has taken a conscientious path to maximize the potential of hydrocarbons in a low-impact method while preparing for a carbon-free future.
Among oil producers, Iraq, Libya, Venezuela, Equatorial Guinea, Nigeria, Iran, Guyana, Algeria, Azerbaijan and Kazakhstan are the least prepared for an emissions landscape net zero, according to the World Bank. Canada, Norway, Australia and the United Arab Emirates are among the most resilient producers to move away from hydrocarbons.
The UAE, Opec’s third-largest oil producer, has allocated $ 163 billion to increase clean energy’s contribution to its mix to 50 percent by 2050. Among clean sources, 44 percent will be renewable energies and the rest will come from nuclear power.