How Will COP26 Affect UAE Oil?
Nov 10 2021
Just days before the 26th United Nations Climate Change Conference kicked off in Glasgow, the UAE was among a raft of Middle Eastern nations making pledges to meet net zero in the coming decades. The Net Zero 2050 Strategic Initiative laid out concrete targets and proposals to curb emissions and become carbon neutral within 30 years.
But while the measures are certainly likely to incur a reduction in the volume of Emirati oil extracted, processed and combusted over the next few decades, fossil fuels will still figure as a key part of the country’s (and the region’s) energy portfolio. Nonetheless, the announcements are an encouraging step in the right direction.
Setting an example
The Middle East has long been regarded as one of the most polluting regions on the planet, and indeed the Arabian Gulf is home to five of the ten countries with the highest emissions per capita, according to the World Bank. However, the challenges of climate change are clear to all and the UAE has served as a regional leader in transitioning towards a more sustainable tomorrow.
Not only was it the first Gulf country to ratify the Paris Agreement in 2015, but it was also the first Middle East and Northern Africa (MENA) nation to introduce economy-wide emissions reductions via its 2050 Strategic Initiative. Over the next three decades, the UAE has announced it will invest some $163 billion into renewable energy technology and garner 50% or more of its energy needs from such sources, becoming carbon neutral in the process.
The Gulf following suit
As so often happens in matters of sustainability and environmentalism, where the UAE leads, its regional counterparts have followed. Saudi Arabia, which is the biggest exporter of oil in the world, has earmarked a date 10 years later for reaching net-zero than the UAE, but committed to spending over $186 billion in that time to do so.
Elsewhere, Bahrain also said that it would become carbon neutral by 2060, while Qatar recently announced it would slash greenhouse gas emissions by 25% by the end of this decade. The pledges were a welcome boon for the COP26 conference, which had been rocked by the news that the heads of state of several of the world’s biggest polluting nations, including China’s Xi Jinping, Brazil’s Jair Bolsonaro and Russia’s Vladimir Putin, would not be making the trip to Glasgow.
Fossil fuels not finished yet
Despite the positivity surrounding the proposals, it was still abundantly clear that the Middle East would not be divorcing itself from oil anytime soon. Indeed, it’s thought that oil and gas will continue to comprise an integral part of the region’s (and the UAE’s) energy portfolio for the foreseeable future, though cleaner sources of power like solar, wind and nuclear are expected to play an increasingly important role.
That stance echoes the one taken by US President Joe Biden, who recently encouraged OPEC+ members to pump more oil, not less. As such, COP26 is certainly likely to have an effect on global oil – but perhaps not as drastic a one as some quarters of the environmentalist community had hoped.
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