By Jessie Moritz, Australian National University
CANBERRA, Nov 11 – Of all the nations discussing the energy transition at the upcoming G20 summit in Bali, the oil and gas-rich countries in the Arabian Peninsula are among the most exposed to decarbonisation.
Their economies remain dependent on continued global demand for fossil fuels, and although they have long been pursuing economic diversification strategies designed to build up non-oil and gas industries, decarbonisation has only recently become a key priority.
But this G20 is the first in which all G20 nations have national low-carbon development targets.
While the climate change and energy transition strategies announced in Arabian Peninsula oil and gas-producing countries have been dismissed by some as greenwashing, the stakes for these countries – of both climate change and the economic transformation required to prepare for a post-fossil-fuel era – are enormously high.
Without successful action on climate change, these states face a future of more intense and extreme dust storms, heatwaves, and deadlier ‘wet bulb’ conditions, where humidity and heat overwhelm the human body’s capacity to cool. If climate action is successful, they face demand destruction of the fossil-fuels that have served as the foundation of their economy for much of the past century.
Since 2017, there has been a flurry of climate change and net zero targets announced by Arab states as they have sought to brand themselves as international climate leaders, exemplified by the UAE’s pitch to host COP28. This has ranged from fully-fledged climate change strategies – such as the UAE’s National Climate Change Plan released in 2017 – to Kuwait’s more modest pledge to reduce greenhouse gas emissions by 7.4 percent by 2035.
Saudi Arabia and the UAE have both announced circular economy policies since 2020, and in the last 18 months the UAE, Saudi Arabia, Bahrain, Oman and most recently Kuwait have set net-zero emissions targets for 2050 (or 2060 for Saudi Arabia and Kuwait).
Climate change and energy transition policies have extended rather than replaced existing economic diversification strategies and will face similar challenges in implementation.
Reforming energy subsidies, a key element of diversification, has previously proved challenging. Attempts to reduce fuel and electricity subsidies in recent years have been met with popular outcries, as in Kuwait in 2015 and Oman and Saudi Arabia in 2017-2018.
With the exception of the UAE, where fuel subsidies were phased out in 2015, subsidy reform has been implemented in a stop-start manner. A common strategy to address public discontent has been to reform subsidies while shielding citizens from cost of living increases — as with Saudi Arabia’s Citizen Account Program, established in 2017.
This has meant that while migrant workers — who comprise over 80 per cent of the population in Qatar and the UAE – are incentivised to reduce energy usage and their carbon footprint, citizens are not.
Both economic diversification and climate change strategies in the Gulf are designed to prepare for the post-oil era. However, their economic diversification strategies rely on maximising oil and gas exports, increasing global carbon emissions.
Through population growth and as a result of earlier efforts to diversify into energy-intensive heavy industries, domestic consumption of oil and gas has skyrocketed, reducing revenue that might otherwise be created by exporting these hydrocarbons.
The decarbonisation strategies announced in the Gulf states thus focus on increasing renewables as a share of domestic electricity generation, freeing up oil and gas for exportation.
It’s also why Gulf states are likely to emphasise the role of oil and gas in the renewable energy transition at the G20 leaders’ summit, particularly in the context of their heightened role in global energy security following the Russian invasion of Ukraine. While they are investing in alternative energy production such as blue and green hydrogen, they remain, for the moment, reliant on continued global demand for oil and gas.
Deadly heatwaves and extreme weather events have highlighted the very real impacts of climate change for the Gulf region. Gulf governments are clearly prioritising climate action to a much greater extent than in previous decades.
However, their ultimate success depends on their capacity to overcome existing development challenges that have complicated previous diversification efforts, as well as reconciling their status as hydrocarbon producers with their efforts to appear climate progressive.
Jessie Moritz is a lecturer at the Centre for Arab and Islamic Studies at the Australian National University.
Article courtesy of 360info.
