Fossil fuels, such as oil and gas, contribute to 40% of greenhouse gas (GHG) emissions from extraction to final consumption. However, the significance of the location of extraction should not be overestimated, as downstream users also share the responsibility for carbon emissions. Oil companies are responsible for a portion of CO2 emissions, contributing to "only" 10% of the carbon balance. This is primarily due to flaring, methane leaks, the transformation of crude oil into refined oil, and the use of electricity in petrochemical plants. National companies have a moral responsibility to strive for net-zero carbon emissions, as they have the upper hand in the supervision of the sector. To address global environmental issues, analyzing both production and consumption provides a better perspective. Countries with hydrocarbon resources intend to exploit them, which slows down the transition to a different model. The supply in this industry always follows the demand. Therefore, countries must reduce their consumption of fossil energy to meet the Paris Treaty's carbon emissions reduction goals. The UAE is committed to achieving this objective.
The UAE Nationally Determined Contribution
The United Arab Emirates (UAE) is a nation with a high demand for energy due to its heavy industries, including aviation, aluminium, and cement. The country's consumption of fossil fuels per capita ranks among the top five in the world, according to the World Bank. Despite this, the UAE submitted its first Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015, pledging to diversify its economy and generate 25% of its electricity from clean energy sources by 2021. The UAE has also set a more ambitious target to reduce greenhouse gas emissions by 25% by 2030 across all major economic sectors, including energy, transport, industry, services, agriculture, and waste, equivalent to 70 million tons of GHG. Furthermore, the UAE aims to cut its total energy consumption by almost half (40%) by 2050. The Emirati authorities have expressed a commitment to supporting renewable energy projects in developing countries and have demonstrated this commitment by organizing the COP28 in Dubai in 2023. Through these efforts, the UAE is striving to shift from an oil-based economy to an innovation-driven one, paving the way for a greener and more sustainable future.
Business as Usual in the Oil Industry?
The UAE’s commitment to sustainability has caused a stir in the business community and especially the oil and gas sector, which has been under pressure to revamp its business and operations models in the wake of COP26. Soon after the conclusion of the Glasgow conference, the UAE hosted the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC). Dr Sultan Al Jaber, special envoy for the COP26 in Glasgow and later designated president of the COP28, communicated with the “global energy leaders”, mainly heads of oil companies, to underline the Emirates’ commitment to invest in “carbon-efficient oil and gas” (WAM, November 14, 2021) and to reassure the industry that it is encouraged to adapt and not to stop. For the opening ceremony of ADIPEC, he reaffirmed the federation’s green efforts: the Abu Dhabi National Oil Company (ADNOC) already produces low-carbon crude oil. It has diversified its portfolio in other carbon-related domains like fertilizers. He also highlighted on hydrogen, the promising energy of the future, noting that the UAE is well-positioned to become one the leading producers and exporters of blue hydrogen. This low-carbon fuel is reportedly more environmental-friendly than oil and gas. The CEO of ADNOC reiterated: “(…) The solutions will be found where the energy expertise exists” and concluded that this multi-trillion-dollar business is “good for the climate, good for humanity and good for economic growth. (…) Solutions are both pro-climate and pro-growth” (WAM November 15, 2021).
Dr Sultan Al Jaber also projected multi-sector benefits when he led a panel session titled ‘Projecting COP Ambitions across COP27 and COP28 and Economic Diversification Priorities Post-pandemic’ at the Abu Dhabi Sustainability Week (ADSW), pointing out that decarbonized industry is no objective per se: “Net-zero, for us, is about new industries, new skills and new jobs. For us, the business of tackling climate change is simply good business” (WAM January 18, 2022). The business community and, to a great extent, the energy sector leaders needed that kind of reassurance on the stance of the UAE. Thus, while pursuing a sustainable agenda with the objective of net-zero emissions, the UAE will not compromise its business-friendly policies. Investing in new technologies with low carbon emissions would generate profits alongside respect for the environment.
Net-Zero Extraction, Net-Zero Charter
The “net-zero policy”, meaning no carbon emission, could therefore be interpreted in a variety of ways. On a global level, around 44 countries have pledged to work towards a net-zero objective, which accounts for almost three-quarters of global CO2 emissions, according to International Energy. However, only ten of these countries have updated their legislation to meet this pledge.
In the UAE, it is important to note the distinction between production and consumption. The UAE emphasized its commitment to reduce its carbon footprint in the future, and in the meantime, the extraction of fossil energies has increased. At the beginning of the century, the federation produced between 2 and 2.5 million barrels per day (bpd). With fluctuations in the oil markets and recent sanctions against Russia, production has increased today to 3 million bdp. ADNOC intends to reach 5 million bpd by 2030. In addition, the discovery of gas resources in Jebel Ali (Dubai), will contribute to making the federation self-sufficient in gas by the end of the decade. To reach the net-zero objective, low-emissions technologies should be implemented. Dr Sultan Al Jaber, who is also the head of ADNOC, made it clear that the oil and gas sector has to decarbonize its activities. Since May 2022, by becoming the sixth member of the Net-Zero Producers Forum (with the US, Canada, Norway, Qatar and Saudi Arabia), the UAE reiterated its commitment to pledges of decarbonization. Dr Sultan Al Jaber recently acknowledged that only “half of the industry” has engaged in reducing direct emissions of GHG (scope 1 of the UK GHG Protocol of 2001) or indirect emissions (scope 2).
Fossil fuels, be they in terms of production or consumption, remain the key factor in achieving net-zero carbon emissions in the UAE and globally. Even if the task looks overwhelming, the roadmap is clear. Any strategy to reach the objective implies that all stakeholders, from the Emirati authorities to private sectors and individuals, play their part. This is the way in which we may understand the motto that the COP28 will be “inclusive” – with the mandatory participation of the oil and gas sector. The Emirati authorities have multiplied the projects to get all parties involved. The latest initiative was to elaborate a UAE Government’s Net Zero Charter with the contribution of local governments. However, reducing consumption demand in the developed world will ultimately determine the success or failure of the net-zero objective.
