Saudi Arabia, UAE see economic merits of going green

Energy ministers from two of the Mideast Gulf's largest oil producers today said they see clear economic benefits from a transition to cleaner energy.

Speaking at Abu Dhabi Sustainability Week, Saudi Arabia's Prince Abdulaziz bin Salman said "there is a solid economic case [for transition]," and added "there will be money that will be made".

UAE energy minister Suhail al-Mazrouei focused on potential savings, saying incorporating a 50pc contribution of 'green' resources to the country's energy mix by 2050 will allow Abu Dhabi to reduce 70pc of its emissions within that time and lower its investments in the sector.

"We were supposed to spend… $353bn on fuel, plus capex, but going 50pc green would save us $191bn, or almost 60pc of the budget," he said, adding that a shift would benefit countries financially and environmentally and create new job opportunities.

The UAE aims to raise the contribution of clean energy in its domestic mix to 50pc by 2050 — 44pc of renewables and 6pc nuclear, with 38pc of gas and 12pc clean coal — from 25pc in 2017, and to reduce the carbon footprint of power generation by 70pc. The UAE was the first Middle Eastern country to announce a net-zero target — also by 2050 — and will host the UN-led climate conference of 2023.

Saudi Arabia, the world's largest exporter of crude, has pledged to reach net-zero emissions by 2060. In late October, the US singled out Riyadh, Russia and China as being among the nations falling short in their efforts to counter climate change.

The green transition outlook does not mean Riyadh or Abu Dhabi will step away from a hydrocarbon-heavy strategy any time soon, with both seeking to raise their crude production capacity in the next five-to-eight years. The UAE wants to lift its ceiling by 25pc to 5mn b/d in 2030, and Saudi Arabia plans to add 1mn b/d of capacity, for a total of 13mn b/d, by 2027.

Aramco's chief executive Amin Nasser recently said the inability to deploy current low-carbon technologies at a large scale will retain hydrocarbons in the energy mix for now.

"New and existing energy sources will both need to operate in parallel for a long time," he said in early December. "Alternatives [to hydrocarbon] are in no way near ready to carry a big enough load."

Prince Abdulaziz today again underscored the need to focus on lowering emissions, rather than on excluding a specific energy source throughout the green transition.

"I think tabooing a source of energy or being too selective would be damaging and would be not recognising the economics of what we need to do," he said.

Saudi Arabia and the UAE have been pursuing developments in hydrogen. Riyadh wants to produce 2.9mn t/yr by 2030 and 4mn t/yr by 2035 of largely blue hydrogen, derived from from natural gas, and Abu Dhabi has ambitions to capture 25pc of the hydrogen market share and is in talks with existing oil and gas customers about supply.

By Ruxandra Iordache