Commitment to carbon neutrality
There are growing hints the United Arab Emirates may announce a net-zero carbon-emissions target ahead of the COP26 climate conference in November. Saudi Arabia also may agree to a carbon-neutral goal for around 2050, according to the US climate envoy, John Kerry. So should Gulf oil producers truly commit to carbon neutrality, and if so how would they get there?
At first encounter, even asking the question seems bizarre. The region remains the world's premier locus of hydrocarbon exports, the foundation of its economy. But the global winds are changing.
By the end of last year, more than two-thirds of the global economy had set, or had planned to set, net-zero targets, mostly around 2050, or 2060 in the case of China. As record heatwaves sweep the Middle East and North America, eliminating net greenhouse-gas emissions is necessary to keep global industrial-era temperature rises below 1.5 degrees Celsius by the end of the century.
Still, setting a target could be aspirational and not much more, a sign of concordance with other leading countries. But even that would send an important signal to those fossil-fuel exporters that have lagged on the issue of climate change, notably Russia and Australia.
To be somewhat cynical, if others do not achieve their goals, any shortfall from the Gulf Cooperation Council bloc will be overshadowed. If they do meet them, much of the GCC's hydrocarbon economy will be obsolete anyway.
That said, a really effective target for the GCC, backed up by concrete goals and intermediate milestones, would help prepare the bloc's entire domestic and export economy for three decades of total reinvention. That would require intermediate targets for 2030 and 2040, such as that of the European Union, which is to cut 2030 emissions by 55% versus 1990.
The concern is that the whole plan will quickly become infeasible if emissions are still rising by 2025 or 2030. The UAE's nuclearpower plan, its single largest lowcarbon investment, took 13 years from conception to first generation of electricity. Fewer than three such cycles remain by 2050.
The first GCC country to commit to a net-zero carbon goal would certainly be taking a big risk: of moving prematurely away from hydrocarbons while prices are still high and when reserves underground are enormous.
But it would also be getting ahead of the game. Some competitors already are offering carbon-neutral oil and LNG (liquefied natural gas) cargoes, reducing associated emissions as far as possible, then paying for "offsets" to neutralize the rest. Oman, in partnership with Shell, sent the Middle East's first carbon-neutral LNG shipment in June.
Of course, reaching net-zero carbon would not mean stopping the extraction, use and sale of oil and gas entirely. But oil output in particular would fall precipitously. The International Energy Agency's plan for net-zero by 2050, albeit not the only possible route, sees OPEC oil production, mainly from the GCC and its neighbors, falling to 12.5 million barrels per day, from current capacity of some 35mbpd.
The remaining oil and gas output would mostly be employed in non-emitting uses - with carbon capture and storage, or as feedstock for long-lived materials such as plastics. Any residual emissions would be mopped up by direct removal of atmospheric carbon dioxide, or by planting trees and other biological methods.
There is going to be enormous competition for a limited amount of "negative emissions," given all the users who will not have managed to eliminate their emissions or will regard them somehow as essential or unavoidable.
The leading countries in such a plan would avoid locking in highcarbon infrastructure, and would encourage and enable people and companies to reorient their skills and strategies. There would be a clear direction for research and investment in startups and new technologies.
Such a strategy would help protect the economy against the increasingly likely prospect, in the EU and probably the UK, the US and others, of border carbon tariffs, designed to penalize imports from countries without strict carbonreduction policies.
But what would the components of such a plan be? The electricity and desalination sector would be the easiest target, though still challenging.
The UAE's national energy strategy already plans for renewables and nuclear power to be half of generation capacity by 2050.