Laith Alajlouni, Amnah Ibraheem & Asna Wajid
Gulf-state leaders have been emphasising their significant clean-energy investment pledges during the 2023 United Nations Climate Change Conference, COP28, in Dubai. Saudi Arabia and the United Arab Emirates (UAE) have said that they will spend up to US$266.6 billion and US$54.5bn, respectively, by 2030 to upgrade their energy infrastructure and begin a long-term transition towards achieving net-zero carbon emissions. Climate-related investments are also a major factor driving Gulf-state diplomacy.
Saudi Arabia’s state-owned ACWA Power announced a US$10bn investment in Egypt’s green-energy sector in August 2023. The company is already participating in the construction of the Suez Gulf wind farm and the Kom Ombo photovoltaic plant, with ambitions to hold a 50% share in Egypt’s renewable-energy market by 2026. It also plans to expand into China and Central Asia. Qatar’s sovereign wealth fund, Qatar Investment Authority, agreed to invest US$2.4bn in Germany’s largest power producer, RWE AG, so that it could acquire the American firm Con Edison Inc.’s clean-energy subsidiary. And, in Central Asia, Abu Dhabi’s clean-energy company, Masdar, has become a leading player, recently signing agreements in Azerbaijan for three renewable-energy projects with a combined capacity of 1 gigawatt and valued at US$1bn. Masdar’s joint investment project in the Eastern Mediterranean will produce renewable electricity for the Greece–Egypt subsea power link through its affiliate Infinity Power and Greece’s Copelouzos Group.
Despite this burgeoning activity, however, two perennial issues continue to impede the regional push towards green energy: the continuing imperative to expand Gulf-state oil production and the intractable Hamas–Israel conflict. Firstly, regarding oil production, the UAE this year simultaneously held the COP28 presidency while also planning a major expansion of its oil-production capacity. This tension was apparent in the country’s much-criticised appointment of Sultan Ahmed Al Jaber, chair of the Abu Dhabi National Oil Company, as COP28 president.
Despite the Gulf states’ potential as future producers of clean energy, their economies currently depend on maintaining or increasing oil exports, which is also necessary for preserving the stability of the global oil market. Domestic consumption of oil has increased significantly in recent years, and governments have begun tapping new natural-gas fields to boost gas exports and offset the cost of the oil that is now used at home rather than exported. Solar- and wind-energy exports could eventually play a similar role as gas – as a substitute for lower oil exports – but the technology is not yet scalable or cost competitive.
Saudi Arabia and the UAE have both begun investing in carbon-capture technology to offset their continuing production and use of fossil fuels. The technology is especially useful because one form, carbon-dioxide injection, can increase the lifespan of old oil-drilling sites once they are deemed economically unviable. Many benefits of carbon capture remain notional, however, and using current technology at the scale required to meet global climate goals would require unfeasibly large amounts of electricity.
Secondly, efforts towards regional integration that had been underway prior to Hamas’s October 2023 attack against Israel, including multiple climate-related investment deals, have now been paused or cancelled. On 16 November, Jordan announced its withdrawal from an ‘energy for water’ deal with Israel, which was supposed to have been formalised during COP28. Under the deal, solar energy produced in Jordan would have been sold to Israel and the occupied Palestinian Territories for the production of desalinised water, which would then have been sold back to Jordan.
The death toll from Israeli airstrikes in Gaza has exacerbated popular anti-Israel sentiment throughout the region, complicating the path for government-to-government normalisation and for existing and future climate-related deals involving Israel. Given the multi-year timescale for realising most climate-infrastructure projects, it is unclear how any regional projects involving Israel can proceed without a political solution for, or at least greater stability in, relations between Israelis and Palestinians.
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