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U.A.E., a giant oil company, aims to burnish climate credentials

U.A.E., a giant oil company, aims to burnish climate credentials

Sultan Al Jaber is the chief executive officer of a major polluter. However, he is likely to be welcomed and even congratulated upon his arrival. The COP26 climate summit in Glasgow starts this weekend.

Mr. Al Jaber, who heads Abu Dhabi’s national oil company, which provides about 3 percent of the world’s oil, has another job. He is the United Arab Emirates’ special climate envoy and the founder of a multibillion dollar state-backed company that invests into renewable energy.

For more than a decade he has tried to position the Persian Gulf state as a leader on environmental issues, acting at the behest of Abu Dhabi’s de facto ruler, Crown Prince Mohammed bin Zayed.

The United Arab Emirates, the first country in the region, made a pledge to have zero net carbon emissions by 2050 as part of the latest initiative. It joins an increasing number of countries that have made long-term commitments that are difficult and hard to evaluate.

“He is a pioneer of climate action,” said Karim Elgendy, a fellow on Middle East environmental issues at Chatham House, a research organization in London.

It might seem paradoxical to try to be both an environmental advocate as well as an executive selling fossil fuels. The United Arab Emirates is a federation made up seven states, including Abu Dhabi, whose oil production finances the other six.

The Emirates views the push to green energy not as a threat but as a “unique opportunity”Mr. Al Jaber stated in an interview that it can use its financial strength and expertise to make money. interview earlier this year.

Make no mistake: Abu Dhabi’s leadership wants to preserve a market for the Emirates’ enormous oil reserves, which are enough for more than 60 years’ output at current rates.

The Emirates produce approximately three million barrels per day of oil, mainly through the Abu Dhabi National Oil Company (ADNOC). That revenue underwrites much of the country’s economy, financing the government and helping support downtowns of futuristic office towers in Abu Dhabi and Dubai.

But the royal families who lead the Emirates appear to have decided that they are better off to be part of the solution to global warming, in partnership with much of the rest of the world — or at least be seen to be. (The country has offered to host COP28 in two years.

“A net-zero target has a business case behind it,” said Karen Young, a senior fellow at the Middle East Institute, a research organization in Washington. “It brands a state hydrocarbon producer in a class of the solution finders, rather than the obstructionists.”

Analysts say that hitting the net-zero target, even by 2050, won’t be easy: The Emirates is one of the world’s highest carbon-dioxide emitters per capita, much it from electric power plants.But under the climate accounting used at COP, the oil exported by Abu Dhabi counts as emissions of the customers that burn it, like China and Japan, and not on those of the producing state.

Nonetheless, the goal is likely spur investment and action.

“You need an ambitious target to move things in the right direction,” said Steven Griffiths, senior vice president for research and development at Khalifa University in Abu Dhabi. “The country is in the best position probably of all the Gulf countries to actually do this.”

The Emirates plans spending 600 billion dirhams or $163 billion over the next three decades to reduce greenhouse gas emissions from power stations that burn large volumes of natural gases in order to cool buildings in the extreme Gulf heat. Solar farms can be built across the Emirates’ sands. Another source of clean energy will be the four nuclear reactors that were recently constructed in Abu Dhabi by South Korean contractors. These reactors are slowly becoming operational.

Analysts believe that the country’s decision to spend so much money will have a major impact on its economy. With 9.9 million inhabitants, it is already ahead of neighboring oil exporters like Saudi Arabian and Kuwait in diversifying away from oil. For example, the Emirates is a regional hub in finance, logistics, and tourism.

And more funding is likely to be forthcoming to support the green agenda, like retrofitting buildings so that they don’t suck up so much power for air conditioning, or converting transportation to electric power or hydrogen. The Emirates is one of those places with the riches and the will to implement “loss-leading projects that are about being at the cutting edge,” said Raad Alkadiri, managing director for energy and climate at the Eurasia Group, a political risk firm.

John Kerry, President Biden’s climate envoy and a regular visitor to Mr. Al Jaber in the Emirates, said in a Twitter message that its commitment was “an example for other energy-producing nations.”

The pledge may already have had an impact. Last Saturday, at a conference in Riyadh, officials in Saudi Arabia, the world’s largest oil exporter and frequent rival to the United Arab Emirates, said it would commit to achieve net zero by 2060.

There is also a certain amount of image-burnishing. The announcements enabled the Saudis and Emirates to appear confident before the world leaders who gathered for COP26. They also gave Mr. Kerry wins in his efforts at securing pledges.

These commitments also show that the major petro-states now believe that the world has changed, and that they need participate in efforts to combat global warming.

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“There has been a calculation that being at the table will allow you to shape this new world and the new climate economy,” said Mr. Elgendy.

These oil states insist that the new climate economy must include fossil fuel burning.

Mr. Al Jaber, along with Saudi officials, asserted at the Riyadh conference that oil and gas would be required to power the world economy for years to come — as well as generate a source of revenue to pay for investments in new energy sources.

Mr. Al Jaber stated that recent price shocks in natural and oil have caused electric bill to soar and forced some companies to scale back or close down. These were due to premature cuts in investment in these resources.

“The world has sleepwalked into a supply crunch,” he said. Oil and gas need to remain “mainstream” during the so-called energy transition, he added.

These views are contrary to some climate experts’ conclusions that new investments in oil or gas should be made must stop immediatelyIf the world wants to end climate change,

ADNOC is one the few oil companies that has made substantial investments to increase its production. The Emirates demanded last summer that ADNOC increase its production. Organization of the Petroleum Exporting Countries raise its output quota, leading to a high-profile standoff — since resolved — with the Saudis.

Five years ago, Mr. Al Jaber was named chief executive of ADNOC, and he has attracted private investment through sales of stakes in the company’s infrastructure to investors like the financial management firms BlackRock and KKR, and with oil and gas exploration deals with companies including U.S.-based Occidental Petroleum and Italy’s Eni. According to Colby Connelly of Energy Intelligence, an analyst firm, such transactions have generated around $26 billion over the past five years.

ADNOC announced recently that it would partner with BP to build facilities in Britain, the Emirates, and to produce large quantities of hydrogen. This clean-burning fuel could be used to power trucks or make steel in the future, signaling that the oil giant is ready to adapt to climate change.

Hydrogen could be used to replace oil exports. ADNOC has already shipped hydrogen from Japan to replace oil exports. Japan is the largest customer for Gulf oil in the form ammonia.




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