How many times has the Conference of the Parties – the annual UN climate conference – been held in a major oil and gas exporting country? Only twice, compared with 14 in Europe and four times in Germany. So, the decision to hold 2023’s Cop28 in the UAE is a major opportunity for a new narrative.
The annual conferences (Cop26 slipped back a year because of the Covid-19 pandemic) are intended to review national climate plans and co-ordinate between countries and companies on initiatives and policies.
How can the UAE make its distinctive contribution? How can Cop28 be more than a bureaucratic update or a diplomatic haggling?
Some have remarked on the apparent “irony” of awarding Cop28 to a leading global oil and gas exporter, without noting the irony that Europe’s largest consumer of coal has hosted four editions of the event.
A growing number of countries in the 'Beyond Oil and Gas Alliance' are promising to phase out petroleum extraction entirely – though not its use, which is the real problem.
So, the UAE’s message should be two-fold. The first, easier part is to show how a wealthy, fast-growing country with a mostly fossil-fuelled economy and a hot, arid climate, can make serious progress towards its 2050 net-zero ambition.
This will be achieved by the large-scale introduction of nuclear and solar power, cuts to energy subsidies and boosts to efficiency, plans to expand carbon capture and storage (CCS), and the Abu Dhabi National Oil Company’s agreement to power its installations with low-carbon electricity.
The picture of achievement will be strengthened greatly if the country can show more gains in tangible CCS projects, a swath of new starts on giant solar farms and some steps on low-carbon transport such as a big step-up in electric vehicles use before November 2023.
Even better, a domestic carbon price, even at a low initial level, will begin the job of aligning companies with the 2050 goal.
The much harder part is to reconcile the apparently irreconcilable: how do the UAE’s growing oil and gas exports match with the urgent climatic need to approach global net-zero emissions in the next three decades?
The UAE is selling oil and gas because others are buying. It is a time of record liquefied natural gas prices.
The US government has requested Opec+ several times to boost oil output as crude prices hover around $85 per barrel. This is understandable domestic politics, but it makes little sense to demand the UAE and others to invest heavily in oilfields, while simultaneously intending to make them “stranded assets” within a few years.
At Cop26, 26 countries and development finance agencies agreed to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022”.
The use of the technicality “unabated” is key because this allows the use of fossil fuels in non-emitting methods – such as with CCS or to make blue hydrogen. Adnoc and Saudi Aramco already have major plans to produce blue hydrogen and its derivatives.
Going beyond this, major oil producers could offer a systematic path to carbon-neutral fossil fuels. Some LNG cargoes have already been marketed on this basis.
The seller reduces emissions on the production side as far as possible, then deals with the carbon dioxide that will be produced when the fuel is burnt by purchasing “offsets”, typically planting trees or similar activities that suck up carbon as they grow.
In February, a subsidiary of American company Occidental Petroleum sold the world’s first “carbon-neutral” oil to India’s Reliance.
But there has been much criticism of offsets. Many are of low quality – based on projects that do not really reduce emissions, or on forestry that can be undone overnight by a forest fire or logging company.
The GCC countries could offer a different path. First, they can receive back shipments of carbon dioxide from the combustion of their products and store it safely and permanently deep underground in their well-understood rock formations. Saudi Aramco announced plans for such an arrangement with South Korea in March.
Second, they could offer the service of taking carbon dioxide from other emitters, who, due to unsuitable geology or public opposition, cannot store it at home. This would include Japan, South Korea, Germany and other European countries.
Third, they can become a centre of direct air capture (DAC) – removing carbon dioxide from the atmosphere with machines. This can be stored underground or used to make long-lasting products such as cement and plastic-based metal substitutes.
Most scenarios for reaching net-zero emissions around mid-century rely heavily on large amounts of DAC, which is currently operational only on a small scale in Iceland and Switzerland. DAC is very expensive today, but costs would fall sharply as it is scaled up and standardised.
This would enable sales of oil to continue for uses with few viable alternatives, such as for aircraft. A DAC cost of $100 per tonne would add $170 to the cost of a Dubai-New York economy round trip, currently priced at around $900.
Alternatively, it would represent a $40 per barrel discount on the oil price. This is advantageous for the low-cost, low-carbon Gulf producers over most rivals.
Carbon-neutral hydrocarbons can be a major topic for Cop28: how to allocate the responsibility between producer and consumer, how to certify them reliably, what market mechanisms can be used and how to fund and develop the technology.
The concept squares the circle between hydrocarbon producers and consumers, and between a world that has no ready alternatives today and a low-carbon world of 2050-70.
It challenges all fossil fuel exporting countries and companies to make good on their promises. And, it softens the zero-sum struggle that has bedevilled so many previous Cop summits.
Robin M. Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis