The UAE, the Arab world’s second-largest economy, is investing "way more" in renewable energy than in oil and gas, Minister of Energy and Infrastructure Suhail Al Mazrouei said on Monday.
The Emirates' investments in clean energy surpass the investments in hydrocarbons, but funding oil and gas projects is necessary to avoid high prices going into the transition, Mr Al Mazrouei said during a panel session at the Cop28 climate summit.
If not done correctly, higher oil and gas prices could “hinder” the transition to clean energy in many countries where affordability is crucial, he said.
Mr Al Mazrouei urged countries to not “eliminate” any source of energy.
“Let’s fight one enemy, which is the emissions. So, if we can capture carbon dioxide from any source and remove it, that source becomes clean.”
The UAE, Opec's third-largest producer, has been investing heavily in clean energy projects, ranging from nuclear to solar, to achieve net-zero emissions by 2050.
The state-owned energy company, Adnoc plans to become carbon neutral by 2045.
On Saturday, 50 oil and gas companies, including Saudi Aramco, ExxonMobil and Shell, signed the Oil and Gas Decarbonisation Charter (OGDC), which calls for net-zero emissions by 2050 or before, as well as near-zero upstream methane emissions by the end of the decade.
The pledge does not include the emissions from the fuel they sell, also called Scope 3 emissions.
David Turk, deputy secretary at the US Department of Energy, said the commitments to reduce methane emissions in the oil and gas sector were “long overdue” but added that he hoped to see a greater focus on Scope 3 emissions.
“For many companies, Scope 3 is 10 times as big as Scope 1 and Scope 2 combined, so again, we need to ask ourselves tough questions [and] we need to focus on where the emissions are,” said Mr Turk, who was part of the same panel.
Methane, the second-largest contributor to climate change, is a greenhouse gas that warms up more than 80 times faster than carbon dioxide.
The oil and gas industry is estimated to account for up to a quarter of human-caused methane emissions.
Meanwhile, the top executive at Spanish energy company Cepsa said the energy transition would not be possible without incentivising demand.
Maarten Wetselaar, the company’s chief executive, said emissions abatement would not happen without demand incentives and carbon pricing.
“If you don't incentivise demand, it is very hard to subsidise your way into the energy transition because it will eventually be unaffordable at $3 Henry Hub,” Mr Wetselaar said.
“That is fundamentally very cheap energy [and] even subsidised hydrogen will struggle to compete.”
Natural gas, considered a low-carbon alternative to crude oil, is set to become even cheaper with many large projects set to come online over the next few years.
In a later session, Mohamed Al Ramahi, Masdar’s chief executive, said the Abu Dhabi-based clean energy company would continue investing in more renewable energy projects in the Global South.
“For the next 10 years, we will be tripling renewable energy. Some of that capital will go to the Global North, [but] we have the Global South as the top priority and we will continue deploying more capital [there],” Mr Al Ramahi said.
The Global South, home to countries such as India, Brazil and Indonesia, has access to cheap and abundant renewable energy but funding for projects has lagged behind due to lack of government support and private capital.
