Hints of Opec+ dissension drive down prices
Opec+ surprised the markets by postponing its scheduled meeting from November 25 and 26 to the 30th, without giving a reason. This caused oil prices to lurch down 4.9 per cent last Wednesday, with worries that it might signal the group was having trouble agreeing on output targets for next year. Saudi Arabia’s intentions on the continuation of its voluntary 1 million barrel per day cut into next year are crucial. “Every member country acknowledges the need to reduce output to support prices into 2024. The question is how to share the burden of this,” said consultancy Rystad Energy, with suggestions that Nigeria and Angola were chafing at proposed reductions in their baseline production capacity.
Rising output from some non-Opec+ states – in the organisation but not bound by targets – and over-production from a couple of members, has collided with persistent worries over demand. Last week offered hopes of the first weekly gain in five, but drops on Thursday and Friday left it where it started. From nearly $98 per barrel in late September, Brent crude closed below $80 on Monday, though it picked up a bit on Tuesday.
A chemical tanker in the Gulf of Aden has been rescued by the US navy after being seized by suspected Houthi fighters. For now, markets remain sanguine about threats to oil transit through the Red Sea area.
Energy companies work to cut methane, CO2; power up planes
Adnoc and Australian oil company Santos will explore a joint carbon management platform. Santos is building a large carbon capture and storage hub at Moomba in South Australia. The Abu Dhabi state oil giant has opened the first high-speed green hydrogen refuelling station in the region, in Masdar City. Mohammed Alardhi, executive chairman of InvestCorp, writes that abundant solar power can create the next energy revolution in the Gulf, the production of clean hydrogen, with Oman at the fore.
The clean fuel is an essential component of energy transition plans, and Belgian hydrogen electrolyser maker John Cockerill is building factories around the world to capitalise on demand and local incentives. But Europe needs to commit more to buy clean hydrogen and simplify its rules.
Sharjah-based Crescent Petroleum has promised to stop methane leaks from its operations by 2030 as it targets carbon neutrality. It says its emissions are one-third of the global average, and has cut escape of the powerful greenhouse gas across its operations by 42 per cent since 2021.
Dubai Electricity and Water Authority has completed the final unit of its Hassyan power and water complex, which has been converted from coal to run only on natural gas. Ports group DP World and the International Renewable Energy Agency are working together to increase the use of renewable energy in the ports and maritime sectors, and Tabreed, a district cooling company, is considering expanding its cost-effective and environmentally friendlier business into south-east Asia. And the Dubai Financial Market will launch a pilot carbon credit trading programme.
Emirates has operated the first Airbus A380 flight using entirely sustainable aviation fuel in one engine, and a Virgin Atlantic plane has made the first trans-Atlantic flight of a commercial airline powered wholly by SAF. But SAF is still available in too small volumes and is three to five times costlier than fossil-based jet fuel. The International Civil Aviation Organisation’s third annual meeting on alternative fuels concluded in Dubai last week, agreeing to use SAF to reduce emissions 5 per cent by 2030. SAF consumption rose from 0.1 per cent of airlines’ fuel use in 2021 to 0.2 per cent last year.
Motorists in the UAE, meanwhile, are keener on electric vehicles than Europeans: 19 per cent of those surveyed said they planned to buy an EV in the next year, versus 16 per cent of those in Europe. Fuse, a UAE start-up, fits electric motors to classic cars to keep them on the road cleanly. The UAE’s minister of energy says the country will introduce a pricing mechanism to encourage private-sector investment in electric vehicle charging. The UAE aims to raise the share of electric and hybrid cars from about 1 per cent currently to 50 per cent by 2050.
Slowing warming of our overheated planet is urgent
We cannot wait until the 2040s to reduce emissions. The globe is already dangerously close to breaching the level of 1.5°C of warming above pre-industrial levels identified in the Paris Agreement. But if we fall short of this goal, we have to redouble our efforts and fight for every fraction of a degree. There is no room for self-imposed ideological fetters: we need to combine and accelerate all solutions, from renewable energy, energy efficiency, carbon capture, removal of atmospheric carbon dioxide, and controlled screening out of the sun’s heat.
An overheating planet brings temperatures that are dangerous to human health, with recent heatwaves in India and Iran exceeding the maximum level that people can tolerate for lengthy periods. Farmers in Iraq are abandoning their drought-stricken fields. Weather-related disasters are expected to rise 40 per cent from 2015 to 2030, and another 250,000 people will die annually from heat-related problems from 2030 onwards. Outdoor workers will be more prone to kidney and respiratory diseases. People may be encountering venomous snakes more often in the UAE as they hibernate less in the hotter weather. Antarctica and Greenland are melting three times faster than in the early 1990s, says the UN Secretary General.
By 2050, global GDP could drop 4.4 per cent each year due to climate change, if temperatures warm above 2°C, says S&P Global Ratings. Up to 12 per cent of GDP in South Asia, and 8 per cent in sub-Saharan Africa, the Middle East and North Africa, is at risk.
Lahore is considering cloud-seeding to try to bring rain to clean up its air pollution, among the worst in the world. Abu Dhabi has initiated a new plan to improve its air quality and monitor pollution.
What to see and do at the Cop28 climate gathering
The Green Zone of the conference is open to the public between December 3 and December 12, with events and workshops including a musical, an organic farm, discussions, art installations and film screenings. Sheikh Mansour bin Zayed, Vice President, Deputy Prime Minister and Chairman of the Presidential Court, visited Expo City Dubai on Friday to inspect the venue.
Students will have extensive opportunities to participate, with Zayed University, New York University Abu Dhabi and Heriot-Watt University Dubai organising a range of events, and pupils from a Dubai school are among five finalists for a global climate prize. The Greening Education Hub will be launched at Cop28, spotlighting the importance of education in mitigating climate change. And Jais Climate, a UAE-developed large language model, bilingual in Arabic and English, is designed to make climate information more readily accessible through artificial intelligence.
Cop and climate policy contains much jargon and acronyms: here is our handy guide to understanding them.
Cop ready to bridge differences at a 'moment of truth'
The UAE will help countries “bridge their differences”, but “now it is on those parties to come with the right mindset and deliver an outcome”, says Majid Al Suwaidi, Cop28 director general. For a successful Cop, “You must listen to everyone. Not just the parties, but the position of non-government bodies, companies, youths, indigenous people and more,” says Moustafa Bayoumi, Abu Dhabi-based climate change researcher.
The summit is a “moment of truth” for the oil and gas business, says Fatih Birol, executive director of the International Energy Agency. The petroleum industry contributes only 1 per cent of the $1.8 trillion of global clean energy investments. It needs to cut its operational emissions 60 per cent by 2030 and be at near-zero carbon intensity by the early 2040s, to be compatible with the Paris Agreement’s core aim of limiting warming to no more than 1.5°C. But the IEA gave rather mixed messages in warning against “excessive expectations and reliance” on carbon capture and storage, a technology today that needs more support rather than less. The deployment of new technologies and improving energy efficiency are accelerating, giving hope of limiting warming to 1.6-1.9°C.
Much of the Cop discussion will revolve around finance: for carbon trading, for developing countries, and for “loss and damage” from climate change. The World Economic Forum says $13.5 trillion of investment is required by 2050 for a carbon-neutral future, covering the “hard-to-abate” sectors of steel, cement, ammonia, aluminium, oil and gas, aviation, shipping and trucking. Creative methods are needed to bring multinational funds, to unlock private-sector capital, and to reduce the cost of capital – with African countries currently paying five times as much for market-rate bonds as they do to the World Bank. Effective climate finance needs a reliable pipeline of infrastructure projects – and GCC countries could leverage their historical experience to partner with Africa. The Emirates Development Bank has agreed to provide $350 million to support the International Renewable Energy Agency’s Energy Transition Accelerator Financing platform, which supports projects in developing countries. Etaf has now surpassed its target of raising $1 billion by the end of the decade.
“Isn't that a Ponzi scheme, when you liquidate your capital assets and count it as growth?”, asks Tony Juniper, former conservation aide to King Charles III, speaking to a gathering of Swiss investment managers. “We are working in an economic system which sees the degradation of nature as rational and we're counting it as growth.” He called for the pursuit of business and nature to be “joined-up”. The King, who will give the opening speech at Cop28, is himself a long-time and outspoken supporter of environmental causes.
Sustainable finance is surging in the Middle East: $24.55 billion in 2021 was up 532 per cent on 2020. The UAE plays a pivotal role in this and the parallel developments in digital finance. Abu Dhabi Finance Week began on Monday, with a focus on “investing in the transition era”. The UAE faces both risk and opportunity in the transition, with energy engineering and services group Petrofac pointing to carbon capture, hydrogen and fuel from waste.
Cop28 is an opportunity for India to accelerate its energy transition. The South Asian giant is one of the biggest markets for renewable energy systems, but still uses coal for 70 per cent of its electricity. New Delhi reportedly wants developed countries to commit to being carbon-negative by 2050, giving it and other developing economies more room to emit.