There is plenty of talk about energy “transition” in the current discourse around climate mitigation, but what is actually happening in the energy sector is going beyond that – our present trajectory is more akin to a “revolution”. A transition implies a clear and neat path from A to B, with defined milestones and a predetermined outcome; whereas with a revolution the journey is treacherous, the destination uncertain, and there is high risk of collateral damage along the way.
The current polycrisis of high inflation and interest rates, energy security issues, and the climate crisis, have made it clear that we cannot afford to focus on one or two prongs of the energy trilemma – security, affordability and sustainability – at the expense of the others.
While the desired destination is unequivocally a greener future, the journey ahead – if we are to sidestep a messy revolution – needs to be far more considered. A path towards as clean and green a transition as possible must involve building rational frameworks as well as a frank appraisal of the financial realities, while also leveraging expertise and innovation – including from the Middle East and Africa, and from the hydrocarbon sector itself, which has important depth and breadth of knowledge and skills.
From my vantage point of working strategically in the energy space across India, Middle East and Africa every day, I see two things as undebatable: first, we will depend on the entire energy mix going forward, certainly for the next few decades. We need to stop thinking that hydrocarbons and clean energy are mutually exclusive, and understand that we still need to employ oil, gas, renewables and clean energy in tandem. It is necessary to acknowledge that and work with it, rather than against it.
Second, it’s critical to ensure that all voices are heard, including those from emerging economies. It is after all the developing countries – which emit less carbon than the developed countries – that are suffering disproportionately from the effects of both climate change and inflation, further putting economies, communities and political stability at risk.
And, because of this, forums that are inclusive, rational and action-oriented are essential. The G20 is of course a leading forum, as is Cop; and the upcoming Cop28 being held in the UAE is important, as it is a regional hub for innovation and collaboration. At Cop28, we should see a focus on implementation of measures that balance the energy trilemma, while also moving us towards a greener future.
But while convening and agreeing on targets is one thing, one also needs to focus on measurability. That is why frameworks – such as those for transitioning companies by the Sustainable Markets Initiative Energy Transition Task Force – are so important. Developed to provide stakeholders with the information they need on performance and progress, this framework recognises the activities and impact of companies reducing and removing emissions, as well as those accelerating the development of low-carbon solutions at scale. Ultimately this will help to mobilise capital into transitioning companies.
This framework brings many perspectives together, as it was developed by the Sustainable Markets Initiative Energy Transition Task Force working group. This group includes parties from across the energy and utilities, sustainability, metals and mining, banking, insurance, and management consulting sectors. Rating agency Sustainable Fitch will utilise it to develop an independent transition assessment, illuminating the spectrum of companies in the undefined space between carbon intensive and net zero today.
Focusing the lens back on the Middle East and Africa, it’s clear that this part of the world will continue to play a very important energy security role as we journey towards becoming green. For starters, much of both regions enjoy year-round sunshine, ample wind and plenty of space. There is also the matter of positioning, and the fact they sit between markets east and west of Suez. Specifically in the GCC, there is significant appetite for transition, the ability to scale infrastructure quickly, and the willingness and ability to invest. In parallel with providing the world with much-needed hydrocarbons, mega projects that are greening the energy mix are being undertaken already, and much more is planned.
It is also clear that policymakers in parts of Europe and East Asia are aware of the potential of this region to be better placed to produce green energy than they are. Germany recently took formal delivery of its first batch of ammonia from the UAE, and has also said it hopes to import green ammonia from a terminal due to open in Saudi Arabia in 2026. Meanwhile, South Korea and Saudi Arabia have entered into a multi-part agreement around the production of hydrogen in the kingdom.
Ultimately, it is a matter of looking at the entire energy mix to shift towards being as green as possible, and as quickly as is sustainable. This includes working with the promise of greener energy sources, including ammonia and hydrogen. Crucially, we must also reduce the globe’s coal consumption – it is our most polluting energy source after all. Then there is the act of making fossil fuels much greener through innovation; because while the region scales up green energy production, the GCC will continue to produce oil and gas, increasingly sustainably, to help meet today’s global energy demand affordably and securely, lest these two elements of the trilemma be forgotten as we transition.
So, the next decade will certainly be interesting, but through inclusive dialogue, the use of strong frameworks that allow for measurability, and a recognition that we will need most forms of energy to power the journey ahead – there may be a chance we can avoid a revolution and achieve the transition we all aspire to, the one that the world deserves.