EU urged to deepen green investments in the Gulf

Think tank says region could become a key exporter of clean energy to Europe

The EU should increase its green investments in the Gulf as countries in the region embrace clean energy, a think tank has urged.

Cinzia Bianco, a fellow at the European Council on Foreign Relations think tank, said Saudi Arabia’s promise to reach net zero by 2060 was a sign that Gulf countries see opportunities in the green transition.

She said Brussels stood to benefit from this because Gulf states “could become key exporters of cheap clean energy to Europe”.

The EU is facing a spike in gas prices which has raised fears of Russia — the main supplier of fossil fuels to the bloc — using them as a political bargaining chip, prompting calls for Europe to increase its energy resilience.

Deeper economic ties between Europe and the Gulf would not only offer cheap energy to the EU but pave the way for greater political dialogue, Ms Bianco said.

Efforts to promote green energy are part of the European Green Deal, the EU’s flagship initiative aimed at tackling climate change.

“The development of the external dimension of the European Green Deal is critical to Europe’s future as a global power,” Ms Bianco said.

“Through the agreement, the EU can support its Gulf partners’ attempts to diversify their energy mix by expanding their green energy capabilities.”

Trade between the EU and GCC was worth €97.1 billion ($112.9bn) in 2020, according to data from Brussels.

Previous joint ventures include a solar energy project being developed in Greece by UAE company Masdar and Finland’s Taaleri Energia. German investors have put money into renewable energy in Oman.

Green hydrogen

Ms Bianco said green hydrogen was one area worth investing in, because it would help Europe to reach net zero and the Gulf to reduce its dependence on oil and gas.

This would require substantial upgrades to energy infrastructure, such as new hydrogen-ready pipelines and import terminals, she said.

She said investment could take place under the auspices of the EU-GCC Dialogue on Trade and Investment, which was launched in 2017.

Ms Bianco said Europe could use investment as a way to increase its standing in the Gulf, as China gains influence and the US disengages from the Middle East.

“The EU and its member states should put the European Green Deal at the centre of their engagement with the Gulf,” she said.

“For example, if the EU became an important market for green energy exports from Gulf countries, as well as their essential partner in the green transition, the bloc would gain a new form of influence.”

Saudi Arabia’s 2060 promise was announced by Crown Prince Mohammad bin Salman in Riyadh on Saturday.

It came a week before the start of the Cop26 summit, at which participants are being urged to put forward ambitious climate plans.

Updated: October 26th 2021, 12:53 PM