How Gulf Oil and Gas States Will Play Their Hand at COP27

But what was always a colossal task of landing practical solutions has been made more difficult by the economic, geopolitical and energy challenges of 2022 such as the weakened international ties following Russia’s invasion of Ukraine and recent announcements by the Organization of Petroleum Exporting Countries (OPEC) and OPEC Plus countries.

Among the practical solutions likely to be advanced are those by wealthy oil- and gas-exporting economies in the Gulf, especially de facto leader Saudi Arabia, that center on fossil fuels. COP27 may well be remembered as the conference that saw fossil fuels strongly shoulder their way back to the negotiating table.

Prior to COP26, the reliance of Gulf states on oil and gas drove their resistance to the energy transition, which in turn won them the reputation of being climate obstructionists. Yet in an unexpected and unprecedented policy shift, these states joined pro-climate endeavors in 2021.

The United Arab Emirates (UAE) pledged to reach net-zero emissions by 2050. Pledges by Saudi Arabia and Bahrain by 2060 followed. These states, especially Saudi Arabia and the UAE, have positioned themselves as leaders in providing clean energy globally. Not only do they have expertise in oil and gas, they also have a potential advantage in renewable energy, having some of the best solar and wind resources and, therefore, some of the cheapest renewable energy globally.

But the reality is more complex than that. A key feature of these states’ net-zero emissions targets is their continued production and exploitation of oil and gas – but with a twist: It is coupled with decarbonization technology.

This feature is explicit in the position of Saudi Arabia, the region’s largest fossil fuel exporter and a G20 economy and leader of the bloc of Arab States. It is also a leader in the Like-Minded Developing Countries (LMDC) Group and the Group of 77 & China, both of which also include Egypt.

To meet its net-zero targets by 2060, Saudi Arabia launched the Saudi Green Initiative and Middle East Green Initiative to plant 10 billion and 40 billion trees in Saudi Arabia and the Middle East, respectively. This announcement followed it joining the Net-Zero Producers Forum (along with Qatar, Norway and the US) in 2021.

These initiatives support the ‘circular carbon economy’ framework, which was endorsed by the 2020 Saudi-presided G20 in Riyadh as the cornerstone of the country’s solution for decarbonization, carbon reduction, and recycling. The framework encompasses the production of fossil fuels as well as new energy sources, most notably clean (blue or green) hydrogen, and heavy industries (hard-to-abate sectors). The framework intends to decarbonize all of these industries using carbon capture, utilization and storage (CCUS) technology.

At COP27, we can expect to see Saudi Arabia and other wealthy oil and gas exporters of the Gulf region position themselves as climate leaders. Saudi Arabia will hold the Middle East Green Initiative Summit and the Saudi Green Initiative Forum on the sidelines of COP27 and will invest US$30 million in Egypt. Saudi Arabia will also showcase the Regional Voluntary Carbon Market (recently established by the Saudi Public Investment Fund), which auctioned the largest carbon credits to date (1.4 million tonnes) during the 6th edition of the Future Investment Initiative Summit in Riyadh (dubbed the “Davos in the Desert”) in October 2022.

This position of keeping fossil fuels at the center of climate discussions is not unexpected from leading fossil fuel producers. Such a position is also common among other resource-dependent economies, including India, Norway, Australia and others. Beyond these states, the position is consistent with arguments of the least developed countries for which fossil fuels can offer an affordable solution to energy access, especially the 770 million people without access to electricity and the 2.5 billion people without access to clean cooking fuel.

The position will also be supported by many developing economies (especially those in Africa, the Middle East, and Asia) that seek to develop their own oil, gas, hydrogen or critical minerals resources. Supporters of the ongoing need for fossil fuels will point to a similar argument adapted by Europe in its response to the energy crisis that followed Russia’s invasion of Ukraine. Phasing out fossil fuels has seemingly been abandoned as Europe favored energy security over climate targets (for which Europe was accused of hypocrisy in Bonn in June during the lead-up talks to COP27).

COP27 will thus set the stage for other fossil-fuel exporters to attempt to steer climate negotiations. As the host of COP28, the UAE will naturally assume a similar leadership position. For that, it will present itself as the regional pioneer in establishing zero-carbon nuclear power, expanding renewable expansion and co-funding a Renewable Energy Fund that supports renewable energy projects in developing countries.

It will also note that it was the host of the first Middle East and North Africa climate week in March 2022 and the first Gulf state to announce net-zero targets. As an advocate for technology and an aspiring innovation hub for the region, decarbonization technology will be central to the UAE position but without abandoning fossil fuels.

Whether Gulf oil- and gas-exporting economies will meet their ambitious renewable energy, net-zero, and hydrogen targets remains to be seen. And it is not certain that they will become global leaders in energy transitions which will contribute to putting the world on track to avert the worst climate breakdown. Indeed, adherence to climate targets is urgent and requires phasing out fossil fuels altogether. But the use of fossil fuels will offer energy access and continue to attract support – and increasingly so.

Solutions must also target the long-term aim of phasing out fossil fuels and expanding clean energy sources. A collaborative approach is crucial; encouraging all countries to contribute to mitigating climate change given their own resources and economic circumstances. This collaboration will not be possible without adhering to elements of climate justice and of just energy transition.

This is important as the countries most impacted by climate change have historically not contributed to the emissions that caused it. It is these countries that also aspire to access energy and/or develop their fossil fuel industries to achieve economic growth and development.

Without such a collaborative, net-positive sum approach, countries will have neither the incentives to comply nor accountability if they do not, and both climate and energy targets will remain merely ink on paper.