18 Jan 2023

Road to COP 28: Decarbonisation Developments in the UAE

Authored by: Catriona McDevitt, Alan Rodgers & Manal Khan

In Brief:

  1. The UAE Government and UAE entities are accelerating their low-carbon growth strategies and their goal of net zero by 2050.
  2. In order to control the effects of climate change, the UAE is controlling emissions, reducing flaring of natural gas, increasing energy efficiency and undertaking many other steps.
  3. The UAE Net Zero by 2050 strategic initiative is a national drive to achieve net-zero emissions by 2050, making the Emirates the first MENA nation to do so.

Following our previous article in our Road to COP 28 series, in which we provided an update on the developments in sustainable finance in the UAE [https://www.hadefpartners.com/News/592/Road-to-COP28--Latest-Development-in-UAE-Sustainable-Finance]. We set out below a further update with respect to the recent developments in this arena, in anticipation of the UAE hosting COP 28 in Dubai at the end of 2023.

One of the key themes in recent months is ‘Decarbonisation’, a term used for the elimination or reduction of carbon dioxide (“CO2”) emissions into the environment. Global efforts to target the climate crisis are underway with decarbonisation appearing to be at the forefront of the global community’s climate change efforts, in preparation for COP 28.

An agreement adopted in Paris at the 21st COP of United Nations Framework Convention on Climate Change in 2015 (“Paris Agreement”) outlined a decarbonisation strategy to achieve reduced levels of CO2 emissions from 2.5°C to 1.5°C (by 2030) compared to pre-industrial levels and eventually to achieve net-zero by 2050. Parties to the Paris Agreement are bound by this goal, which arguably brings them to a common ground of undertaking determined efforts to achieve the temperature goal for decarbonisation, collaboratively.

With COP 28 to take place in Dubai at the end of the year, the UAE is gearing up its efforts in its fight for climate change and aims to present its decarbonisation objectives at the conference, with a primary focus on global energy transition.

Some of the recent developments of decarbonisation in the UAE include collaborative efforts from 21 companies (government and private) that have pledged to commit to the UAE Ministry of Climate Change & Environment’s (“MoCCAE”) Climate-Responsible Companies Pledge to reduce carbon emissions in the country.

Majid al-Futtaim Group and Emirates Steel Arkan Group have, amongst others, committed to implement strategies to reduce their carbon footprint in the region by constructing science-based plans and sharing such plans with the UAE government, in an attempt to contribute to the targets to achieve net-zero by 2050. Some of the additional pledges by the companies include developing core company values and principles in respect of climate change and measuring their greenhouse gas emissions and reporting them in a transparent manner to MoCCAE.

In addition, Abu Dhabi National Oil Company (“ADNOC”) has allocated USD 15 billion towards decarbonisation projects and initiatives as it aims to reduce its carbon emissions by 25 percent by 2030. In line with the UAE government’s decarbonisation initiatives, ADNOC have confirmed its decarbonisation strategy will incorporate low-carbon solutions such as investment into clean power and renewables and developing new technologies for CO2 absorption in order to move towards achieving net-zero by 2050.

ADNOC also recently announced a partnership with the Fujairah Natural Resources Corporation (FNRC), Abu Dhabi Future Energy Company (Masdar) and 44.01 to pilot technology that permanently mineralizes CO2 within rock formations found in the Emirate of Fujairah. The project, due to commence this month, will use 44.01's Earthshot prize-winning Carbon Capture and Mineralization (CCM) technology to eliminate CO2 from the atmosphere. It will be the first CCM project by an energy company in the Middle East.

Further attempts to reduce UAE’s carbon footprint includes the high-voltage direct current (“HDVC”) subsea transmission network project (“Project Lightning”) announced by ADNOC and Abu Dhabi National Energy Company PJSC (“TAQA”). ADNOC has awarded USD 3.8 billion towards Project Lightning, referred to as a ‘first-of-its-kind’ HDVC transmission system in the MENA region. Project Lightning will be jointly developed by a consortium (ADNOC, TAQA, and Korea Electric Power, Kyushu Electric Power Company and Électricité de France) and is anticipated to supply electricity through Abu Dhabi’s onshore power grid owned and operated by TAQA.

By replacing existing offshore gas turbine generators with sources providing sustainable power, ADNOC aims to reduce its carbon footprint by more than 30% through the development of Project Lightning.

Masdar, one of the world’s leading clean energy companies, also recently signed joint development agreements with the State Oil Company of the Republic of Azerbaijan (SOCAR), for onshore wind and solar projects, and integrated offshore wind and green hydrogen projects, with a total combined capacity of 4 gigawatts (GW).

A recent step towards achieving decarbonisation includes the formation of an Expert Group between the UAE and the US to govern the Partnership for Accelerating Clean Energy (“PACE”). Led by COP28 President-Designate, Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology and US Co-Chair Amos Hochstein, US Special Presidential Coordinator, the Expert Group will consist of government and private sector officials from both countries. PACE aims to catalyze $100 billion in financing, investment and other support and also deploy 100 gigawatts (GW) of clean energy by 2035, reaching widely into developed and developing economies.

The four strategic pillars of PACE include 1) Clean Energy Innovation, Deployment and Supply Chains; 2) Carbon and Methane Management; 3) Nuclear Energy; and 4) Industrial and Transport Decarbonisation and will be discussed at monthly meetings convened by members of the Expert Group.

The UAE’s commitment to decarbonisation is ongoing, with a national drive to achieve net-zero emissions by 2050. COP 28 will take a global stocktake of the implementation of the Paris Agreement and assess whether the 200 signatory countries’ pledges to cut global emissions are sufficient in terms of achieving the CO2 temperature level of 1.5°C, as anticipated.

It will be interesting to see how the UAE will unite the global community to achieve the climate change and sustainability objectives outlined by the international convention. Notwithstanding this, a fundamental change is required in terms of parties’ modus operandi to accelerate decarbonisation strategies to achieve net-zero by 2050.  

Decarbonisation is a global imperative and multilateral efforts are required not only from governments and companies but from society at large to combat the climate crisis. Significant collaborative steps are required to be taken by nations in order to achieve decarbonisation objectives set by the international convention.

We anticipate that additional decarbonisation projects and initiatives will be announced in 2023, not only by governments, including the UAE, but also by companies working together to achieve the global goals of COP28. Please watch this space for further updates as we head towards COP 28.

Please contact the Banking & Finance Team if you have any queries on this subject matter.

 
 

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