Embracing a Sustainable Future: The Middle East's Leap Towards Decarbonization

Living in the UAE, reflecting on the torrential rain and storms that battered the country two weeks ago, the toll faced by the country’s infrastructure was severe. Over the course of just 4 hours the UAE was deluged with an entire year’s worth of rain. Large swathes of cities were submerged, including homes, businesses, and roads. Even with the resilient infrastructure and the swift and impressive action taken by the emergency services, no country could have been prepared for such an impact. Although I have a vested interest, I am particularly thankful that the electricity infrastructure remained mostly unaffected.

The 19 people that lost their lives to this terrible storm, mostly in neighboring Oman, highlights the tragedy that such devastating climate events can have. Sadly, this has given us a taste of what could be expected in the years to come and the adversity that infrastructure and people will face as extreme weather events become more common with global warming.

Embedding Energy Resilience

Energy infrastructure is vital, not just on fair days but especially during times of emergency, supporting and enabling the operation of emergency services, households, and businesses. As the UAE continues to pursue ambitious renewable energy targets (44% from clean sources by 2050) there is potential for generation capacity, transmission infrastructure, and grid stability to be impacted. Already the UAE’s energy mix is estimated to constitute over 20% clean energy, demonstrating the impressive resilience of the nation’s energy infrastructure amid this powerful storm. Across the Middle East and Africa, countries are ramping up their green energy goals. Baking in resilience to their energy infrastructure is paramount.

It is undeniable that there is a rising decarbonizing tidal wave of transformative shifts occurring in the energy landscape, and we’re glad to be a part of it. But there is also a growing sentiment, particularly from energy sector executives at recent events like CERAWeek, that the energy transition will move much slower than projected. Demand for oil and gas is expected to continue for much longer than assumed, especially without government support for emissions reductions. Although this should slow down the efforts to progress with the energy transition, in contrary it creates additional momentum.

The Infrastructure of Transition

The Middle East, a region historically synonymous with oil, is pioneering a path towards a more sustainable and decarbonized future. As a company, we have witnessed our regional order book more than double in the past fiscal year, driven by three key energy topics: increasing electricity demand, decarbonization initiatives, and grid expansion.  

Boston Consulting Group (BCG) forecasts underscore the Middle East's rapid economic growth, with an estimated $1 trillion for investment in infrastructure and development projects by 2030. This surge in investment is not merely about expansion but signals a decisive shift towards incorporating environmental considerations and reducing emissions in a sector responsible for a significant share of global greenhouse gas emissions. A notable trend is the increasing demand for greener materials and chemicals, such as recycled steel, green aluminum, low-carbon cement, blue and green ammonia, with their price premiums rapidly declining. If regulation is enacted to support market demand for lower carbon products, supply will have to increase.

The evidence is also clear as our customers and partners seek energy solutions that offer greater efficiency, in terms of fuel usage, operating costs, and emissions.

The Urgency of Decarbonization

The urgency and scale of decarbonization initiatives have been further highlighted by the COP28 outcomes and the need for renewable power capacity to be tripled by 2030. This ambitious goal underlines the necessity for a comprehensive approach, including modernizing infrastructure, adapting policies and regulations, and significantly enhancing international collaboration. Importantly, it also emphasizes the critical need to develop a skilled workforce capable of sustaining this transition, aligning with the educational sector to bridge potential skill gaps.

Investment in renewable energy is predominantly driven by private capital, supported by policies aimed at mobilizing these resources. The significance of international collaboration cannot be overstated, particularly in enhancing global finance flows and equitable technology sharing. With this shift, the challenge remains in managing the transition for economies heavily reliant on fossil fuels, ensuring that strategies for economic diversification and sustainability are in place.

This is not a ‘one size fits all’ process. Different countries have different starting points and different challenges that need to be tackled. Whilst Saudi Arabia and the UAE are well ahead in this transition and are quickly implementing renewable energy development, other countries are decarbonizing at different speeds.

A notable recent success story for us is the signing of an agreement with SLB and the Ministry of Electricity in Iraq to develop a power station that utilizes flare gas. This project has the potential to bring investment, technology, skills, and employment to Iraq, whilst reducing carbon emissions, increasing access to electricity, and capturing value from resources that would otherwise be wasted.

The Hydrocarbon Transition

The Middle East and North Africa (MENA) region, with half the world’s oil reserves and 40% of its natural gas, is at a crossroads. Its annual per capita emissions are among the highest globally. However, the region is uniquely positioned to lead in renewable energy, thanks to its substantial solar and wind power potential. The last decade has seen the MENA region double its renewable energy capacity, with countries like Saudi Arabia, the UAE, and Egypt leading the way in green energy transition efforts. These countries are not only increasing renewable capacity but are also investing in innovative technologies like green hydrogen and carbon capture to decarbonize heavy industries.

Saudi Arabia and the UAE have announced significant investments in carbon reduction technologies, demonstrating their commitment to spearheading the region's sustainability efforts. These investments are pivotal, offering the dual benefits of mitigating climate impact while unlocking new economic opportunities in green technology and services.

A Transformation Towards Sustainability

What is ultimately clear is that the Middle East's energy and decarbonization landscape is undergoing a historic transformation. The drive towards sustainability is not just a response to global environmental challenges but a strategic move to position the region at the vanguard of the global energy transition.

Amidst this transformation is the challenge of maintaining energy security and affordability. A key task is to ensure that the energy infrastructure assets of today are not the stranded assets of tomorrow. We are working with our customers to ensure these assets are prepared for this transition and can contribute to sustainability. Today burning oil and gas, tomorrow using blue or green hydrogen, or even to repurpose assets to provide stability through rotating grid services that counteract the grid frequency fluctuations which are associated with intermittent renewable energy sources like wind and solar.

We are committed to supporting this transition, leveraging our expertise and technologies to contribute to a sustainable and prosperous future for the Middle East. The journey is ambitious and challenging, but with collective effort and innovative spirit, the region is well on its way to becoming a global beacon of sustainability and renewable energy.