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UAE, Azerbaijan and Brazil juggle oil and climate goals

  • Market: Crude oil
  • 27/09/24

Oil and gas producers the UAE, Azerbaijan and Brazil — the Cop presidencies Troika — are pushing for increased global climate ambitions, but are seemingly avoiding the question of fossil fuels in relation to their own new climate targets.

Countries party to the UN Framework Convention on Climate Change (UNFCCC) must submit their nationally determined contributions (NDCs) — emissions-cut targets — for 2035 in November-February. Since July, the Troika has been calling on countries to step up. They also said they would signal their own commitments early, which the UAE and Brazil did during a meeting at the UN on 26 September. They will submit their new targets aligned with the Paris agreement's most ambitious temperature limit — 1.5°C — ahead of Cop 29 in Baku in November. Azerbaijan's incoming Cop 29 president Mukhtar Babayev did not offer a timeline, but encouraged all parties to "come forward with 1.5°C-aligned NDCs… well ahead of the 10 February deadline".

Cop 28 last year ended with an agreement including transitioning away from fossil fuels and tripling renewable energy capacity globally by 2030. At the UN meeting, Cop 28 president and Abu Dhabi's state-owned Adnoc chief executive, Sultan al-Jaber, reiterated the latter but not the former. Al-Jaber said that the UAE's NDC will remain focused on nature and "will continue to drive investments in diversifying our energy mix", adding the country is on track to triple its renewable energy capacity by 2030. The UAE's focus is likely to be on technologies, with Al-Jaber saying that the new NDC "will leverage artificial intelligence to drive decarbonisation". Cop 30 host Brazil did not mention fossil fuels either, but highlighted efforts to reduce deforestation. The country "will come forward with an ambitious, economy-wide emissions-reduction target covering all greenhouse gases", secretary for climate, energy and environment Andre Correa do Lago said.

Oil Change International says the Troika ignores "a simple reality". Delivering NDCs that keep to the 1.5°C goal will not be possible "without an immediate end to fossil fuel expansion". And the three countries all plan to expand oil and gas production.

National circumstances

The UAE targets crude production of 5mn b/d — from 4.85mn b/d today — before 2027. The third-largest crude oil producer within Opec has received two upward revisions for its production quota in the past two years. It is also expanding gas production capacity. Natural gas output in Azerbaijan reached a new high of 132mn m³/d in 2023, and the country aims to increase it further. Upping exports to the EU to 20bn m³/yr by 2027, from the current 12bn m³/yr, has been a key government commitment since 2022, when Europe was desperate for alternative gas suppliers. Brazil could hit output of 5.3mn-5.4mn b/d by 2029-30, up from 3.4mn b/d in 2023. The government has its eyes on the south and in the environmentally sensitive equatorial margin for new oil exploration.

The Troika countries look at fossil fuels through the lens of their own national circumstances — with their economies being heavily reliant on them. Azerbaijan's increasing gas exports spurred an economic boom, with GDP increasing tenfold over 2003-13. Babayev pointed to the "difficulties of developing ambitious NDCs", saying Azerbaijan faces them itself. He recognised the need to deliver "deep, rapid, and sustained emissions reduction, including transitioning away from fossil fuels. But at the same time, Azerbaijan's Ilham Aliyev, "as the head of a country rich in fossil fuels" is defending "the right of these countries to continue investments and production". It is the same for Brazil. President Luiz Inacio Lula da Silva said in June that the country will make "an extraordinary leap" as soon as it begins exploring the equatorial margin. "We want to do everything legal, respecting the environment. But we are not going to throw away any opportunity to make this country grow."

Still, the UAE brokered a Cop 28 outcome that included wording on fossil fuels despite pressure from fellow oil producer neighbours. But if it continues to push for the oil and gas sector to increase decarbonisation efforts, it prefers the focus to lie on the industry's emissions rather than output. And oil and gas use accounts for 33pc and 22pc, respectively, of global emissions, the IEA says.

By Caroline Varin, Lucas Parolin, Bachar Halabi and Rhys Talbot


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20/12/24

US House votes to avert government shutdown

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US government agencies set to shut down


20/12/24
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20/12/24

US government agencies set to shut down

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Viewpoint: More changes for Dated crude benchmark ahead


20/12/24
News
20/12/24

Viewpoint: More changes for Dated crude benchmark ahead

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Trump backs new deal to avoid shutdown: Update


19/12/24
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19/12/24

Trump backs new deal to avoid shutdown: Update

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US Congress passes waterways bill


19/12/24
News
19/12/24

US Congress passes waterways bill

Houston, 19 December (Argus) — The US Senate has passed a bipartisan waterways infrastructure bill, providing a framework for further investment in the country's waterways system. The waterways bill, also known as the Water Resources and Development Act (WRDA), was approved by the Senate in a 97-1 vote on 18 December after clearing the US House of Representatives on 10 December. The WRDA's next stop is the desk of President Joe Biden, who is expected to sign the bill. The WRDA has been passed every two years, authorizing the US Army Corps of Engineers (Corps) to undertake waterways infrastructure and navigation projects. Funding for individual projects must still be approved by Congress. Several agriculture-based groups voiced their support for the bill, saying it will improve transit for agricultural products on US waterways. The bill also shifts the funding of waterways projects to 75pc from the federal government and 25pc from the Inland Waterways Trust Fund instead of the previous 65-35pc split. "Increasing the general fund portion of the cost-share structure will promote much needed investment for inland navigation projects, as well as provide confidence to the industry that much needed maintenance and modernization of our inland waterway system will happen," Fertilizer Institute president Corey Rosenbusch said. The bill includes a provision to assist with the damaged Wilson Lock along the Tennessee River in Alabama. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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