Key Mideast Gulf oil ministers on Sunday backed the need for a concerted push towards cleaner energy forms, but called for realism as they warned that all costs need to be taken into account in the path to decarbonisation.
Speaking at the UN Framework Convention on Climate Change's (UNFCCC) Mena Climate Week conference in Riyadh, UAE energy minister Suhail al-Mazrouei said the transition needs to be carried out keeping twin pillars of energy affordability and security in sight.
"We need to realise that during the transition, affordability is going to be the major challenge," al-Mazrouei said. "While we are ready to provide cleaner solutions, consumers need to be ready to face the price for quicker decarbonisation."
As the world transitions from fuels like coal to cleaner forms of energy, al-Mazrouei highlighted that we will be faced new challenges.Shifting to cleaner forms of energy like solar means an intermittent load and needs base load balancing, he said. "The fact that you have gas sitting idle for eight hours, or around 30pc of the day, could come at a cost" al-Mazrouei said, adding that when combining all the costs, the price of electricity for countries will not be cheaper just because they are using solar generation.
The minister said that "interconnectivity" between countries can help reduce energy prices. In the winter, some countries in the GCC only use 30-40pc of the energy they consume in the peak summer months, he said. Through interconnection, that capacity could be leveraged during the winter and prevent countries from overbuilding gas capacity, which he said could do "more harm to the environment" by extracting more resources.
The UAE is targeting 14GW capacity of clean power by 2030, up from around 9.2GW currently. It is also pressing ahead with a programme to boost its crude capacity to 5mn b/d by 2027, from around 4.65mn b/d today. "We as hydrocarbon producers also have the responsibility to provide enough resources to ensure that we are transitioning at a reasonably priced manner," al-Mazrouei said.
Speaking at the same event, Saudi energy minister Prince Abdulaziz bin Salman said that even if the energy transition materialises, countries in the Mideast Gulf will continue to "capture the biggest share of hydrocarbons".
"In the long-term, the matrix of who is going to be producing oil will change as few zones and regions will dry up and mature. But others will have the potential to continue for years to come. So there is a case for us to continue to be in oil and to continue to be in gas", he said.
State-controlled Aramco is now several years into its own crude capacity expansion to 13mn b/d by 2027, from around 12mn b/d today. Although the share of oil and gas "may diminish," it will still be a part of the energy system, he said.
Saudi Arabia is also exploring geothermal energy and looking to study the technology behind small modular reactors (SMR) in nuclear energy, he said.
Challenge of financing
Finance for mitigation — cutting global emissions — but also adaptation, which refers to adjustments to avoid global warming impacts and loss and damage, the unavoidable and irreversible effects of climate change, remains point of focus in discussions at Mena week.
"We have to make sure that nobody forgets that $100bn promised by 2020," Bahrain's oil minister Mohamed bin Daina said. A key focus for developing countries is a $100bn/yr climate finance goal, which wealthy nations agreed to provide by 2020 but have still not reached. The US, Germany, Canada and France are confident that developed countries will reach the target this year.
"Hopefully, the response measure fund will be established with the help of the UAE during the upcoming Cop," bin Daina added, referring to discussions on the establishment of a loss and damage fund, as agreed last year at Cop 27.
Kuwait's oil minister Saad Al Barrak lamented how advanced nations are not "living up to their commitments, which sets a negative example and impacts the whole issue of financing". He also warned about a "paradoxical challenge" that producers face when they are keen to expand production but are asked to disinvest for the development of climate change control.
"We are not saying that we do not [support climate action], but from an economic and development point of stage, we do not prefer that as a priority", he said.
