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Five Reasons Why Countries in the Arabian Gulf are Turning to Renewables

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photo: IRENA

As global leaders look to renewables as a way address the growing and multi-dimensional threat of climate change, traditional energy countries in the Gulf Cooperation Council (GCC) are embracing renewables faster than ever before. Led by efforts in the United Arab Emirates and Saudi Arabia, the GCC has become crucial to global efforts in support of the energy transformation.

As the IRENA Director-General Francesco La Camera said recently at the International Energy Forum in Riyadh, Saudi Arabia: “It is perfectly possible to generate sufficient cheap, reliable energy from renewable sources. Not only is it possible, but it is also our best option, as it would bring higher socio-economic benefits than business as usual, and it would allow us to effectively address climate change.”

For the Gulf, renewables bolster energy security and support economic diversification whilst offering nations rich in renewable energy resources, an opportunity to explore their full economic potential. They also offer a second chance at energy leadership. Today, much of the global cost reductions witnessed in renewables have come from the Gulf. And by driving down the price of renewables and investing abroad, the Gulf is also shaping the energy transformation in other regions.

Here are five reasons why GCC countries are turning to renewables:

Renewables are the most practical and readily available climate solution

According to an IRENA analysis, the accelerated deployment of renewable energy in the GCC region can reduce emissions of C02 by 136 million tonnes. As nations are being urged to step up their renewable energy targets to keep the world well below 2° Celsius of warming, the UAE has more than doubled its existing pledge, committing to 50 per cent clean energy by 2050 at the UN Climate Action Summit in New York, resulting in even more C02 reductions than predicted.

Renewable energy is the most competitive form of power generation in the region

The business case for renewables is a central motivating factor for the Gulf’s transition towards renewables. Today, renewable energy is the most cost-competitive source of new power generation in the GCC, replacing traditional energy sources as the answer to the region’s fast-growing domestic energy demand. Recently, the 900 megawatt (MW) fifth phase of the Mohammed Bin Rashid Al Maktoum Solar Park in the UAE received one of the lowest bids for a solar PV project in the world at 1.7 cents per kilowatt hour (kWh).

Renewable energy creates jobs

Long-term policy objectives seen in the GCC region, including private enterprise, education, training and investment in local skills and human resources, can facilitate the rise in the number of jobs in the renewable energy sector. IRENA’s data suggests that renewable energy can create more than 207,000 jobs in the region by 2030 with solar technologies accounting for 89 per cent of them. The proliferation of rooftop solutions alone could employ 23,000 people by 2030 in the region.

The GCC region is endowed with considerable renewable energy potential – and not just solar

The suitability analysis for solar PV technology in the GCC reveals strong potential for deployment in all GCC countries, with Oman, Saudi Arabia, and UAE as leaders. Furthermore, areas in Kuwait, Oman and Saudi Arabia also boast good wind resources. Technologies such as biomass and geothermal power may hold additional potential but remain underexplored. According to IRENA analysis, based on targets in 2018, which, if met, could result in about 72 GW of renewable energy capacity in GCC by 2030.

Renewables save water

Water scarcity is an acute challenge in the region, with four of the six GCC countries ranking within the top 10 most water challenged on earth according to the World Resources Institute. And with one of the fastest-growing populations in the world, the region’s demand for water is expected to increase fivefold by 2050. If the GCC countries were to realise their renewable energy targets, this would lead to an estimated overall reduction of 17% and 12% in water withdrawal and consumption, respectively, in the power sectors of the region. Much of this reduction would be in Saudi Arabia and UAE, due to their plans to add significant shares of renewable energy in the power sector.

IRENA

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How Azerbaijan changed the energy map of the Caspian Sea

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image source: azertag.az

Since the collapse of the Soviet Union, crude oil and natural gas have been playing a key role in the geopolitics of the Caspian region. Hydrocarbon revenues became an important source of economic growth for the Caspian Basin countries such as Azerbaijan, Kazakhstan, and Turkmenistan. Shortly after gaining independence in the early 1990s, the Caspian states implemented energy policies that protect their national interests. According to the BP 2020Statistical Review of World Energy total proved energy reserves of the Caspian states are: Kazakhstan has30.00 billion barrels of oil and 2.7 trillion cubic meters of gas, Azerbaijan 7.00billion barrels of oil and 2.8 trillion cubic meters of gas, and Turkmenistan 0.6billion barrels of oil and 19.5 trillion cubic meters of gas.

Such rich hydrocodone reserves allowed the Caspian states to contribute significantly to the global energy markets. Today, the Caspian states are supplying oil and natural gas to various energy markets, and they are interested in increasing export volume and diversification of export routes. In comparison with Turkmenistan and Kazakhstan, which supply energy sources mainly to China and Russia, Azerbaijan established a backbone to export energy sources to Europe and Transatlantic space. As the Caspian Sea is landlocked, and its hydrocarbon resources located at a great distance from the world’s major energy consumers, building up energy infrastructure was very important to export oil and gas.

To this end, Azerbaijan created the milestone for delivery of the first Caspian oil and natural gas by implementing mega energy projects such as Baku-Tbilisi-Ceyhan (BTC) oil pipeline and Southern Gas Corridor (SGC).Now, one can say that both energy projects resulted from successful energy policy implemented by Azerbaijan. Despite the COVID-19 recession, the supply of the Azerbaijani oil to the world energy markets continued. In general, the BTC pipeline carries mainly Azeri-Chirag-Gunashli (ACG) crude oil and Shah Deniz condensate from Azerbaijan. Also, other volumes of crude oil and condensate continue to be transported via BTC, including volumes from Turkmenistan, Russia and Kazakhstan. As it is clear, the BTC pipeline linked directly the Caspian oil resources to the Western energy markets. The BTC pipeline exported over 27.8 million tons of crude oil loaded on 278 tankers at Ceyhan terminal in 2020. The European and the Asian countries became the major buyers of the Azerbaijani oil, and Italy (26.2%) and China (14%) became two major oil importers from Azerbaijan.

The successful completion of the SGC also strengthened Azerbaijani position in the Caspian region. The first Caspian natural gas to the European energy markets has been already supplied via Trans Adriatic Pipeline (TAP) in December 2020, which is the European segment of the SGC. According to TAP AG consortium,a total of one billion cubic metres (bcm) of natural gas from Azerbaijan has now entered Europe via the Greek interconnection point of Kipoi, where TAP connects to the Trans Anatolian Pipeline (TANAP). The TAP project contributes significantly to diversification of supply sources and routes in Europe.

Another historical event that affected the Caspian region was the rapprochement between Turkmenistan and Azerbaijan. The MoU on joint exploration of “Dostluk/Friendship” (previously called Kapaz in Azerbaijani and Sardar in Turkmen) offshore field between Azerbaijan and Turkmenistan was an important event that will cause positive changes in the energy map of the Caspian Sea.

The Assembly of Turkmenistan and Azerbaijan Parliament have already approved the agreed Memorandumon joint exploration, development, and deployment of hydrocarbon resources at the “Dostluq” field. It should be noted that for the first time two Caspian states agreed to cooperate in the energy sector, which opens a window for the future Trans-Caspian Pipeline (TCP) from Turkmenistan to Azerbaijan. Such cooperation and the future transit of Turkmen oil and gas via the existing energy infrastructure of Azerbaijan will be a milestone for trans-regional cooperation.

The supply of the Caspian and Central Asian natural gas to European energy markets was always attractive. Therefore, the TCP is a strategic energy project for the US and EU. After the signing of the Caspian Convention, the EU officials resumed talks with Turkmenistan regarding the TCP. The May 2019 visit of the Turkmen delegation headed by the Advisor of the President of Turkmenistan on oil and gas issues was aimed at holding technical consultations between Turkmenistan and the EU. Turkmen delegation met with the representatives of the General Directorate on Energy of the European Commission and with the representatives of “British Petroleum,” “Shell” and “Total” companies. TCP is a project which supports diversification of gas sources and routes for the EU, and the gas pipeline to the EU from Turkmenistan and Azerbaijan via Georgia and Turkey, known as the combination of “Trans-Caspian Gas Pipeline” (TCP), “South-Caucasus Pipeline Future Expansion” (SCPFX) became the “Project of Common Interest” for the EU.

Conclusively, Azerbaijan is a key energy player in the region. Mega energy projects of the country play an important role to deliver Caspian oil and gas to global energy markets. However, the Second Karabakh War has revealed the importance of peace and security in the region. The BTC pipeline and the Southern Gas Corridor linking directly the Caspian energy to Western energy markets were under Armenian constant threat. As noted by Hikmat Hajiyev, the Foreign Policy Advisor to the President, “Armenia fired cluster rocket to BTC pipeline in Yevlak region”. Fortunately, during the Second Karabakh War, Azerbaijan protected its strategic infrastructure, and there was no energy disruption. But attacks on critical energy infrastructure revealed that instability in the region would cause damages to the interests of many states.

In the end, Azerbaijan changed the energy map of the Caspian Sea by completing mega energy projects, as well as creating the milestone for energy cooperation in the Caspian region. After Azerbaijan’s victory in the Second Karabakh War, the country supports full regional economic integration by opening all transport and communication links. Now, the importance of the Caspian region became much more important, and Azerbaijan supports the idea of the exportation of natural gas from Turkmenistan and the Mediterranean via SGC. Such cooperation will further increase the geostrategic importance of the SGC, as well as Azerbaijan’s role as a transit country.

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The Silk Road of Gas: Energy Business from Central Asia to Europe

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Central Asia possesses a significant role within the global geopolitical balance since it comprises numerous trade channels that link many businesses with millions of target customers from China to Portugal and vice-versa. Withal, by having abundant hydrocarbon potentials, the region offers tremendous opportunities to the global and local players.

Throughout the recent period, the preponderance of the energy-based plans and policies triggered the emergence of mega projects in the region, such as the Southern Gas Corridor, Central Asia–China gas pipeline, TAPI, and a possible Trans-Caspian pipeline in the upcoming years. Albeit these intense investment activities are foreshadowing new regional perspectives for economic development, it also generates additional alternatives and realities for the European policymakers.

The new business in the traditional routes

Anciently, the region was home to the legendary Silk Road, which was shaping the vivid economic landscape of the planet. Today, the region’s erstwhile role in trade seems to be revitalized to some extent by the projects such as the Road and Belt Initiative. In contradistinction to the past, energy forms the backbone of modern trade in Central Asia despite some cardinal difficulties of marketing and transportation.

In the last decade, Turkmenistan, Kazakhstan, and Uzbekistan had some attempts to increase their presence in the sector via their involvement in Central Asia–China gas pipeline. Notwithstanding, none of them was able to establish a comprehensive framework of cooperation with the EU as Azerbaijan. Through its unique Southern Gas Corridor project, which enables the transfer of the natural gas from the Shah Deniz field of the Caspian Sea to South Europe, Azerbaijan had radically transformed the pipeline mappings at the Caspian region. Concomitantly this channel provides a tremendous chance to the other landlocked Central Asian countries to be able to meet the rising demand in the European market.

Europe’s apprehension

From the European Union perspective, energy can be categorized as a strategic sector since the European economy increasingly relies on international suppliers. Currently, 54% of the energy consumption within the EU is imported mainly from Russia. More specifically, in 2019, Russian stake in the EU’s natural gas import was 44%, and the dependency of EU countries on Russian gas in 2013 as follows: Estonia 100%, Finland 100%, Latvia 100%, Lithuania 100%, Slovakia 100%, Bulgaria 97%, Hungary 83%, Slovenia 72%, Greece 66%, Czech Republic 63%, Austria 62%, Poland 57%, and Germany 46%. These substantial factors are forming the backdrop of the EU’s diversification policy in the concerning field through the establishment of intense diplomatic and economic ties to ensure the sustainability of energy security.

During the anticipated turbulent periods, especially considering the latest exacerbation between Russia and the Western bloc over the Ukraine dispute, the European economy might inevitably face some severe hurdles. Since there is a possibility that the process might be accompanied by the risk of the blockage of the Russian gas by the transit countries.

The viable solution

Geopolitical escalations undoubtedly hasten the energy diversification process within the European Union. Therefore, the essence of the energy policy of the EU can be categorized as a combination of liberal and realist approaches. Although the union intends to achieve its economic goals via the market mechanisms, it also adopts a realist standpoint in International Relations, specifically in the energy context.

As stated by the British Petroleum data published in 2019, proved gas reserves of Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan totaled26,2 trillion cubic meters or 13,1% of the world’s known reserve. Undoubtedly, such an enormous potential would significantly contribute to the energy security of the EU.

Given the current situation in the European energy market and the global political climate, the EU cannot ignore its energy security concept, which is the fundamental aim of energy policy. In this sense, Southern Gas Corridor appears like the most convenient alternative by considering the future possibility of the construction of the Trans-Caspian pipeline that would dramatically facilitate the direct transfer of the Central Asian gas to South Europe.

As long as the EU is dependent on the imports of fossil fuels, the necessity of the balance in the energy sector will remain topical. Hence the formulation of a rational approach towards cooperation with potential suppliers, particularly key countries such as Azerbaijan, is essential. Otherwise, the energy notion will remain a risky and problematic political and economic instrument.

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China, biomarine energy and its players

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In the future, China and Europe will compete and cooperate in the field of ocean energy and green hydrogen energy production. This is why this aspect is crucial in building a bridge of cooperation and friendship between China and Europe.

Wave energy in China is generally low and accounts for only one seventh of wave energy in Europe. Fujian Smart Energy Technology Co., Ltd. has a new patented technology that can increase wave energy in the operating area by over 10 times, causing negligible changes to the environment. It is an environmentally friendly technology that does not affect the free movement of marine life, and can increase wave power generation by over 100 MW. It is certainly innovative, ingenious and daring. It will require strong support from the Ministry of Natural Resources.

The “National Independent Contributions” are non-binding national plans outlining climate actions, including climate-related targets, policies and measures that governments intend to implement in response to climate change and as a contribution to achieving the global goals set out in the Paris Agreement of December 12, 2015.

In these projects China has proposed that carbon dioxide emissions should peak around 2030, striving – as a stakeholder – to achieve this target as soon as possible. In 2030, carbon dioxide emissions per unit of GDP will be reduced by 60-65% compared to 2005 and primary energy consumption will focus on non-fossil energy.

The percentage has reached about 20% and the volume of forest stock has increased by about 4.5 billion cubic metres compared to 2005. Support for this project may enable China to reach this target earlier.

Shenzhen (a sub-provincial centre of the People’s Republic of China belonging to the Guangdong Province) is positioned as a global oceanic central city. China plans to initiate wave hydrogen production projects in Shenzhen and establish headquarters there.

In this regard, the European Union will invest 470 billion euros in clean energy over the next 25 years, with a focus on the hydrogen energy sector. The European Union has already launched its Hydrogen Energy Strategy in summer 2020. By the end of 2024, the European Union will build a batch of renewable hydrogen electrolysis equipment with a single capacity of 100 megawatts and annual production across Europe will exceed one million tonnes.

The aim is to promote this technology in Europe and later in the world through the Belt and Road Initiative, i.e. the New Silk Road called for by President Xi Jinping. There are plans to build one hundred 600-MW wave power plants and one hundred wave hydrogen production projects with an annual output of 100,000 tonnes over the next 15 years.

China’s Roadmap 2.0 for Energy Saving Technology and New Energy Vehicles foresees that by the end of 2035 the number of fuel cell vehicles will amount to one million and the demand for hydrogen will reach two million tonnes. The International World Group’s 600-MW wave power project will produce 103,000 tonnes of green hydrogen per year.

The project can meet China’s hydrogen demand until 2035 and will provide energy from green and renewable hydrogen.

The China Hydrogen Energy Industry Development Report 2020 forecasts that, by the end of 2050, hydrogen energy will account for 10 per cent of final energy consumption, the number of hydrogen fuel cell vehicles will be 30 million and hydrogen demand will be equal to 60 million tonnes.

The International World Group’s project can provide a steady flow of green hydrogen energy for 30 million vehicles. The related Sino-European Strategic Cooperation Agreement for Ocean Energy Development has a first and a second phase. The first will see the establishment of a global ocean energy technology research and development centre and then a Sino-European ocean energy technology research and development centre in Shenzhen.

At the same time, the ocean energy technology will be focused on its generation: from wave motion, from tidal power without dams, from offshore wind systems and also from offshore solar energy.

The cost of producing hydrogen from non-fresh seawater is lower than the cost of producing hydrogen from oceans and pertains to an advanced technology.

Zhisheng Energy currently holds invention patents for 100-MW wave power generation, as well as for environmentally friendly tidal power generation, and 10-MW wind power generation.

On the afternoon of April 16, President Xi Jinping held a video-conference-in Beijing with French President Macron and German Chancellor Merkel. The leaders of the three countries held an in-depth exchange of views on cooperation for tackling climate change, China-EU relations, anti-epidemic cooperation and major international and regional issues.

President Xi Jinping stated that China would strive to achieve peak carbon emissions by 2030 and carbon neutrality by 2060. This means that China, as the largest developing country on the planet, will complete the world’s highest carbon intensity reduction in a shorter timeframe than any third party. This stands in contrast to other powers that in Presidential candidates’ election speeches promise respect for the environment, but in fact do nothing more than confirm old energy production systems.

The President said China decided to accept the Kigali Amendment of October 15, 2016 to the Montreal Protocol of August 26, 1987 to strengthen the control of greenhouse gases other than carbon dioxide such as HFCs (refrigerant gases containing hydrofluorocarbons).

He argued that responding to climate change should be the common cause of all mankind and should not be a bargaining chip for geopolitics, a target to attack other countries or an excuse to erect trade barriers.

During the video-conference the President also said China would adhere to the principles of equity, common responsibilities and responsibilities differentiated by the respective capabilities, as well as promote the implementation of the United Nations Framework Convention on Climate Change of June 4, 1992 and the Paris Agreement and actively carry out South-South cooperation on climate change.

He added he hoped that developed economies would lead by example in reducing emissions and take the lead in meeting their climate financial commitments, so as to provide adequate technical and capacity-building support to developing countries to tackle these epoch-making energy changes.

A few words are now appropriate about Xi Jingping’s most important collaborator on environmental issues: Ministers Lu Hao and Huang Runqiu.

The Minister of Natural Resources, Lu Hao (born in 1967), was the youngest provincial Governor in China, ruling Heilongjiang Province (population: 38,312,224 inhabitants in 2010) from 2013 to 2018. Lu Hao also served as First Secretary of the Communist Youth League and vice-mayor of Beijing. At the age of 20, he was elected Head of the University Students’ Union, becoming the first student union President, elected by popular vote since the Cultural Revolution. He holds a degree in Economics and Business from Peking University.

Lu Hao became Head of the Zhongguancun Administrative Office in 1999, thus beginning his career in the Public Administration. The area is known as China’s Silicon Valley, rich in technology start-ups.

He also served ex officio as President of the China Youth University for Political Sciences. Prior to Lu Hao, several political heavyweights, including former party leaders Hu Yaobang and Hu Jintao, as well as Premier Li Keqiang, had served in that position.

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