REPORT: Energy Transition Middle East 2022

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Leading the global energy transition

The coming 18 months will see the next two instalments of the UN climate change conference taking place in the Middle East, with COP 27 being held in Sharm el Sheikh, Egypt in November 2022, and COP 28 in Abu Dhabi in November 2023.

The events highlight the region’s commitment to decarbonisation and sustainable development, and they underline the fact that energy transition is now among the highest priorities for Middle East policy makers.

The Gulf’s oil producers are on a mission to transform from simply being suppliers of oil and gas to the world, to leading the global energy transition away from fossil fuels.

It is a move aimed at ensuring that the region remains at the forefront of the world’s energy industry, and which also enables governments to shift away from over consumption and dependence on hydrocarbons. The change will create new opportunities for business for decades, particularly in the projects industry.

Clean energy

Across the region, governments have set ambitious clean energy targets, with Dubai the most aggressive, aiming for 75 per cent of its energy to come from clean sources by 2050. About 98GW of new renewables capacity is planned across the region, with 39GW due to come on stream by 2025.

At the same time, governments must ensure adequate power and water to meet the needs of growing populations and expanding economies. Electricity demand is rising by about 5 per cent a year across the Mena region, and with a shortage of gas supplies and the need to decarbonise, expanding renewables capacity is at the top of the region’s energy agenda.

There is plenty of room for growth. With about 28GW of renewable energy production capacity installed across the region, of which the biggest component is hydropower with 21GW, renewables represent only 7 per cent of the region’s power generation capacity.

But, boosted by falling technology costs, most countries are planning and procuring solar and wind projects. And the world’s biggest and cheapest solar projects are now found in Saudi Arabia, Abu Dhabi and Dubai.

Green hydrogen

The UAE, Saudi Arabia, Oman, Egypt and Qatar are investing in pioneering clean energy projects at home with the goal of establishing the region as a hub for the development of clean technologies and a major exporter of hydrogen fuel.

Tapping the region’s abundant, low-cost solar energy to sustainably produce ‘green’ hydrogen from water is generating huge interest from governments and investors.

At the heart of the Middle East’s energy transition is the need to rethink the way that the region’s cities are designed, built, and operated. Saudi Arabia has created a National Transformation Project to integrate sustainable development goals into its Vision 2030 national planning process.

While the Dubai 2040 Urban Master Plan maps out a comprehensive plan for sustainable urban development in the emirate. Technology and innovation play a key role in making the most of these new technologies however, and governments and companies must invest in reskilling and upskilling of their workforce.