How the GCC is fueling the transition to clean energy
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How the GCC is fueling the transition to clean energy

How the GCC is fueling the transition to clean energy

The energy transition presents the GCC region with opportunities for climate change mitigation and adaptation as well as economic diversification

Kudakwashe Muzoriwa
How the GCC region is powering into the future

GCC countries made a seismic shift by unveiling a raft of measures to eliminate planet-warming emissions within their borders in 2021, despite the region’s heavy reliance on oil and gas, which accounts for 70 per cent of the six-nation bloc’s total goods exports and revenues.

Global ratings agency Fitch Ratings said GCC countries have implemented plans to increase the share of renewable energy in their power mixes in the recent past. The UAE is targeting 44 per cent renewable energy by 2050 and Saudi Arabia is aiming for 50 per cent by 2030.

The initiatives, which include investments in solar and wind energy, and hydrogen, are part of the region’s transition towards low-carbon economies with a strong focus on sustainability.

Saudi Arabia, the world’s top oil exporter, said in October 2021 that it would invest more than $186bn (SAR700bn) into a green economy as it aims to reach net-zero carbon emissions by 2060 while the UAE unveiled plans to invest $163bn (Dhs600bn) in renewable energy as part of its strategy to achieve net-zero emissions by 2050.

Similarly, Oman is vastly investing in clean hydrogen and the Gulf state is poised to become a leading exporter of ‘green’ hydrogen by the end of the decade as Qatar is setting itself up to control as much as a quarter of the world’s liquefied natural gas (LNG) supply by 2030.

The GCC has several factors that make rapid deployment of renewables an attractive opportunity. Here are some of the biggest renewable energy projects in the region.


How the GCC region is powering into the futureThe UAE is extensively investing in nuclear energy, solar plants and sustainable transport. The Emirates is home to the first nuclear power plant in the Arab world and  the three biggest solar plants in the world – the 1.2 gigawatts (GW) Noor Abu Dhabi Solar Park, the Mohammed bin Rashid Al Maktoum Solar Park which will produce 5,000 megawatts (MW) of power by 2030 and Masdar City’s 17,500MWh solar plant.

The country connected unit 4 of the Barakah nuclear power plant to the national power grid in March, adding another 1,400MW of clean electricity capacity to its energy mix. The Barakah plant will generate 40 terawatt-hours (TWh) of electricity per year while preventing the release of 22.4 million tonnes of carbon emissions.

“The Barakah plant will play a key role in the UAE’s 2050 ‘net zero’ strategy, which aims to drastically increase the country’s production of clean energy,” according to the International Atomic Energy Agency.

Last October, the UAE inaugurated its first wind programme and built 103.5MW of wind capacity across four sites – a 45MW wind farm on Sir Bani Yas Island, Delma Island (27MW), Al Sila (27MW) and Al Halah in Fujairah (4.5MW).

The UAE also joined forces with the US in November 2022 to invest $100bn in clean energy projects to produce 100 GW by 2035.

Saudi Arabia

How the GCC region is powering into the futureSaudi Arabia has been going all out to commit itself to sustainable development and the country plans to rely on renewables for 50 per cent of its electricity generation by 2030. The National Renewable Energy Program, which is part of the kingdom’s ambition to secure a comfortable energy mix for producing electricity using sustainable means, will see ACWA Power producing 11.8 GW by 2025.

Bolstering the country’s renewable energy pipeline, the Saudi Energy Procurement Company launched the 1.5 GW Sudair solar park while ACWA Power partnered with Badeel, a unit of the Public Investment Fund, to build the Middle East region’s largest single-site solar power plant in Al Shuaibah with a generation capacity of 2,060 MW.

Meanwhile, the Saudi Ministry of Energy granted power purchase agreements to two solar energy projects – Al Rass and Saad – in 2022. The two solar energy projects have a combined capacity of 1,000 MW.

Saudi Arabia also launched five new projects in September 2022 to produce electricity using renewable energy with a planned total capacity of 3,300 MW. Similarly, wind farms in Yanbu, Al-Ghat and Waad Al Shamal have a total production capacity of 1800 MW while two solar plants in Al Hinakiyah and Tabarjal will have a total production capacity of 1500 MW.


How the GCC region is powering into the futureThe GCC is synonymous with oil and natural gas, but Oman is championing clean ‘green’ hydrogen as a sustainable fuel of the future. The Sultanate seeks to hike renewable energy-based hydrogen production to at least one million tonnes per year (mtpa) by 2030, rising to at least 3.25 mtpa by 2040 and 7.5 mtpa by 2050.

Hydrogen Oman (Hydrom), a unit of Energy Development Oman, signed six investment agreements, worth more than $38bn with partners in 2023. The company signed contracts worth $11bn to develop two new green hydrogen production projects with an Electricité de France-led consortium and Actis and Fortescue in March.

Fitch Ratings projected that in-country value-added requirements for these foreign direct investments will support existing GDP and ancillary sectors.

Since its inception in 2022, it has secured investment commitments worth $49bn, as part of Oman’s broader strategy to deliver sustainable energy and drive economic growth.

Other GCC states – Saudi Arabia and the UAE – are working on hydrogen projects including the kingdom’s green-hydrogen plant in NEOM, which has a projected capacity of 600 tonnes of green hydrogen by 2026, using 4 GW of solar energy.

NEOM Green Hydrogen Company secured $8.4bn for a green hydrogen production facility. The company also concluded a $6.7bn agreement with Air Products for the plant’s engineering, procurement and construction (EPC).

Meanwhile, the UAE plans to invest around $54.5bn (Dhs200bn) as part of the country’s updated national energy strategy that seeks to triple the contribution of renewable energy over the next seven years.

Hydrogen is an energy carrier that creates no carbon dioxide (CO2) when used. As a result, no carbon is released into the atmosphere from production to end-use.


How the GCC region is powering into the futureWith a wide range of applications, including electricity generation, natural gas is expected to play a pivotal role in the energy transition, with global demand expected to grow by a record 50 per cent by 2040.

Goldman Sachs said the GCC region is home to 11 per cent of the world’s natural gas production and 25 per cent of the world’s LNG exports.

Qatar, one of the world’s top LNG exporters, plans an 85 per cent expansion in LNG output from its North Field’s current 77 mtpa to 142 mtpa by 2030. The planned expansion is expected to give Qatar control over nearly 25 per cent of the global LNG market by 2030.

State-owned QatarEnergy has inked more than 20 long-term LNG deals, with more customers expected to emerge as countries move away from oil or coal but struggle to go all in on renewables.

“Replacing coal and liquid fuels with natural gas for power generation is the fastest way to reduce emissions, as demonstrated by advanced economies like the US and UK,” says Majid Jafar, CEO of Crescent Petroleum and managing director of the board of Dana Gas.

“GCC countries are recognising the vital role that natural gas will play for power generation and industrial growth.”

Elsewhere across the GCC region, Saudi Aramco forayed into the global LNG market with the acquisition of a minority stake in EIG Partners’ MidOcean Energy in a deal that is valued at $500m. The state energy giant plans to increase natural gas by 60 per cent by the end of the decade.

UAE’s ADNOC Group is also a major player in the LNG market. The firm’s gas business, ADNOC Gas, invested $3.6bn (Dhs13.1bn) last August to boost its gas processing capabilities. The company has long-term LNG supply agreements with several global energy companies including GAIL India, TotalEnergies and Japex.

The transition from fossil fuels toward more sustainable energy sources is fundamental to the global goal of achieving net zero by 2050. The use of LNG as a “bridge fuel” could make the switch easier, making natural gas a promising lever for accelerating the global energy transition.

Read: UAE, Germany’s Baden-Württemberg forge green partnership for sustainable industry growth

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