As we look at the world’s sustainability challenges, we must unlock solutions to the growing demand for secure, affordable and cleaner energy. These solutions must drive economic growth while the products, processes and technologies continue to evolve in advancing the energy transition and foster more responsible investment. This was a common thread of discussion on the future of refining and petrochemicals with leaders from energy, industry and technology organisations at the Middle East Technology forum that I attended last week.
For the Middle East, there is a renewed vision to meet the Paris Agreement’s climate commitments by diversifying the energy mix. Developing a dynamic economy that has a reduced dependency on oil markets is going to be a challenge, but as the world changes, so too will the region.
Refining and petrochemical capacity continues to grow at pace across the Middle East. Several new, export-oriented plants and capacity upgrades are expected in the coming years and even more diverse product ranges are required to support energy transition. The total refining capacity is expected to rise to 12 million b/d in 2023, up from 9.9 million b/d in 2019 and along with energy consumption, will continue to climb towards 2040. A cornerstone to our global energy and industrial system, we must not lose sight of the region’s potential to unlock growth in new ways all the while moving towards a low-carbon economy which will pave the way to a more sustainable future.
Progressive project opportunities are required to attract investment and plug financing gaps that need to be met by investors and banks to connect capital and drive sustainable development. In the unique backdrop of the COVID-19 pandemic, we have seen many National Oil Companies (NOCs) and International Oil Companies (IOCs) slash capital expenditure looking for swift opportunities for recovery in 2021. We also see progress in the acceleration of renewable investments which are crucial to decarbonising conventional energy production.
Saudi Arabia and the UAE are front-running efforts to diversify their energy mix, capitalising on the opportunity to leverage their abundant source of sunshine for solar energy with lower financing costs, and potential parity of tariffs with fossil-fuel-based power, as well as its potential to produce hydrogen.
The recently financed Al Dhafra Solar Photovoltaic project in the UAE, will be the world’s largest single-solar power plant, supplying electricity for 160,000 homes. Saudi Arabia has unveiled plans to develop NEOM, a $500-billion futuristic city for one million people, powered by green hydrogen generated from wind and solar projects. Additionally, Abu Dhabi National Oil Company (ADNOC) is teaming up with two of its sovereign wealth funds to become an exporter of blue and green hydrogen, with the potential to be one of the lowest-cost and largest producers of blue hydrogen in the world.
Along with securing new sources of energy, comes the responsibility for clean expansion. With a historically high level of waste sent to landfills, the Middle East is looking at waste-to-energy (WtE) using advanced thermal technologies to convert solid waste into biogas. Leading the regional push for WtE development, the UAE plans to achieve a 75% recycling state of all municipal solid waste by the end of 2021. Saudi Arabia aims to hit a 3GW target of energy from waste before 2030, guided by their Vision 2030 energy diversification plan and Kuwait along with other countries are getting their own studies and projects underway. These policy commitments and tangible investments demonstrate further commitment to sustainable energy generation.
With no universal approach to achieve net zero, one thing is clear: we need the power of partnership from governments, investors and businesses to diversify portfolios. As they adapt to the energy transition, they must maintain business viability by reducing emissions from their existing operations and focus on downstream growth markets.
Carbon capture, utilisation and storage (CCUS) has the potential to address 62% of the world’s global CO2 emissions and will be a key component to assist countries and companies in working towards net-zero targets, whether addressing their current emissions profile or looking to hydrogen solutions requiring capture and utilisation of CO2 cost effectively.
As technology continues to advance and costs reduce, economics may immediately point to renewable energy or alternative fuels as the only solution. Looking at the entire structure of an industrial hub, from its feedstock and energy sources to its product portfolio and emissions, solutions will be prioritised according to policy and sustainability goals while creating growth and value for end markets and shareholders. In the path to change, operators will look to short-term opportunities such as asset integration, energy efficiency and reduced flaring to provide a solid foundation for future developments. Exploring a breadth of options and leveraging the technologies we have in hand today; we can navigate and accelerate transition to tackle climate change.
For the Middle East, achieving bold targets will be made possible with a diversified energy strategy, leveraging CCUS technology and managing waste responsibly. These themes directly contribute to a broad range of the SDGs necessary for all countries to protect the planet, including clean energy, innovation and circular economy. Sustainable finance is also a catalyst for achieving the SDGs and financial institutions and government authorities must work together to drive the agenda.
To learn more on the strategic drivers for a low-carbon economy and overcoming the challenges and vulnerabilities for success, watch the replay of our recent webinar: What’s your decarbonisation SCORE? Together with industry experts, I provide insight into planning, assessment, monitoring and reliable delivery to achieve your ultimate decarbonisation goals.
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