meed-logo

line1 line2 line3
SIGN IN / REGISTER

Cop28 keeps 1.5°C goal within reach

20 December 2023

 

The 28th Conference of the Parties of the UN Framework Convention on Climate Change (Cop28), helmed by the UAE’s Sultan al-Jaber, stopped short of recommending the phasing down of fossil fuels, which was on the wish list of half of the countries that ratified the Paris Agreement eight years earlier, and which were present at the 2023 climate summit in Dubai.

However, the conference scored a major victory by referencing, for the first time since Cop started, the need to transition away from fossil fuels to keep the 1.5-degree-Celsius temperature goal alive.

With few exceptions, the Cop28 UAE climate agreement – or the UAE Consensus, as Al-Jaber prefers to call it – has been described by world leaders as historic.

The UN Framework Convention for Climate Change said the agreement signals the “beginning of the end of the fossil fuel era by laying the ground for a swift, just and equitable transition, underpinned by deep emissions cuts and scaled-up finance”.

“We are standing here in an oil country, surrounded by oil countries, and we made the decision saying let’s move away from oil and gas,” Denmark’s Climate & Energy Minister, Dan Jorgensen, said after the final climate text was adopted on 13 December.

Phasing down or out

After campaigning for the final text of the agreement to exclude the phasing down or phasing out of fossil fuels, reports say that Opec member Saudi Arabia appears satisfied with the outcome.

According to a report by Reuters, Saudi Arabia views the agreement as akin to a menu that allows every country to follow its own pathway to the energy transition.

Opec members account for close to 80 per cent of the world’s proven oil reserves, along with about a third of global oil output. Phasing fossil fuels out threatens the members that have not yet diversified their economies away from oil revenues.

As expected, the least-developed countries and islands that are most vulnerable to climate change wanted more from the Cop28 agreement. 

“It reflects the very lowest possible ambition that we could accept, rather than what we know, according to the best available science, is necessary to urgently address the climate crisis,” said Senegal’s Climate Minister, Madeleine Diouf.

“The agreement highlights the vast gap between developing-country needs and the finance available, as well as underscoring rapidly dwindling fiscal space due to the debt crisis,” she explained. “Yet it fails to deliver a credible response to this challenge.”

Despite opposing views, various research and studies, including those conducted by the International Panel for Climate Change, confirm that human activities – with burning fossil fuels at the top of that list – contribute to global warming to a huge extent.

Taking the carbon from the environment, or replacing fossil fuels with non-carbon emitting alternatives, are seen as a key solution to keep the ocean levels from rising as icebergs dissolve, or to avoid extreme weather events such as droughts or flooding.

Some experts say that even the 1.5-degree-Celsius target will not entirely rule out the more frequent occurrences of catastrophic events, based on today’s environmental scenario, when the temperature is estimated to be at 1.06 degrees Celsius above pre-industrial levels.

In September, for example, thousands of lives were lost in Derna, Libya, when a storm swept through the region. Experts said Storm Daniel drew energy from extremely warm seawater in the Mediterranean, causing unexpected heavy rainfall that overwhelmed two dams in the area.

Phasing fossil fuels out threatens Opec members that have not yet diversified their economies away from oil revenues

Next steps

Beyond the initial reactions and responses, many agree that the Cop28 text will provide momentum for a global energy transition, and will have a fair impact on hydrocarbons-producing countries in the Gulf.

A Dubai-based consultant focusing on energy projects and investments tells MEED: “It is a step in the right direction, and if the implementation leads to positive gains, it will allow confidence to deepen.

“There is a lot of talk about how it is watered down with regards to fossil fuel use, but we need to give the Middle Eastern countries the time to transition to new revenue sources, otherwise we only bring economic fragility to an already politically fragile region,” the consultant adds. “That is in nobody’s interest.”

The consultant warns against using the text as an excuse to put new money into polluting projects, however. “We need a more robust methodology for new capital commitment to ensure that it goes into clean projects,” she notes.

Karen Young, a senior research scholar at the Centre on Global Energy Policy at Columbia University in the US, agrees. “I think the final language was obviously a concession to oil and gas producers, but also a push to make them more accountable,” she says.

The language implies a shift in demand. “Gulf producers reason that they will be able to meet the tail-end of that demand curve more efficiently and with fewer emissions than their competitors,” adds Young. 

“That logic has not changed, and the timeline is, of course, totally dependent on technology, finance and how quickly and in what geographies that demand curve moves.”

Over the short term, the Cop28 agreement is not expected to result in any real change to the Gulf economies, except in terms of domestic infrastructure, where momentum will likely grow for more renewables deployment; more carbon capture, utilisation and storage (CCUS); and new investment in – and export of – liquefied natural gas, ammonia and hydrogen.

There will also be continued competition for market share and market management of oil, according to Young. 

Loss and damage

The call to transition away from fossil fuels was not the only accomplishment at Cop28.

The agreement called on the parties to contribute to tripling renewable energy globally and doubling the global annual rate of energy efficiency improvements by 2030, as well as accelerating efforts towards the phase-down of unabated coal power.

It also rallied the parties to reduce methane emissions and accelerate zero- and low-emission technologies, including renewables, nuclear and abatement and removal technologies such as CCUS, particularly in hard-to-abate sectors, as well
as in the production of low-carbon hydrogen.

Equally important, Cop28 managed to secure $89bn in pledges covering climate finance, local climate action and the Loss and Damage Fund.

Lisa Jacobson, president of the US-based Business Council for Sustainable Energy, tells MEED that the agreement on the Loss and Damage Fund early in Cop28 demonstrated a commitment by governments to assist the most vulnerable countries as they cope with the impacts of climate change.

Jacobson, like many others, expects the pledges – which some analysts say equate to only about 0.2 per cent of the necessary funding – to grow in time.

Unlike the funds that focus on climate mitigation and adaptation projects, the Loss and Damage Fund addresses the needs of communities or countries that have already sustained economic losses due to extreme weather events like floods, droughts or wildfires.

“The Loss and Damage Fund operationalisation has been critical … other financing pledges have also been important,” says Jessica Obeid, a partner at New Energy Consult. “Yet the critical factors are the processes [for] eligibility, among others, which remain to be seen, along with moving from pledges to commitments and disbursements. 

“In all cases, the commitments still fall short of the required financing for climate change mitigation and adaptation measures.”

The next step for Cop will have to include developing transparent eligibility and allocation criteria and simplified application processes, as well as building domestic capacity, says Obeid. “Leveraging further financing is also key, and may require institutional and technical assistance.”

Cop28 secured $89bn in pledges covering climate finance, local climate action and the Loss and Damage Fund

Coalition of the willing 

Despite Cop28’s historic substance and intent, a healthy dose of cynicism remains. “Cop has been around for nearly 30 years, yet emissions have continued to increase year after year,” a UAE-based business leader tells MEED.

From this vantage point, the forging of a coalition of the willing – or several coalitions of the willing – could be the best way to deliver the energy transition without exceeding the 1.5-degree-Celsius temperature goal.

An example of this is the more than 125 countries that have signed on to the pledge to triple renewable energy capacity globally and double the energy efficiency improvement rates by 2030. While such agreements are non-binding, a willing coalition will help encourage others to pursue those pledges. 

“That is an example of a coalition having a strong impact and working effectively to elevate the issue they are advocating for, and creating a platform for countries and stakeholders to identify emission reduction and adaptation strategies,” concludes Jacobson.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11376263/main.jpg
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Gulf seizes AI opportunities

    30 May 2025

     

    This package also includes: Data centres churn investments

    Opportunities to build digital infrastructure – mainly data centres – to support the Gulf’s ambitious artificial intelligence (AI) initiatives jumped in value to about $80bn in mid-May, up from around $20bn at the end of April, thanks to the gigawatt-scale AI campuses announced during US President Donald Trump’s Gulf visit.

    These projects provided the final piece of a puzzle relating to the massive power generation capacity buildout in Saudi Arabia and the UAE, which have been overhauling their electricity systems in line with their energy diversification, economic expansion and net-zero targets.

    The planned 5GW AI campus in Abu Dhabi is expected to occupy 26 square kilometres of land when completed. Experts say that in countries with more temperate weather, such a facility would require power equivalent to the consumption of nearly three million homes.

    “This is as much a story about electricity as it is about AI,” Karen Young, senior research scholar at Columbia University’s Centre on Global Energy Policy, tells MEED.

    She adds that the UAE leadership was “extremely prescient” to invest in nuclear power many years ago, perhaps understanding that a surplus of electricity would be key to future growth and industrial policy.

    “But these things are expensive, and are easier to permit and build in the UAE because of the concentration of funding and decision-making,” she says. “It's proving a major advantage in the AI race and construction of data centres.”

    Attractive asset class

    Data centres are often considered part utility assets – similar to delivering gas, electricity, water and telecoms services – and part real estate assets, due to the rents they yield from tenants.

    “Yet a lot of the talk … now concerns how investors look at data centres as assets,” a partner at an international law firm with an office in Riyadh says, “because they are neither utility nor real estate”.

    However they are defined, the gap in digital infrastructure to support AI advancements is driving investments in data centre projects in the Middle East.

    “The opportunity is ripe,” says Sherif Elkholy, partner and head of Middle East and Africa at UK-based private equity and investment firm Actis.

    In addition to the sovereign wealth funds in Saudi Arabia and Abu Dhabi, family offices such as Saudi Arabia’s Vision Invest and international private equity firms are getting their feet wet in the rapidly expanding Gulf data centre market.

    Actis, for example, is looking at credible local partners, with a platform or portfolio of operating as well as greenfield assets. US-based KKR acquired a stake in UAE-based Gulf Data Hub earlier this year.

    “Historically, the region has been an exporter of capital, but today there is a concerted effort to attract foreign direct investments, particularly into Saudi Arabia. The strategy now is how can the region become an importer of value-added capital to support their 2030 visions?” says Elkholy.

    Part of the answer lies in opening the sector to private investors and capital. According to Elkholy, the Middle East has very ambitious energy transition, digital infrastructure, desalination and district cooling projects, and the private sector is now playing a central role in delivering these.

    “The mood of international investors has been to avoid risks due to global uncertainties, such as we have now, but the reality is there is a major infrastructure gap, and addressing this, especially given the 2030 targets, requires private sector participation.”

    Data sovereignty

    Uncertainty over data sovereignty issues across the Gulf states is yet another issue investors have had to grapple with.

    Although the GCC countries have had stringent data localisation laws in place for almost a decade now, that does not seem to have dampened growing investments in data centre projects in the region, according to Nic Roudev, who leads UK-based legal firm Linklaters’ TMT practice in the Middle East.

    “While data localisation requirements prevent the most efficient operational configurations, where data centres capacity is deployed in one country to service demand across the entire region, it also presents hyperscalers with opportunities to build out robust operations in each of the major GCC countries,” says Roudev.

    This allows firms to take advantage of incentives for local presence, such as access to government procurement contracts and financing opportunities.

    “Demonstrating commitment to the particular country’s economy by establishing and growing local operations also allows data centre investors to build durable strategic partnership relations with regulatory and government authorities, which can lead to a decrease in long-term regulatory and business uncertainty,” the executive says.

    The heat and climate effects will continue to be a thorn for future Gulf data centre development and investments
    Karen Young, Columbia University’s Centre on Global Energy Policy

    Improving regulations

    It's not all perfect, though, Young suggests, citing that the heat and climate effects will continue to be a thorn for future Gulf data centre development and investments.

    “There is also the rather poor track record of exporting, trading and sharing electricity within the UAE and the GCC, and thinking about export to third countries… so that makes the idea of data centres and even data traffic via cables a little more complicated,” she explains.

    From a regulatory viewpoint, Roudev says the main unique risk factors that data centre investors in the GCC typically have to wrestle with stem mostly from the usually non-transparent and frequently hard to predict legislative and regulatory rule-making and enforcement.

    However, Roudev also notes that “in recent years there has been a marked trend in both the UAE and Saudi Arabia for increasing transparency by opening draft laws and regulations to public consultations and actively soliciting input from key industry stakeholders.”

    A good example of this in Saudi Arabia has been the development of one of the key regulatory instruments for cloud computing services, which went through “a series of sudden and significant revisions, and the data protection law, which underwent unexpected but considerable revisions after remaining suspended for a year”.

    Regulatory enforcement actions in the GCC, which have traditionally not been publicised, have also shifted, with an evident attempt in recent years to increase transparency and predictability of enforcement by authorities in both countries, concludes Roudev.

     Data centres churn investments

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13939315/main.jpg
    Jennifer Aguinaldo
  • Meraas awards Madinat Jumeirah construction deal

    30 May 2025

    Dubai-based real estate developer Meraas Holding, part of Dubai Holding, has awarded a AED300m ($82m) contract for the main construction works on Elara, which is Phase 7 of the Madinat Jumeirah Living masterplan in Dubai.

    The contract was awarded to the local firm Al-Sahel Contracting Company.

    Elara will feature three residential towers offering 234 apartments.

    Construction is expected to start immediately, and the project is scheduled for completion by the end of 2026.

    Earlier this month, Meeras awarded Bhatia General Contracting a contract to construct the fourth phase of the Nad Al-Sheba Gardens community in Dubai, worth AED690m ($188m).

    The scope of the contract covers the construction of 92 townhouses, 96 villas and two pool houses.

    In March, Meraas awarded Abu Dhabi-based Arabian Construction Company an estimated AED2bn contract ($544m) to build its Design Quarter residential project in Dubai Design District.

    The development will comprise three buildings offering over 558 residential apartments. Construction is expected to be completed in 2027.

    The UAE’s heightened real estate activity is in line with UK analytics firm GlobalData’s forecast that the construction industry in the country will register annual growth of 3.9% in 2025-27, supported by investments in infrastructure, renewable energy, oil and gas, housing, industrial and tourism projects. 

    The residential construction sector is expected to record an annual average growth rate of 2.7% in 2025-28, supported by private investments in the residential housing sector, along with government initiatives to meet rising housing demand.

    MEED’s May 2025 report on the UAE includes:

    > COMMENT: UAE is poised to weather the storm
    > GOVERNMENT & ECONOMY: UAE looks to economic longevity
    > BANKING: UAE banks dig in for new era
    > UPSTREAM: Adnoc in cruise control with oil and gas targets
    > DOWNSTREAM: Abu Dhabi chemicals sector sees relentless growth
    > POWER: AI accelerates UAE power generation projects sector
    > CONSTRUCTION: Dubai construction continues to lead region
    > TRANSPORT: UAE accelerates its $60bn transport push
    > DATABANK: UAE growth prospects head north

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13981791/main.png
    Yasir Iqbal
  • Hydrogen’s future may not be so green

    29 May 2025

    Commentary
    Jennifer Aguinaldo
    Energy & technology editor

    Much has changed in the region’s hydrogen landscape since the first projects were launched in a flurry of excitement.

    Initially, in anticipation of demand for low-carbon fuel arising from Asia and Europe by the early 2030s, aspiring green hubs such as Egypt, Morocco, Abu Dhabi and Saudi Arabia announced batches of large-scale green hydrogen and ammonia projects.

    Two or three of these have progressed. At Neom, the world’s largest and most ambitious green hydrogen and ammonia production plant is under construction. The $8.4bn project reached financial close in May 2023, achieved a 60% completion rate in December, and appears on track to meet the company’s 2026 target commercial operation date.

    In Oman, meanwhile, where the sultanate’s third hydrogen block land auction is ongoing, developers and downstream companies are expected to submit bids sometime this year.

    However, across the Middle East and North Africa region, most of the projects announced in the past few years remain in the concept or preliminary design stages, while the rest have not moved beyond signing the memorandums of understanding.

    With the exception of Oman, there have been few announcements on new green hydrogen projects in the region over the past 12 months.

    Shareholders have even revolted over clean hydrogen plans. Seifi Ghasemi, former CEO of Air Products, which co-owns the Neom Green Hydrogen Company, along with Saudi utility developer Acwa Power and gigaproject developer Neom, was removed from the firm’s board earlier this year, with sources citing the company shareholders’ opposition to the firm’s green hydrogen plans.

    In addition to being a co-owner, Air Products is also the main offtaker, contractor and systems integrator of the Neom green hydrogen project.

    Cost issue

    The main issue for these projects remains the cost of production, according to Michael Liebreich, managing partner at UK firm EcoPragma Capita.

    “If green ammonia is going to work anywhere, it should be [in] Oman and the GCC,” he explains. However, the London-based executive and entrepreneur has doubts about green hydrogen’s economics.

    Earlier this year, his conversations with “a number of participants in green hydrogen and ammonia projects” indicate that the costs they are able to achieve today come to around $6 a kilogram (kg), and potentially $4/kg in five years for projects coming online in the early 2030s.

    “They talk about $3/kg or $2.5/kg, but you could only get there by offering incentives such as subsidies, concessionary finance, free land, free infrastructure and offtake guarantees,” notes Liebreich.

    While the region has very cheap solar power, a $15 a megawatt-hour (MWh) solar tariff does not necessarily lead to cheap hydrogen because it is only available roughly 25% of the time. To get to 24/7, one needs batteries, and in jurisdictions like Abu Dhabi, this will take the price to roughly $50/MWh.

    Adds Liebreich: “And since you need 50kWh of power per kilogram of hydrogen, assuming an 80% efficiency, that means you have $2.50/kg just of electricity cost. No capex, no maintenance, no compression, no pipelines, nothing. So $4/kg looks like being a floor price for a long time; $3/kg would be the outside edge of achievable.”

    Meanwhile, fossil gas at around $1-1.50/kg creates an extra cost of $2.50/kg, which means that anyone producing a million tonnes of green hydrogen a year has to cover the extra cost of $2.5bn a year and find at least 15 years of guaranteed offtake to get the project built.

    “You need to secure 15 years of support to close the cost gap of $37.5bn. You need it guaranteed upfront by someone with a bullet-proof balance sheet – so that’s either a government or sovereign wealth fund.”

    The near-impossibility of exporting liquid hydrogen to Europe due to prohibitive costs and inefficiency of liquefying the hydrogen should also be considered.

    In comparison, a more feasible option could be putting ammonia on a ship to Europe, where it could benefit from a Carbon Border Adjustment Mechanism (CBAM) at the same price as a tonne of carbon under EU-ETS.

    According to Liebreich, under this scenario, each kilogram of green hydrogen reduces emissions by around 9kg, and the EU-ETS price today is €72 ($81)/tonne.

    “So each kilogram of green hydrogen will avoid a carbon price of $0.009 x 81, which is equal to $0.72. That closes your gap, so a tonne of green ammonia is now only $320 more than a tonne of grey, or only double the price,” Liebreich explains.

    “Look at it another way, if you want to export 1 million tonnes of hydrogen as ammonia a year into Europe, you are still looking at an annual cost gap of $1.8bn after taking the EU-ETS CBAM into account. And you need a 15-year deal, so that’s $27bn,” he notes, under the assumption one can get the hydrogen price down to $4/kg.

    Far from being rosy, Liebreich concludes that green hydrogen-wise, the region could be heading down a blind alley. “There will be almost no import market for green hydrogen or its derivatives because, in the best scenario, they will remain too expensive.”

    Bright side

    Liebreich’s dour forecast collides with the vision of most regional stakeholders that net zero by 2050 will not be possible without low-carbon, and particularly green, hydrogen and its derivatives, including green ammonia, methanol and sustainable aviation fuel.

    Mohammad Abdelqader El-Ramahi, chief green hydrogen officer at Abu Dhabi Future Energy Company (Masdar), for instance, told MEED in October that green hydrogen is the most important driver and enabler of net zero and decarbonisation. “Very few people know that electrification alone can address no more than 30% of our decarbonisation [needs], even if we install all sorts of renewable sources,” he said.

    Abu Dhabi intends to replicate its success in the energy sector’s previous four waves – oil and gas in the 1960s, liquefied natural gas and anti-flaring in the 1970s, renewable energy in the 2000s and nuclear energy in the 2020s – in the sector’s fifth low-carbon hydrogen wave.   

    The list of Masdar’s potential green hydrogen partners includes Ireland-headquartered Linde; France’s TotalEnergies; the UK’s BP; Austria’s Verbund; and Japan’s Mitsui, Osaka Gas, Mitsubishi Chemical, Inpex and Toyo Gas.

    Despite the slow progress and major reality check, hope proverbially springs. “Green hydrogen is the inevitable future fuel,” El-Ramahi asserted.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13956351/main.gif
    Jennifer Aguinaldo
  • Wood wins Iraq oil and gas contracts

    29 May 2025

    The UK-based engineering company Wood has been awarded a series of decarbonisation contracts with a total value of about $100m for flare gas reduction and carbon efficiency project solutions across Iraq’s largest oil fields. 

    Under the terms of the contracts, Wood will deliver brownfield engineering, procurement and construction (EPC) and modifications solutions to “enhance operational efficiency and minimise environmental impacts”, according to statement released by the company.

    In its statement, Wood said that the projects would support Iraq’s commitment to reduce gas flaring by 78% by the end of 2025. 

    Wood has already provided decarbonisation solutions for major operators in Iraq and has implemented the country’s largest flare gas reduction programme to date.

    Ellis Renforth, Wood’s president of operations for Europe, Middle East and Africa, said: “We are working in partnership with our clients to achieve Iraq’s energy ambitions and deliver a sustainable energy future for the country. 

    “Wood Iraq has extensive knowledge of our clients’ infrastructure, operations and goals, enabling them to improve operational efficiency and reduce the impact of gas flaring while maintaining critical production.” 

    The reimbursable contracts will be delivered by Wood’s team in Iraq and the UAE.

    The company said it would recruit 60 new employees to support the successful delivery of these projects. 

    Money problems

    Earlier this month, Wood announced that its chairman, Roy Franklin, would step down from the board.

    The move comes amid ongoing financial problems at the engineering company, which is working on projects worth tens of billions of dollars across the Middle East and North Africa region.

    At the end of April, Wood Group’s shares were suspended on the London Stock Exchange because the company did not publish its accounts for 2024 on time.

    Wood employs over 4,000 people in the Middle East, having increased its headcount by 500 in 2024.

    MEED’s June 2025 report on Iraq includes:

    > COMMENT: Iraq maintains its pace, for now
    > ECONOMY: Iraq’s economy faces brewing storm
    > OIL & GAS: Iraqi energy project value hits decade-high level
    > PIPELINES: Revival of Syrian oil export route could benefit Iraq
    > POWER: Iraq power sector turns a page
    > CONSTRUCTION: Iraq pours billions into housing and infrastructure projects
    > DATABANK: Iraq forecast dips on lower oil prices

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13974910/main.png
    Wil Crisp
  • BP considers Algeria lubricants plant project

    29 May 2025

     

    The UK-based oil and gas company BP is considering developing a facility in Algeria to produce products for its Castrol lubricants business, according to industry sources.

    BP has been considering developing the facility for some time, but has yet to make a final decision on whether to proceed with the project.

    One source said: “BP is continuing to evaluate the business case for developing the facility.”

    BP’s upstream business exited Algeria with the sale of its assets to Italy’s Eni in a deal announced in September 2022.

    That deal included selling its interests in the gas-producing In Amenas and In Salah concessions.

    BP’s Castrol brand serves consumers in more than 150 countries in various sectors, including automotive, marine and industrial.

    Its passenger car engine oils include Edge, Magnatec and GTX.

    Its products also include commercial vehicle engine oils, transmission fluids, metalworking and machining fluids, production fluids, and specialist greases and lubricants.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13974906/main.jpg
    Wil Crisp