The journey towards net zero

26 October 2022

Published in partnership with

The most pressing concern in the race to net zero is the need to reduce carbon emissions. According to the International Panel on Climate Change (IPCC), carbon dioxide (CO2) accounts for 76 per cent of total global greenhouse gas emissions, of which 65 per cent is a direct result of fossil fuel and industrial processes.

Lowering CO2 output would therefore have the biggest impact on global warming.

The Middle East is central to this process. Although the region accounts for only 7 per cent of total global CO2 output, its emissions are some of the world’s highest on a per capita basis. 

In 2021, for example, per capita emissions in the Middle East were 8 tonnes, compared with 2.3 tonnes in South America, 4.1 tonnes in Asia and 5.6 tonnes in Europe. These figures exclude the environmental impact of oil and gas exports from the region. 

It is also an issue the region can no longer afford to ignore as it is particularly prone to climatic changes including reduced rainfall, heatwaves and increasingly severe weather events, such as the cyclones that have hit Oman in recent years. 

Reality bites

The subject was a key talking point at the Siemens Energy Middle East & Africa Energy Week event in June, where attendees discussed decarbonisation and the government targets – 2050 for the UAE and Oman, and 2060 for Saudi Arabia and Bahrain – set as deadlines to reach net zero. 

A startling finding from the event was the gap between perceptions and reality regarding what has been achieved so far in cutting emissions.

As part of Siemens Energy’s survey for its Middle East & Africa Energy Transition Readiness Index, when asked to quantify CO2 reductions in their country today and what they will be in 2030 compared to 2005, participants estimated that total emissions had fallen by 23 per cent on average over the past 17 years. Only one-third correctly answered that emissions had not fallen at all.

In fact, the opposite has taken place. Between 2005 and 2020, total global CO2 emissions increased by 50 per cent to almost 3.5 billion tonnes, according to the authoritative BP Statistical Review of World Energy 2021.

“This year, many reports were issued of which the most important is the IPCC report,” said Mohamed Nasr, director of the Environment & Sustainable Development Department at Egypt’s Foreign Affairs Ministry and lead negotiator for Egypt at Cop27, speaking at the Energy Week.

“All [of the reports] stressed that we are not on track to keep climate change below 2 degrees, or even keep the 1.5 degrees target within reach. More work needs to be done.”

Between 2005 and 2020, total global CO2 emissions increased by 50 per cent to almost 3.5 billion tonnes

BP Statistical Review of World Energy 2021

Work in progress

A second poll revealed that attendees expected emissions to fall to 39 per cent of their 2005 levels on average, a figure that is highly unlikely to be reached in just eight years. 

This is especially the case given that carbon emissions must be cut across the board. Although the region is making good progress on the development of renewable energy production, there has been much lower momentum in other areas. 

For example, cement production is estimated to account for between 7 per cent and 10 per cent of total carbon emissions, but despite this, there has been little in the way of new regulations on government cement output in the region. 

Overall, in 2021 the industrial sector directly accounted for about a quarter of total global greenhouse emissions equivalent to 9.4 gigatonnes, a rise of 193 megatonnes on the previous year, according to the International Energy Agency (IEA). Iron, steel and cement production comprised more than half this figure.

The industry itself recognises more needs to be done and is implementing a range of policies and agreements to act co-operatively on reducing its climatic impact.

In early September for instance, the International Renewable Energy Agency (Irena) and international companies including Siemens Energy as a co-founder, Tata Steel, Enel Green Power, Technip Energies, Taqa and Eni launched the global Alliance for Industry Decarbonisation. The new alliance is aimed at accelerating net-zero ambitions and the decarbonisation of industrial value chains in accordance with the Paris Agreement. To date, 20 members have joined the alliance to work towards the same vision.

“Climate action needs industry leaders,” said Francesco La Camera, Irena director-general. “This Alliance stands for the growing commitment of global industry to act on decarbonisation and unlock opportunities that come with a green industrialisation through renewables and other transition-related technologies like green hydrogen.

“By standing together we send a clear signal of solidarity ahead of Cop27 and we invite new partners to join our common vision.”

Ultimately, we must remember that every tonne of CO2 we emit into the atmosphere will need to be removed

Dietmar Siersdorfer, Siemens Energy Middle East and the UAE

Renewables focus

Closer co-operation is a step in the right direction, but is just one element in a range of measures that need to be implemented. 

When ranking the energy initiatives to reach net zero as part of the Transition Readiness Index, the Energy Week participants identified three other priorities with the highest beneficial impact: accelerating the development of renewable energy projects; reinventing energy business models; and implementing energy storage solutions. 

The focus on renewables reflects the raft of utility-scale solar, hydro and wind schemes across the Middle East and Africa. In all, there are more than 500 projects planned or under way, with a total capital investment value of more than $510bn. 

But there has been less progress on the other two main priorities. Energy storage solutions have gained little traction to date in the region, although Dubai’s innovative 250MW pumped hydro energy storage project in Hatta could become a template for others to follow when it comes to grid-connected storage capacity. 

Nonetheless, with grids operated by centralised state utilities and renewable projects at a stage where they support conventional energy production rather than replace it, there is still some way to go before storage systems become more widespread.

For now, the principal opportunity for energy storage systems is for captive use at off-grid demand centres – for example, at Saudi Arabia’s gigaprojects along the Red Sea coast, such as the Red Sea Project and Neom. Entirely dependent on renewable energy production, the projects may require stored energy when weather conditions are unfavourable or during periods of peak demand. 

Diversifying the energy business model is unsurprisingly a key priority given the region’s reliance on hydrocarbon exports. Over the past 18 months, the development of a hydrogen industry has emerged as the pre-eminent trend to enhance the Middle East’s position as the leading source of global energy supplies. 

Today, there are some 46 world-scale hydrogen projects across the Middle East and Africa worth well in excess of $50bn. Although only two are under construction, the hydrogen industry is expected to grow massively in the region over the next decade.

This is just as well as time is fast running out if the world is to avoid a climatic emergency. 

As Dietmar Siersdorfer, managing director of Siemens Energy Middle East and the UAE, puts it: “Ultimately, we must remember that every tonne of CO2 we emit into the atmosphere will need to be removed.”

Related reads:

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  • Region heads for hotel boom

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    Alongside the major infrastructure and construction schemes currently under way in the region, contractors in the Middle East and North Africa (Mena) are looking forward to a significant inbound spree of hospitality-linked project work.

    A combination of government-led touristic masterplans – led by expansive and ambitious schemes in Saudi Arabia – alongside private sector investment in individual hotels and resorts has led to the build-up of a $54bn pipeline of hospitality-linked projects in the pre-execution, study and planning stages across the Mena region, according to regional projects tracker MEED Projects.

    With this ramp up in planned hotel schemes, the region is now leading the global recovery in tourism projects, in a reflection of broader travel trends that have seen tourist arrival numbers grow to exceed pre-pandemic levels by 22%, according to GlobalData.

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    The $54bn project pipeline compares to a value of $22.7bn of work currently under execution in the region, and a long-term tally of $95.4bn-worth of hotel and resort project contract awards over the past decade and a half.

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    This sets the stage for an intensified period of hotel investment and development over the next five years that could surpass the last investment boom cycle in 2014 and 2015, when hotel project award totals reached $9.1bn and $10bn, respectively.

    Since 2009, the average annual value of hotel and resort project awards has been $6.4bn, with activity waxing and waning over the intervening period. Hotel and resort schemes fell away dramatically in 2020 amid the Covid-19 pandemic, with awards reaching a low of $2.6bn in 2021. Activity then recovered in 2022 and 2023 to the above-average values of $6.7bn and $6.6bn, respectively.

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    Looking at the $54bn-worth of projects split by market, the pipeline is dominated by the touristic megaprojects currently under development in Saudi Arabia, which account for $39.9bn or 74% of the total value of upcoming work.

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    Dubai Mall was the most visited place on earth in 2023, with 105 million visitors

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    While full-year data for most other GCC markets has yet to be reported, one other GCC country that has recorded strong numbers for 2023 is Saudi Arabia. 

    The kingdom welcomed more than 100 million tourists last year, achieving its 2030 goal seven years early. The 2023 total comprised 77 million domestic and 27 million international visitors, generating revenues of $27bn for the kingdom. 

    Saudi tourism numbers cross 100 million

    Riyadh wants more growth and aims to emulate Dubai by developing ambitious projects that are designed to be global attractions in the future. The target now is to increase tourist numbers to the kingdom to 150 million by the year 2030, with a split of 80 million domestic and 70 million international tourists.

    Saudi Arabia welcomed more than 100 million tourists last year, achieving its 2030 goal seven years early

    Regional travel

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    Riyadh is not allowing anything to distract it from its ambitious goals for economic diversification as part of the country’s Vision 2030 development plan. This includes the war in Gaza and the secondary conflict escalating in the Red Sea, despite its proximity and its direct implications for Saudi Arabia.

    After nearly a decade of a destabilising, demoralising and ultimately fruitless war in Yemen, the court in Riyadh appears to have lost not only its appetite for military adventurism, but also the will to get involved in regional conflict in any way. In this regard, Saudi Arabian foreign policy has drawn much closer to the default position of much of the rest of the Gulf, which is to avoid regional tension and focus on the business angle – and this is partly born of necessity. Riyadh has ambitious plans not just for its own development, but for the volumes of foreign direct investment that it can draw into the country with those plans. Conflicts risk poisoning investor sentiment.

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    MEED's April 2024 special report on Saudi Arabia includes:

    > GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
    > BANKING: Saudi lenders gear up for corporate growth
    > UPSTREAM: Aramco spending drawdown to jolt oil projects
    > DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector

    > POWER: Riyadh to sustain power spending
    > WATER: Growth inevitable for the Saudi water sector
    > CONSTRUCTION: Saudi gigaprojects propel construction sector
    > TRANSPORT: Saudi Arabia’s transport sector offers prospects


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