Energy This Week: the hottest year on record, Gaza's gas, & pope, king & billionaires at Cop28

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Markets unconcerned by Gaza threats to gas and oil

S&P says that in the worst case of an escalation of the war in Gaza, Israel’s gas supplies to Egypt and Jordan could be cut. The offshore Tamar field was briefly shut down as a precaution, but resumed output on November 9. The UAE, Qatar and Oman could possibly step in to supply liquefied natural gas, but this would be significantly more expensive, posing the struggling Egyptian economy with further challenges. US energy envoy Amos Hochstein says that the gas reserves offshore Gaza belong to the Palestinian people and could be a source of future revenue and energy independence.

The Red Sea carries 10 per cent of global shipping and is a crucial seaway for oil and gas trade from the Gulf to Europe. In apparent retaliation for the war in Gaza, the Houthis on Monday seized a ship ultimately owned by an Israeli billionaire, raising the threat to energy shipments. This is, though, not the first time they have attacked vessels transiting near Yemen.

Oil prices rose on Monday, more over anticipation of possible Opec+ supply cuts in their meeting this weekend than over geopolitical concerns. Brent crude finished Monday at $82.32 per barrel, up $1.71 on Friday’s close, and added another 17 cents on Tuesday. Prices had dropped last week over continuing demand concerns.

Simplistic calls for an immediate halt to investment in oil to tackle climate change risk economic damage and counterproductive environmental effects. One key technology for decarbonising hydrocarbon production and use is carbon capture and storage (CCS). Adnoc and Santos, an Australian oil and gas company, have agreed to co-operate on CCS and carbon dioxide shipping, while the Abu Dhabi state petroleum giant has begun its pilot project to trap the greenhouse gas in rocks in Fujairah, in partnership with British-Omani start-up 44.01.

Hydrogen is another key technology for decarbonising petroleum and industry, and Adnoc’s fertiliser joint venture, Fertiglobe, shipped its first cargo of renewable ammonia, made from hydrogen produced by an electrolyser, from Egypt to the soda ash business of Unilever in India. Dubai Electricity and Water Authority managing director Saeed Al Tayer says hydrogen will play a bigger role in his company’s business, but that it will take eight to 10 years to bring costs down.

District cooling company Tabreed announced a 10.5 per cent rise in third-quarter revenues, but recorded a loss due to the recognition of a tax liability as the UAE introduces corporate tax. The firm is bringing its energy-saving technology to India, and introducing geothermal energy to its facility at Masdar City.

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Climate change 'breaking all the wrong records'

The world is set for warming of 2.9°C on current emissions pathways, warns a UN report just ahead of Cop28 – some improvement on previous years, but far above the 1.5°C aspiration of 2015’s Paris Agreement. It concluded that, even in the most optimistic scenario, there is only a 14 per cent chance of not exceeding the 1.5°C goal. This warming already brings unbearable heat and humidity to some areas, drying up Egypt’s mango crop as the weather refuses to cool down even well into November. Last year’s heatwave in Europe may have killed 70,000 people. This year is almost certain to be hotter overall.

Folly destroyed the world’s fourth-largest inland body of water, the Aral Sea between Uzbekistan and Kazakhstan, leaving a toxic wasteland whose dust-storms carry pesticide and fertiliser residues. Diversion of the Amu Darya and Syr Darya rivers for cotton cultivation caused the sea to shrink to a tenth of its original size. Despite growth of tourism in the region, there is little prospect of the Aral’s waters’ returning.

Droughts and heatwaves have also dried up Iraq’s marshes and Tunisian farmlands, uprooting their inhabitants.

In the opposite climatic zone, Greenland’s ice sheet is melting, possibly irreversibly. This teaches several lessons: it’s essential to reduce emissions, to boost solutions based on nature, remove carbon dioxide and methane from the atmosphere, transform farming, and mobilise sustainable finance. Dutch start-up Land Life is expert in reforesting land and ensuring the trees survive. Nature is a victim of climate change, but it is also a key part of the solution – with initiatives such as restoring topsoils and protecting mangroves.

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A pope, a king and billionaires at Cop28

Pope Francis, King Charles III and Bill Gates are all confirmed to appear at the key UN climate event in Dubai. They have no formal role at the negotiations, but bring a mix of moral weight, influence and money.

The UAE may update its climate plans after Cop, says the UAE’s Minister of Climate Change and Environment, Mariam Al Mheiri, depending on the outcome of the important “global stocktake”. The country’s green agenda and its strong financial community could combine to bring leadership in sustainable finance. One of the key issues for the event is steering climate finance to developing countries. The Paris Agreement’s target of $100 billion annually, itself a drop in the bucket and eroded by inflation, was probably finally reached last year. Developing countries will have to spend about $1 trillion per year on climate issues by 2025.

Food resilience to the changing climate will be a key focus of Cop28, Ms Al Mheiri has announced, with a high-level session on the first day. This is expected to unveil an Emirates Declaration, supporting a rethink of food and agricultural systems and for countries to link these to their national emissions and biodiversity plans. Ms Al Mheiri has laid out a plan to cut the UAE’s food waste in half by 2030, which could include fines for households producing large amounts of waste. One-third of food produced globally is lost or wasted, an environmental as well as social burden.

Disputes between China and the US have sometimes derailed past Cops. The two global giants last week reached agreement on working together on climate issues including tripling renewable energy, doubling energy efficiency, reducing deforestation, cutting plastic pollution and accelerating the replacement of coal, oil and gas-fired power, outcomes praised by Cop28’s President-designate, Dr Sultan Al Jaber. He also hailed the achievement of the overdue $100 billion climate financing goal. Dr Al Jaber, who is also the UAE's Minister of Industry and Advanced Technology, has been named one of Time magazine’s 100 most influential business leaders on climate.

US climate envoy Amos Hochstein said, “[Dr Al Jaber]’s done a very good job” but “the hardest part of the Cop is at the end”. Saying “the world has to get serious about accelerating the energy transition”, he praised expenditure made by his country, the UAE and Saudi Arabia, but bemoaned the falling share of clean investment going to developing countries.

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200,000 electric vehicles in Dubai to cut pollution

Abu Dhabi has inaugurated the Al Dhafra solar plant, at two gigawatts one of the world’s biggest, and the Barakah nuclear power plant has received an operating licence for its fourth reactor, completing a key part of the UAE’s net-zero plans. Dubai’s Roads and Transport Authority has begun installing 9.959 megawatts of solar panels at its metro and tram depots. Distributed or “rooftop” solar is an important complement to large-scale plants.

One of the key aims of Cop28 is to reach an international commitment to triple renewable energy capacity by 2030, and global energy companies operating in the UAE, such as China’s Jinko Solar and France’s EDF Renewables, are optimistic that the target can be achieved. Solar is now the biggest employer in the worldwide energy industry, representing more than half the employment growth since 2019.

Dubai is targeting about 200,000 electric vehicles by 2030, a 10 per cent share. Electric and hydrogen vehicles, the Dubai Metro, cycle paths and e-scooters are parts of the solution to sustainable mobility and reducing air pollution.

Northvolt, a Swedish battery maker, has developed a high-performance sodium-ion battery, which is more heat-resistant and potentially cheaper than the incumbent lithium-ion, and circumvents concerns regarding supply bottlenecks of lithium, cobalt and platinum.

The Third Conference on Alternative Aviation Fuels, taking place in Dubai this week, aims to boost the output of sustainable aviation fuels (SAF), a crucial goal for a hub of air travel such as the UAE. SAF production volumes are still too small and prices too high. Adnoc, Masdar, Emirates and Etihad have various collaborations with international companies on SAF and carbon credits, with the UAE’s SAF road map targeting 700 million litres of SAF production in 2030. On Monday, the UAE Centre for Renewable and Advanced Fuel Technologies for Aviation – Air-Craft for short – was announced. Electric air taxis able to carry six people, made by Spanish company Crisalion, will begin tests in Dubai next year.

The Mena region could cut greenhouse gas emissions by 60 per cent by 2035 by adopting sustainable construction practices, says a report by Strategy&, the consulting arm of PwC. A net-zero carbon school will open in Abu Dhabi’s Masdar City next year, using solar panels, shading and thermal insulation, and Dubai’s Expo City will be powered entirely by renewable energy from the Mohammed bin Rashid Solar Park. Emirates Global Aluminium has begun constructing a 170,000 tonne per year aluminium recycling plant at Taweelah, saving on emissions from producing the primary metal. Ports operator DP World cut its carbon footprint in the UAE by nearly 50 per cent this year by buying renewable energy certificates from Dubai Electricity and Water Authority. And a study commissioned by Kuwaiti logistics firm Agility finds that the UAE, Saudi Arabia and Qatar rank best in the GCC on climate change mitigation.