The agreement adopted Wednesday at COP28 in Dubai on a gradual abandonment of fossil fuels, presented as potentially a landmark, will have little impact in the short term on the oil industry in the Gulf, officials and specialists believe.
The influential Saudi Minister of Energy, whose country is the world’s leading exporter of oil, was quick to minimize its impact upon the adoption of the text in a statement to the latest addition to the Saudi channels Al Arabiya Business.
Prince Abdel Aziz ben Salamane stressed that this agreement would have “no impact on exports” from his country. According to him, the text “imposes nothing” on producing countries and allows them to reduce their emissions “according to their means and their interests”.
It is not an “agreement on the immediate or gradual elimination of fossil fuels, but a transition process,” he stressed.
The prince had previously strongly opposed the inclusion in the agreement of a reduction in fossil fuels. Ultimately, the agreement omitted any mention of “phase-down” or “phase-out” of these energies.
The agreement which appeases nearly 200 countries is the result of compromises negotiated by the Emirati president of COP28, Sultan al-Jaber who is also boss of the national oil company ADNOC.
The official UAE news agency, WAM, described the text as a “win-win” agreement and saw COP28 as a “decisive moment in the fight against climate change”.
The French Minister of Energy Transition Agnès Pannier-Runacher highlighted “a victory for multilateralism and climate diplomacy”.
According to her, the use of the term “transition” away from fossil fuels is “a very elegant way on the part of the various negotiators to find a way out for all parties […] no one loses face and it’s the climate and the planet that win.”
Economic opportunities of the transition
Saudi Arabia and the United Arab Emirates, large oil producers, are also investing in renewable energies and say they want to decarbonize their economies.
Like other producers, such as the United States, they are strengthening their production capacities to cope with the expected increase in demand.
However, the economic opportunities of the energy transition are not being ignored by the Gulf monarchies, according to analysts.
“They will continue to produce and export oil for decades,” Ben Cahill, a senior fellow at the energy security and climate change program at the Center for Strategic and International Studies, told AFP.
“But the Emirates is also investing to create a more diversified energy system and sees itself as a global player in financing the energy transition,” he said.
Middle East expert Andreas Krieg called the deal “an important, trend-setting statement.”
“I think this is a shift in discourse for the Gulf states who understand that the intention to phase out fossil fuels will be balanced by a relatively stable demand for oil and certainly gas in the decades to come. come from outside developed countries,” he said.
Million dollar question
Cinzia Bianco, a researcher at the European Council on Foreign Relations, said it was a million-dollar question whether Saudi Arabia had joined the deal.
“The UAE benefits from fossil fuel production, but it has already embarked on this transition, well before other producers,” she said.
“It was easier for them” to adhere to the agreement while the Saudis “were not inclined, to the same extent, to a compromise position”.
According to Mr. Krieg, the initial Saudi position “must be considered in light of the growing competition between Gulf countries.”
“However, because the global consensus was so strong and overwhelming, Saudi Arabia did not want to find itself isolated.”
For Kristian Ulrichsen, Middle East policy fellow at the Baker Institute in Houston, Texas, COP28 had particular importance for the United Arab Emirates.
“The UAE invested a lot of political and diplomatic capital in COP28 and wanted precisely this type of historic declaration that would involve the UAE in setting the global agenda and establishing a new consensus for the way forward,” he said.