Analysis
7 Dec 23

Why the Middle East prefers ‘phasing down’ over ‘phasing out’

How do we achieve sustainability? The answer to that question is different in the West and the Middle East. It all hinges on the difference between ‘phasing down’ and ‘phasing out’, as became clear at the start of COP28 in Dubai.

The UN's annual climate conference had barely started when another incident threatened to overshadow the climate conference. This time it wasn’t a leaked document revealing the UAE’s intention to push oil and gas deals, nor the fact that COP28 president Sultan Al Jaber also chairs Adnoc, the UAE’s oil and gas company. 

“Absolute crisis”

This was about comments made a few days prior by Al Jaber in a discussion with Mary Robinson, the former president of Ireland and UN climate envoy. 

“We’re in an absolute crisis (…) and it’s because we have not yet committed to phasing out fossil fuel”, Ms. Robinson said. “That is the one decision that COP28 can take and in many ways, because you’re head of Adnoc, you could actually take it with more credibility.”

To which Al Jaber angrily replied: “There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what's going to achieve 1.5°C”, suggesting that such a phase-out would “take the world back into caves.”

To say the least, that’s a surprising statement for the president of a climate conference. Addressing COP28, UN Secretary General Antonio Guterres presented the consensus view: “The science is clear. The 1.5°C limit is only possible if we ultimately stop burning all fossil fuels. Not reduce, not abate. Phase out, with a clear timeframe.”

Inevitable and essential

Al Jaber was forced to defend his statement: “I have said over and over (that) the phase-down or phase-out of fossil fuel is inevitable. In fact, it is essential.” It is on the difference between those two terms, which are often used interchangeably, that the whole controversy hinges. 

  • ‘Phasing down’ refers to a structured reduction, aiming to gradually lower the share of fossil fuels in the energy mix.
  • ‘Phasing out’ means fossil fuel use should come to a complete and total stop, as soon as possible.

In a nutshell, the difference between those two terms also describes the different approaches to the climate crisis: more urgent and ideological in advanced economies like Europe, and more pragmatic and gradual in the Middle East. 

That difference explains the seeming paradox at the heart of the sustainability policies of many oil-rich countries in the Middle East. On the one hand, they continue to invest in the exploitation of their hydrocarbon reserves; but on the other, they’re also investing heavily in sustainable energy alternatives.

Either/or

In short, for petro states, the choice between fossil fuels and renewable energy is not either/or, but and/and – at least until the renewable options become as profitable as their current business model.

But make no mistake: a substantial and genuine strategic shift is taking place in countries like the UAE and Saudi Arabia. Despite being major producers of fossil fuels, they’re embracing EVs and renewable energy – and using their oil wealth to catch up and overtake the sustainability efforts of other markets. 

That paradigm shift is driven by a combination of factors: 

First of all, the need for economic diversification. Even if they disregarded the climate issue completely, petro states realise they’re sitting on a finite resource, with ‘peak oil’ predicted anywhere between 2025 and 2040. Renewable energy is the obvious alternative. 

Secondly, specialising in renewable energy – with the added advantage that the Middle East is ideally suited for solar power – will allow countries like Saudi Arabia and the UAE to maintain their position as global energy hubs, attracting the investment and generating the innovation that will help them to remain economically relevant on a global scale.

Environmental component

Finally, there is an environmental component. The climate in the Middle East is already precarious. Further global warming could endanger the liveability of cities like Riyadh (pictured) or Dubai. This is where the global drive for emissions reduction most completely overlaps with the interests and concerns of countries in the Middle East. 

The paradigm shift translates into ambitious sustainability targets:

The UAE aims to generate 25% of its energy from renewables by 2025, and 45% by 2050. By that year, the Emirates plan to have invested $160 million in clean energy projects. The most impressive example is the Al Dhafra Solar Power Project, inaugurated just ahead of COP28. With a capacity of 2,580 MW, it is the world’s largest single-site solar power plant. 

Saudi Arabia for its part aims to generate 50% of its electricity from renewables by 2030 and 100% by 2060. Neom, the planned futuristic megacity, will be powered entirely by renewables. To reach net-zero by 2060, the Kingdom is investing $1 trillion in renewable energy and energy efficiency. 

Golden eggs

The electrification of mobility is part of this shift. The UAE, for example, aims to have 100% of its public transport electrified by 2030. 

But don’t expect these petro states to switch to sustainability by killing the goose that lays the golden eggs. The strategy pursued in this part of the world will be to phase down the exploitation of oil and gas over as long a time as it remains economically relevant, not to phase it out as soon as possible. Can there be a compromise between ‘down’ and ‘out’? That will be one of the things to look out for at COP28.

Image: Shutterstock 2289562785

Authored by: Frank Jacobs