Good evening. Welcome to our Friday lecture series at the Middle East Centre.
The theme this term is Environment. My name is Walter Armbrister.
I'm one of the founders of the Middle East Centre, and our speaker this evening is Dr. Manal Shehab.
She is an applied economist with expertise and economic energy resource,
sustainability and policy making and resource dependent economies focussing on the Middle East and the Gulf regions.
Her work involves economy-wide modelling and political economy,
and she uses these methods to contribute to scholarship on economic and energy diversification and policy alternatives and gulf hydrocarbon economies.
Following the energy transition and oil price volatility,
Dr. Shaabi is a frequent presence in media as a commentator or discussant on Gulf energy issues.
She's been on Sky News, Arabic, Al-Arabiya TV, the Australian Broadcasting Corporation, Radio Oman and numerous podcasts,
and she's also been interviewed and cited in Time Magazine, Al Jazeera, Al-Akhbar newspaper and web.
She's a senior research fellow at the Oxford Institute for Energy Studies and currently also an academic visitor at St. Anthony's,
a status which dramatically understates her lively presence at our events over the past few years.
A level of participation that I must say, goes far beyond the economies in energy politics, the Gulf states.
In her most recent academic writing,
Dr. Shabby has addressed such topics as the long term impact of COVID on the economies of oil producing states and in forthcoming articles,
the potential impact of hydrogen production in the Gulf, including both blue hydrogen and green hydrogen.
And I'll leave it to her to explain the difference between them.
I gather there's also grey, pink and yellow hydrogen, and I mentioned hydrogen because it's a good segue Segway to tonight's lecture,
which examines both energy diversification in the Gulf and the state of the environment the region.
I should also mention that she is going to be going to the COP26 conference next week,
so she is on the ground floor on the ground, zero of environmental issues of our times.
The title of her lecture is environment, discounted energy and economic diversification plans in the Gulf.
And I should mention that as usual, you should use the Q&A function of Zoom to send us questions.
If you asked to remain anonymous, then we won't reveal your name.
Otherwise, we'll reveal the names of the speakers as we ask the questions.
So without further ado, I will turn it over to Dr Monalisa.
Happy many thanks for this very kind introduction,
and I'm delighted to be here with you today and also very happy that the theme of the webinar series
this term is on the environment so that it won't be discounted as kind of the title of my presentation,
and I'm going to go ahead and share my screen with everyone now. So before today's talk is Professor Walter had said in the introduction.
The title is environment, discounted energy and economic diversification plans in the Gulf and I in this talk,
it's based on a paper that I'm working on at the moment. But a lot of the background is also really the culmination of research that I've
been involved in for years now as part of this larger project on sustainability,
both energy and economic and resources, and in hydrocarbon economies in the Gulf.
And I think I should probably say that it was really compelling, and I chose the date today to speak.
It was without I was completely not paying attention to the fact that COP will be taking place this week.
So the timing is completely serendipitous here today.
And with the country's going a little bit of the scope of what today's talk will be when we think Gulf states,
everybody thinks oil and gas exporters, which is true. But for purposes of my talk today, I want to exclude Iraq and Iran because for obvious reasons,
Iraq has had political instability lately, which directly affects its economy in Iran.
Of course, it sanctions so very heavy emphasis or impact of exaggerates variables.
So I'm shooting them for purposes of this talk, and I'm focussing mostly on countries that are members of the Gulf Cooperation Council,
Bahrain, Kuwait, Oman, Saudi Arabia and the UAE.
And it's just for everyone's kind of, I think, a reference point to think of how relevant these countries are.
Aside from them being, you know, large oil and gas producers and consumers,
they're also have one percent of the world population but produce significant portion twenty
five percent of global oil exports and or global production and 11 percent of natural gas.
And they also have very large potential for producing renewable energy would also be leaving.
And I guess true to that. I also want to give you a bit, but basically what my talk today, the point going off will be.
So in if we look at the transitioning away from fossil fuels, that's been kind of sweeping a lot of economies in the world.
The main point of that, or the drive of that have been has been protecting the environment,
reducing climate change and mitigating the effects of global warming on the climate.
But I'm arguing today that actually this is different in the Gulf.
Specifically, if you look at the role of the environment and energy and economic development plans and the Gulf,
both in terms of the visions, but also the recent climate commitments.
I'm arguing that the role of environment has been limited because it has not been unlike other countries.
It hasn't been the main motivator for the change,
but rather as a motivator has been really more protecting energy exports and also protecting a leading role in the global market,
global energy market and global economy in general. Having said that, though,
and despite numerous improvements on the environment front and the Gulf states and really
maximising economic and energy sustainability requires putting the environment as a centre.
A point in making. So this is pretty much the point of my talk.
And I wanted to give this to you ahead.
Before I go because I want to take you to give you a bit of the background, but also the evidence of the arguments that I'm making.
I want to take you through a bit of a journey, so to speak with me,
on recovering a bit of the background for the energy and economic diversification of the Gulf and where the environment stands.
Then I'll delve into a little bit on the visions that can make development plans more recent development, particularly on the climate.
And then I'll conclude with how the environment has been discounted.
And I also must say that we have obviously four time limitations.
I will not be this will not be conclusive.
There will be I'll be picking examples and I apologise in advance of a country that one someone is interested in might not be discussed in detail,
but I'm more than happy to take it in a Q&A. OK, so let me just give you a bit of a background on the need for economic and energy diversification.
So I've mentioned that oil and gas, and I think this is probably very well known to everyone.
We're dependence on oil states for over dependence on hydrocarbons, for oil and gas and what I mean by over in ways to refine that.
Because look, as a percentage of natural resources, we tend on average to be higher than the rest of the world,
including other states that export oil and gas, such as Russia.
And I'm going to go ahead and just use a laser pointer here of this line here in purple, for example.
And then you have Libya and Iraq in yellow Iran, while, for example, Russia and even Venezuela,
which are both hydrocarbon exporters, tend to have lower share of GDP.
And in a sense, that being part of GDP or what I show here in the slide as part of your ad for the presence of hydrocarbons is not just in GDP,
but really its share of exports. So these states tend to have over 80 percent of their exports coming from exports, oil or gas.
They're also the main aren't the government revenue. And even, for example, in, for example, we only have 42 percent of its GDP coming from oil.
The 85 to 90 percent of exports and government revenue come from hydrocarbon sectors.
So what that means is there is a huge reliance of the economy on oil, of course, or oil and gas.
Also all of really shifts with oil and gas movements, our own gas movements and performances on gas industry.
And for example, here are some examples from Kuwait and Arabia if you look at the red line here with the difference in price,
while the PDP and the Green Line with the blue lines of production pretty much moved
consistently with oil price on the same look at net foreign assets from Saudi Arabia,
but also we do other economic indicators. One of the people in this is that the fact oil and gas are obviously very volatile, they move quite a lot.
And what that means is that the economy becomes exposed to boom and bust very quickly and obviously isn't new, but it became really problematic.
And I guess for all states, particularly in 2014 mid-2014, when the oil price collapsed from over 130 or so by, you know,
in, for instance, it was thirty dollars per barrel and all of a sudden kind of created or increased the urgency,
really for Gulf states to think about role of oil and gas and the economy and to really advance at least verbally advanced projects
for diversifying their economy so that they're less reliant on exports of oil and gas and less reliance on this volatile source,
which makes their economies very volatile.
And another incident where it was also very volatile was last year after the period of when prices also collapsed.
And the grey line here is the volatility index is quite high now as a response to this, even though, as I mentioned, overdependence is not new.
It really was after the oil price collapse in 2014.
Excuse me that our is more of a significant policy shift took place in the Gulf, one of which included reducing or reforming energy subsidies.
Prior to that were some of the highest in the world. See, for example, Iran and Kuwait.
They had some of the highest subsidisation rates of energy domestically.
And this obviously was with reforms at various levels of success after between 2015 and 2016.
But then on the note, there were also policy response was to really advance these economic and development plans in the form of innovation.
I should say these are not new. Like many states, Gulf states have also had five or 10 year development plans,
and different visions of change that happen after 2014 was really quite significant because the new visions would put you
give you really an idea of what the country would look like at a certain point in the future 20 30 to 20 40 years away.
It really represented kind of like a transformation of the economy away from oil and gas into economies that have more diversified sectors,
economies that have high renewables, but also the role of the private sector.
And employment is higher and R&D or higher. So it's really almost like a complete change from the previous economic structure.
And even in the case of Kuwait, for example, they even call it New Kuwait thirty five.
So that gives you an idea of the strength or the emphasis on transformation transforming the economy in those visions.
And this will be one of the things that I'll discuss briefly in a few minutes.
Now, why does this sense or this urgency for economic diversification persist?
So is the problem of flux of oil price, which had significant fiscal implications?
And then there's also another important kind of energy energy conviction that basically means global effort or
attempt to consume less fossil fuels and hydrocarbons and go towards more clean energy sources such as hydrogen,
which is mentioned in the beginning, but also renewables, et cetera.
And there are different estimates of what size of or what demand really will be for different energy sources in the future.
Estimates do suggest more conservative, but also more optimistic suggests that oil and gas man will be significantly lower,
including information from the IEA and the World Energy Outlook last year, as well as this year,
all suggesting that there is a movement away from fossil fuels toward clean energy and alternative.
This basically means big effect on the main source or the main engine of Gulf economies.
This has been used as the main challenge,
but there's other main challenges that I think are also really stressing the availability of oil and gas exports,
one of which is the fact that domestic consumption of oil and gas is also rising at a rate that is significantly higher than the growth in production,
which is, you see the growth in Oregon, as well as the growth in domestic energy.
And so that means that less availability of hydrocarbon resources for export,
but no third element also is the fact that we just don't know oil prices in the future.
And states are well for state, which means they have very generous.
Welfare distributive measures by way of subsidies and other assistance, and very few here are also very high.
A public sector that employs a lot of the citizens and has a very big public wage bill, then.
So what that means is these states require high price of oil just to balance the budget and the the oil.
The expected oil price is expected to be lower than the price required to balance the budget.
So then really, there is a it was me then an urgency to diversify the economy and have other sources of income and the diversification.
If you remember from my early slide, there was existing non oil sector in GDP.
So that's not really the emphasis that these states require. What they require is a diversification of the export source.
So other exports and sources that can generate sufficient revenue that the governments and the budgets
required and part of the reason that I'm sharing the slide here because I think we need to kind of start,
we often we think of just energy transition and the effect of oil price and global on economy, the U.S. economies.
But we need to also consider much of the existing oil and gas sectors is also concerned locally how that affects local energy,
excuse me, portfolio, the effect of that on the environment,
which as well how that goes back to how much oil and gas are available for tax revenue that then funding social
development and labour and even environmental infrastructure or even economic diversification projects.
There is a really direct effect.
We cannot ignore it between what happens domestically for the environment and of course, what happens internationally.
OK, so now this is probably when I Segway to take you a little bit before describing the
discounted role of the environment in the economic and energy development plans.
I just want to give you a very brief idea of the state of the environment in the goal.
And there's a lot of literature on this, this is not anything that I've come up with,
but it kind of helps contextualise the challenges that we're looking at here when it comes to the environment.
Firstly, I assume everyone knows this is the Gulf area, which I'm highlighting here.
But if you look at this graph,
this is about basically how arid landscape the area of the Gulf as other parts of the Middle East region are also quite arid.
And there's obviously a lot of this fortification with that as well.
And this is an environmental challenge to begin with another challenge.
This in itself is not an environmental challenge, but it's based on the high per capita consumption of energy in Gulf states,
either mentioned or extremely abundant and in hydrocarbon resources.
But they also have had historically very generous subsidies,
with water desalination and electricity being provided almost for free and also other sources, I should say.
What that means is these the lighter the colour and the map basically means that higher capital energy or a kilogram of oil equivalent, basically.
And you see that they have some of the highest per capita usage of energy domestically.
And the reason that matters is because it's conservative to some of the highest emissions per capita,
as well as one of the highest emissions level per GDP. And this is data from the World Bank, it says 2014.
But the data varies, unfortunately, when it comes to a lot of developing states, including the Gulf.
Often there is a lag in that variability stuff, but the trends are clear to be the same with Qatar, for example,
being the highest emitter of the mission's carbon CO2 carbon dioxide emissions globally,
which is and then the Gulf states are just as high point here as Bahrain, UAE, Saudi Arabia, ETS.
It's much more than double, for example, far more than double that.
You protect the emissions in the United States. Now also look at rural emissions per country.
I have to say that these Gulf states are not high emitters compared to other states.
You know, the world's largest emitters are China and India and the US, EU, Australia, etc. States are not are.
As I mentioned, they're from the highest per capita emitters.
If we look at our overall, overall national emissions come mostly from things.
If anything, it has nothing to do with advisory firm second.
The second source is a transport system and for anyone had gone the.
You will see multiple car the lifestyles, the kind of supports this, for example,
where you have multiple cars and a household that houses that have air conditioning.
That because obviously, if there's hot climate air conditioning that runs sometimes all the time and and other very subsidise
almost free energy that is consumed during electricity consumed by different sectors as well.
So from the consumer perspective, from the industrial perspective. Energy price and I contributed to high emissions.
But the reason I want to share this with you, because then this gives us an idea of the scope of where emission reductions would be,
which then would be kind of what the target, so to speak,
in the energy diversification and economic diversification plans that would also be pro-environment.
And I'm not going to go into this next graph here, but this is an example of the challenge of greenhouse gas emissions from coal,
and they're not by accident, but know methane and other emissions as well.
So there's levels of detail at that level for the different countries now, because as I mentioned,
there's been high consumption and high emissions that also contributed to high pollution.
And that also contributes to global low air quality compared with the rest of the world and the data from the World Health Organisation,
where the darkest has basically a level of pollution and PM2.5 concentrations of pollutants that are some of the highest in the world,
significantly higher than the World Health Organisation's guidelines.
So this clearly would be an environmental concern, but also, of course, it's a health concern,
and it also matters when it comes to productivity and it has an economic cost as well.
I can't talk about the Middle East without talking about water because water is the drink.
You see, the Gulf states are significantly challenged when it comes to fresh water.
There's a huge shortage.
A lot of the water that comes from desalination, the sea water, and they have some of the world's largest desalination programmes.
But at the same time, they have some of the most unique soil and marine environments.
And part of the problem with this is that they increases the climate change.
An increase of a global temperature also affects the second acidity of the water.
It affects the ecosystems. It affects the quality of the coastal and marine environment.
Also, silent ocean. There's a lot of pumping of extra chemicals sometimes, as well as saline solutions back into the water, which also affects it.
So the this has a significant really future term environmental Helen.
And this matters. The environment matters because for multiple reasons, the MENA region is one of the most vulnerable to climate change.
Also, the rise in temperature means that we will over time require more energy inputs for the same amount of demand that we have.
So that means lower energy efficiency. But also there's increasing demand purely because the populations are growing with that.
And that will in turn means increase demand and pressure on the water resources and the other different resources that are available.
It's also not just for desalination, which is expected to go by fourth in full, but also the cooling requirements.
It also has an economic cost.
I would mention very briefly effects on health and productivity and what that means with rising health costs and fiscal costs,
but it also affects GDP. And just as an example, this is the data from the World Bank that says the expected economic losses from this climate
related water scarcity is between six to 14 percent loss of GDP between now and mid-century.
So if you compound that effect of over the different sources of where the environment is challenged,
we can expect the cost to be very high at various different levels and you can see why the challenge of the environment is really serious.
Now we get to maybe kind of showing you a little bit more of these visions that I mentioned earlier and where or if the environment fits in them.
So I did mention those visions. I must mention them quite briefly.
What I want to mention here in the section, I'm going to go over the visuals in detail.
I'm just gonna give you a brief idea of what language they use and where the war of environments in them.
And I must say that they're aligned with sustainable development goals of the United Nations.
And if you look at the Sustainable Development Goals, of which there are 17 are few that mention the environment for the environment from 16.
The climate's life below water on land, but also in things like sustainable cities as well as clean water as well.
So in goals in the SDGs, environment is featured across multiple goals and vision.
However, the environment comes usually as one element or one killer, and they are most of the guests.
The environmental regulatory framework comes not so much from the visuals, but really from the different ministries that exist,
that concern or have the mandate of taking care of anything environment related.
But here, I just want to give you a couple of examples.
It says on the left hand side, Vision 20, 21, Vision 20, 21 from the UAE, you see the priorities have, for example, 17 safe and fair judiciary,
knowledge, economy, education and health care, and only one over here, which promises sustainable environment infrastructure.
Look at the one on the right there is quiet, and that also has mostly social human development and economic development.
And then the environment and sustainability comes as one killer.
And here's an example of if you look at if we read the text of the visions, there is a bit usually a paragraph or so on the environment.
And here's an example from Vision 2013 from Saudi Arabia, where it says the following says achieving environmental sustainability has a goal,
and they want to do that by preserving our environment and natural resources for environment and natural resources.
Then innovation as part of our responsibility for future generations.
It mentions the of waste management, recycling projects and fighting pollution and sophistication, and that it also talks about water.
And then finally, of course, renewable water basically means taking renewable energy and using that to dissolve into water.
And then the final bit here, which I didn't mention, or it didn't clear in blue or green, which is basically acting as a natural reserve in Ireland.
So it's really a framework, even though it's a bit vague, but there is some element of the environment that is mentioned.
If we really look at the poem and read them one by one, we find that the visions have no reference to climate change,
except for a man that they do not mention reducing carbon footprint.
There's very limited references to pollution, and the example from Saudi Arabia that I mentioned is one.
Also, they're really more frames in times of even the environment.
It's more framed in terms of how it shoots and supports the national economy and supporting and or alleviating.
I could say it's social and economic concern.
And then there's also emphasis, which I believe is really the main driver in a lot of the projects that have followed these vision.
Is this big emphasis on really having great economies, great economies, not just in oil and gas anymore,
but also being gateways for trade, finance, tourism and really important links to the rest of the world.
And this positioning is very clear, and I'll show you in a little bit really kind of being positioned as really leaders,
not just regionally but also globally. And that really seems to be the drive of why divisions are are created and why the economic
diversification plans are really what they're trying to achieve and is the one that augments vision,
I should say, is the one that offers the most for the environment. Because of that,
I want to give you examples of how environmental listed in the magnificent and the environment and
natural resources specifically are listed as a national priority of mostly what really matters.
Again, we see the wording of support the domestic economy, the national economy, and there is a balance, of course,
between what the environment needs as well as the local unconstrained comic need is really interesting about this.
Is that enrichment in the last era, the last quick point.
Similarly, the aim is to actually move towards the use of raw materials and manufacturing and goods instead of exporting them, as is.
What that means is instead of exporting natural resources, they want to use them in manufacturing and export the manufacturing.
So again, the use of the raw materials is not being to preserve it, so to speak, and that is preserving the environment,
but really using it for diversification purposes and producing or exporting other goods.
Manufacturing in this case other than oil and gas. Here's another example from the UAE.
The reason I thought it would be good to mention the UAE because the UAE has perhaps been a
leader across the states in trying to preserve the environment and having more carbon friendly.
Let me say projects ahead of or before the other states in this case in the UAE.
Again, there is an importance of correcting the irritation and ensuring the state or the government country is attracting business and investment,
so you can see again, we're looking at what how we as a country look to the outside world.
There is a reference to in the process of nurturing a sustainable environment,
but a lot of this is really linked to family cohesion, values rather than the actual environmental resources.
And then there's also a lot of linked with preserving the natural environment for national initiatives.
So it is important that the target not necessarily isn't necessarily protecting the domestic resources to the point that they should be.
But really, how do we just make natural? Sorry. How do any international initiatives and kind of appear to be conscientious from a global perspective?
So this is another example from Saudi Arabia and the you?
And here you can see I know it's probably very small,
maybe something I cannot see them amongst the various different targets I did
mention earlier that performance was listed in the foggy vision is to be achieved,
for example, number one. That's why some were twenty five top for trees on the Global Competitiveness Index.
A lot of the language, and this is an example of the language it's written around the visions and
then other projects that have been achieved or after as a result of revisions.
A lot of the language is kind of basically centring around making this achieving a status as one of the largest economies in the world,
one of the most competitive. But it also has things like, you know, increasing competitiveness, localisation of energy management,
expanding the role of the oil and gas industry and even the glowing gas industry also still being an important part.
Which one would understand being an important parts even in this new vision of energy and economic diversification?
And there are limited environmental references, but as I mentioned before, it's mostly waste management and pollution.
But a lot of the projects don't seem to be achieving or targeting a lot of the issues that I mentioned earlier with the environment,
whether they were high emissions, for example, or the issue of water shortages or even pollution.
OK. And again, we see another emphasis again on economic achievement from global near how we rank at a global perspective,
and here is an example for from bottom left hand side from Bahrain, where Bahrain is celebrating the fourth most improved economy.
And with Qatar, an important showing or displaying excellent sustainability at the World Cup in 2022.
And then obviously for Saudi Arabia, there's also examples of Saudi Aramco's strategic transformation programmes and
the idea when basically enlarging its FDI and natural transformative programmes.
So again, we see that keeping this large scale economy or economic achievement is really a driver in the vision.
At the point of this past section was really to kind of show that the role in
the environment of the environment and the visions has been really limited,
even though the environment has features as as a goal.
But it often kind of is just part of a longer vision or idea of a sustainable living without really big
emphasis on improving the quality of the environment and resources that have that that exist in the Gulf.
However, there have been some recent developments that are very positive on the environment front,
and so this is I don't want to come across as I'm, you know, this is doom and gloom.
Not necessarily. But part of the recent developments that I want to show,
because they're really very much important and also in the right direction that I think helps the environment and overall sustainability.
So for example, again, this is not a comprehensive list of examples.
So in the UAE, for example, there's been the substitution with the first zero carbon city in the world, and this is not new.
I think it's from about 2000. And so it's kind of been going on for for some time.
Also in the UAE, there's a nuclear power plant, also an excuse to increase the share of clean electricity in the domestic economy.
Other examples of Saudi Arabia is the new city. Neom is a giga project, a billion dollars project, very massive.
But the idea of just creating a whole city that is pretty much self-sustaining and also very carbon neutral and friendly.
And there have been some projects with the name that have been, for example, hydrogen projects I'll talk about in a little bit.
But a hydrogen project that also is a green hydrogen project.
So producing or creating a new source of energy that is also clean and can be exported importantly, so it hits the economic diversification target.
There's also the green initiative to announce 2021, whereby Saudi Arabia committed to planting could increase in the desert,
and there's about like one percent that's been achieved so far. It also got 40 million or so to this point and also across the Middle East.
Again, very positive point forward in Kuwait.
This might be one of my favourite examples because there has been a very domestic project and aimed at not really exports,
but just really improving the domestic livelihood of transforming a tyre graveyard to a smart city.
And this was this was in the news about a month ago or so with the idea of having over 20000 thousand houses that will be built on the city.
So again, we see and this is obviously very important from the environmental perspective, but also the economic perspective.
Because tires pollute the environment, they're when they're burned, they're really bad for pollution, et cetera.
And also, they just exist there. So what do you do with them unless you transform them to something usable and recyclable?
And then finally, you know, man, there's been initiatives for cleaning enough oil reserves and water and ocean which have date back,
I think, from 2016 onwards as far as I know, but they could have might as well.
It's possible that they've actually started before that. So there's some recent achievements and really good achievements that I exist.
Another achievements as well for mention of the very beginning, the hydrogen stuff.
And I've written quite a bit on this, but I just want to give you an idea of what hydrogen is and how it fits in this.
So hydrogen, as you know, we we it's it's a it's one of the most abundant, actually the most abundant elements on Earth.
But hydrogen has been known to be very useful in energy applications because it can be used as a for for energy.
It solves that aircraft carrier or even a storage medium. And it can be it has various different applications and.
Importantly, because hydrogen and nature exist by itself, it exists with other elements.
For example, it would water. It's a two 000 remember middle school chemistry or with hydrocarbons with the carbon.
Basically, what that means is hydrogen can be separated from different elements that we have.
So that means that we can also use water, for example, to separate the hydrogen from it, using green renewable power.
And if we use that, the renewable power through a process called electrolysis to get a hydrogen that is called green hydrogen.
So this is the cleanest hydrogen, if you will.
But then we can also use hydrocarbons, the oil and gas and that fill of coal and oil and natural gas and hydrogen,
which at the moment probably the most about 90 percent of the world's hybrid this way.
But then that emits a lot of carbon.
If we capture that carbon through ecologies and carbon capture and sequestration and storage, then that becomes blue.
What that means is we can still use hydrocarbons to get a hydrogen, a clean hydrogen,
and we actually have a solution for the carbon because of these properties and
the ability to use hydrogen in local consumption for decarbonisation purposes,
but also for exports. Hydrogen has become really an important as kind of been looked at as the golden solution, so to speak,
for future energy needs that meets the world's needs for clean energy, but also energy in general because the batch in 2020.
Last year, there was about 20 countries in the world that have had either established hydrogen projects or established
hydrogen strategies of how to develop markets and export them or use the hydrogen and domestic industries.
Gulf countries have been really lagging behind, but we see them starting to catch up.
So in Saudi Arabia in 2020, I did mention the large city of Neom with this idea of green hydrogen and the clean hydrogen from renewable energy.
Also, importantly, there was a blue ammonia cargo that with Japan,
ammonia also carries nitrogen and hydrogen so that ammonia can be then shipped to Japan.
And it's Japan separated what we call cracks to separate the hydrogen from it.
So here is an example again, where this opportunity is being used for the export market and not decarbonising the domestic system.
And then also, Kuwait and Saudi Arabia did adopt a hydrogen strategy in the beginning of this.
No, not beginning about in about a few months ago.
And by August of this year, the UAE also has had some of the largest energy projects across the region,
but also it included the region's first industrial scale green hydrogen project that was also announced in twenty twenty one.
Oman also has a hydrogen economy strategy, as well as project to advance the hydrogen again.
A green hydrogen project with the idea of most of these will be targeting the export market.
And then finally, in Kuwait, there has been a white paper towards a national hydrogen strategy,
but without actual products announced or a strategy put forth.
But again, what what this shows is the the Gulf states are really catching up to kind of not
just do what was in the visions of having financial centres and tourist centres,
et cetera, in their economic diversification plan.
But really looking at how do we join the energy transition process and use a diversification of energy as also a source of economic diversification,
which from an economic perspective makes a lot of sense, of course.
But the role of that in the domestic environment remains to be very little at the moment.
And we the rest on a remarkable change that has happened related to the environment in the Gulf states as the recent
historic announcements of net zero emissions commitments by the UAE to achieve that to achieve net zero emissions by 2050,
followed by Saudi Arabia in 2016, Bahrain and twenty six.
Now, of course, there is a cop going on and I'll be joining them tomorrow, as you have heard.
But with that with the cop, this like all states, this is not just the Gulf states have had to submit new commitments, so to speak to the UNFCCC.
So with new intended nationally determined contributions and in them committing to what they believe they will.
How much they will reduce their emissions by.
And what's interesting in the new indices submission is that the emphasis there is still on the role of hydrocarbons that still exist
as an important role in the in in the economy and focussing on diversifying the domestic economy as a way to reduce emissions,
as well as using carbon capture mechanisms as well. So really, I think, needs to be more details on how that will happen.
But it sounds that there isn't this idea that is presented as having completely transformative or completely new projects to save the environment,
so to speak, but more on kind of just addressing emissions and diversification.
Another important element to this whole carbon emissions story is the circular carbon economy, and this is not a new idea at all.
But I'm mentioning it in a separate slide because in Saudi Arabia's announcement of reducing emissions by or achieving carbon neutrality by 2060,
a big part of the way that they will achieve that will rely on circular carbon economy.
And what that means is basically ways to be able to continue to use fossil fuels and other methods that emit carbon.
But then finding technologies that can capture that carbon that is emitted
and then either finding different uses for it or storing it in an oil wells,
for example, or using it for other purposes. And the thing about this this was adopted also with the G20 that was held in Saudi Arabia last year.
And the thing about this is that it offers a kind of a flexible approach of handling
or for different countries to really target and have a solution for super carbon.
There also, as you said, that the green list to and I've mentioned the the his quote here,
there's still an emphasis on not going away from fossil fuels, but continuing to use fossil fuels in the picture.
We're going to conclude now,
so I just want to give you an idea of even though I have now shown you how the environment has had a limited role in the vision.
And even though we have had now very recently more pro-environment and more pro climate developments on the energy and economic diversification front,
I still believe environment is discounted and I'm going to give you a couple of examples here.
Because remember, environment that I'm talking about here is not just a contribution to the rest of the world in terms of what we export being green,
but also how it affects the domestic environment. And I'll give very briefly a few ideas to make my point as evidence.
The first one is very requirements and harmonisation regulatory frameworks in
these states and across all the states of across the different domains of carbon.
There's either a lack of implicit regulation or lack of regulation altogether.
And sometimes when there is regulation, it can be quite inadequate.
In addition, there is little research and development expenditures on low carbon energy,
and this is important as the driver for the hydrogen economy that I described,
as well as all the circular carbon economy that I also mentioned, which can be a fantastic solution.
They're really driven by improvements in technology, and there was very we're so really behind the technologies,
particularly to make hydrogen to low carbon energy options price competitive with fossil fuels.
The Gulf states have historically and still have very low share of their GDP being spent on R&D development.
And if you compare that to the highest in the world between banks 10 from the US,
ranging from four point three to approximately three percent of GDP in the Gulf,
it hasn't exceeded one percent, except potentially for the UAE in the past couple of years.
And the same when it comes to clean hydrogen technologies.
In addition, the third reason is, even though we have these massive plans, for example, to establish green hydrogen,
which relies on renewables, renewable energy still remains very, very low and the Gulf states.
But there are ambitious plans as part of this vision, relying on hydrogen cities on renewables anywhere from 15 percent in the case of Kuwait,
all the way to about forty five percent in UAE and Saudi, then.
At the moment, we saw about less than three percent on average installed capacity being from renewables.
So there's really slow development.
Another example Another reason is that we saw of a slow progress on a lot of the programmes with these visions are particularly environment driven.
And here's one example, and this is various some patients are maybe ahead of others,
but this is an example from Kuwait looking at the different projects they have for the sustainable living environment.
And you see, when it comes to the air quality and the renewable energy,
they're very much behind in terms of the progress achieved to meet the project completion by the day and driven.
While there's it seems to be when it comes to sewage and waste management, a bit more advancements on that front.
But overall will, so they're still behind schedule.
And that also leads me to this other this other point that environment remains in a state of degradation.
And for example, even though the UAE had lost the city, which was the first carbon neutral city in the world by Sandoz,
one of the as the most polluted city in the world or sorry in the Gulf,
not in the world and the Gulf, but also there are other cities across the different regions across the region Ahmadi, Riyadh or Baghdad.
They're also very polluted cities, and at the moment, even the greenhouse gas emissions remain very high.
I admit that there seems to be improvement in the INTC, the commitments that submitted to the UNFCCC,
but still, there is no real example of how that will affect the environment.
And then finally, I should say another challenge is the fact that there is financial constraints on the
financial constraints means less money that could support projects that help the environment.
I'm going to skip this one and then finally for a final challenge, which is the subsidies, because if you continue to have subsidies,
particularly if you have subsidies for clean energy,
then what that would mean it would reduce the existing part that could be exported, expand the part that is used domestically.
But the cost of that will be obviously fiscal cost. So this will be what we call the distortion from in the economic literature.
And that would also not necessarily achieve the best ideal use of resources that could also maximise the role of or the protection of the environment.
And this is really it's my of the talks.
I in summary, I guess the environment has not been necessarily despite large improvements.
It hasn't been the primary motivator to date in terms of economic and energy diversification.
However, I think it remains an important element that needs to be addressed, particularly if were to maximise energy and economic sustainability.
And I thank you very much for listening to the long fox, and I would very much love to hear your questions and discuss them.
OK, we have my colleague, Michael Willis, has been curating the questions,
so I'm going to turn it over to him to to bring our questions from the audience.
I have a couple of questions of my own, but we do have audience questions, so I think we should give priority to those.
Thank you very much. Well, well done, thank you very much.
Meanwhile, we have about I think we'll be about 10 minutes of questions, so I'll go through some of the questions here.
The first one really deals if something you deal with right on your last screen, which focuses on the international dimension of this.
And this comes from Yacine Yildirim. Thank you for your question.
And the question is by considering the green theory in international relations to overcome most common environmental
problems in the Gulf is relying on intra regional collaboration amongst Gulf nations a realistic or convenient way?
Or do we need more effective method like global cooperation processes with the contribution of other middle nations?
Quite possibly under the supervision of the United Nations? Very much for the question,
I think part of the problem is a lot of the UN or international level mandates or regulation are not really compulsory, right?
There is an issue of regulatory compliance here,
but I do very much believe that a lot of the the region as a whole and despite the the borders of the nation state has the same challenges.
And I think they will benefit significantly if there's cooperation, both in terms of particularly,
for example, when it comes to oceans and waters that are open across the countries.
I think there will be significant benefit when it comes to having a targeting that from a regional level.
But I also believe, particularly with the point that I mentioned earlier on the low R&D point, as well as the fiscal restraint.
I also think there's probably an opportunity for a regional collaboration similar to what you see across Europe,
but to see it across the United States,
where they pull resources together and also focus that on maybe having a region wide R&D centre or region wide hydrogen centre, et cetera.
And I I'll I'll I'll stop here as I'm cognisant of other questions and the list.
Thank you very much. Meanwhile, we're getting quite a few questions that people are actually fascinated by the data that
you've been putting up and whether your slides in the presentation will be available. That's to let you know that we will be making it available.
A recording will be put out both a sound recording on SoundCloud and on the YouTube channel that will take a little while, just edits and puts out.
So do keep an eye on the Middle East centre of social media outputs where that will come through on that.
So to those, if you ask me about that because there's a lot of information about absolute fascinating information.
OK, another question Sami Fahmy asks You looked at the Hydrox look at the hydrogen issue and he wants
to know is the hydrogen cost competitive in the economies that you've been looking at tonight?
An excellent question, because if it's not competitive, then it would not make sense to get into it from an economic diversification perspective.
So I have to say that clean hydrogen at the moment in general across the world is not competitive with oil and gas and with that in coal,
what that means is oil and gas and coal are cheaper to us than green hydrogen.
Having said, though, Gulf region, compared to other regions, have a comparative potential,
I should say potential comparative advantage in the production of both blue hydrogen,
which is hydrogen from fossil fuels with carbon capture and sequestration technology,
as well as a potential comparative advantage in the production of green hydrogen, which relies on renewables.
And I didn't really mention in the slides that renewables, even though I mentioned, are low.
But the quality of the renewable resources that exists in the Gulf is amongst the best in the world.
And also what that means is that they're able to produce some of the lowest renewable energy globally.
And because of that, this will also translate,
particularly for green hydrogen in producing low hydrogen costs very competitive with the rest of the world.
But yet there are the challenges that I mentioned in terms of the there is not enough
renewables at the moment to be used for producing green hydrogen and for blue hydrogen.
I think Saudi Aramco particularly is trying to really be the world leader in blue hydrogen space.
And they do have again a comparative potential comparative advantage because of their comparative advantage in the hydrocarbon space.
But for that to compete with fossil fuels and completely replace them, I think we need to either see carbon taxes, for example,
or some sort of a different structure and the change sorry at a structural change in the price of energy sources.
Thank you very much, man, Alan, next question coming from Becky Evans, who comes from Ursula's college, I hope I'm pronouncing maths and science.
I a you thank you very much.
Yeah, as you can gather, the panel knows that because she's an alumnus of that college, and Becky is very proud to play me with such.
So very pleased to have a question. Then Becky's question is, does the commitment to low carbon energy sources and environmental sustainability depend
on the willingness of individual leaders of GCC countries to embrace such approach?
Does domestic and or global public opinion play an influential role?
So in other words, what are going to be the drivers of change internationally or do we have to rely on on the leaders within the states themselves?
And greetings from Oxford scientists and hello to Becky, and thanks for the question.
Yes, actually, this is a very important question because it does go into the point of the drive or the motivation for low carbon technologies.
I think if you listen, for example, to the Saudi announcement,
there has been a lot of talk about or use of language like we want to be leading in the world,
we want to be known for being the leaders and in climate technologies and or circular carbon economy.
So there's definitely this emphasis or interest of moving, joining really the the the the energy transition step,
which has started to scale already and kind of joining that from being not only oil and gas leaders,
but to energy transition leaders and also their reputation.
And this is really very, very close came across very vividly in the past month or so with the zero emission targets.
What's been really interesting in that is also this it's not just the reputation.
I think that's important, but this position as global leaders.
And also another thing that's interesting in terms of the part of the question is that in the Gulf,
the individual leaders tend to be the decision makers are obviously very important in achieving a lot of the change.
So I think they if a lot of the change has to come from the top down, we see Kuwait, for example,
where the parliament has more of a prominent role being really lagging in terms of achieving change.
So I think it's the interest of both the reputational interest leading the world in being the global leader in this,
as well as the reputation for sure. Thank you.
Now a couple of questions that sort of look at very similar themes about to what extent,
what is the then the moves that have been made on the environmental issue.
A really about an it's an image to the external world.
We have Matteo Renzi, very good friend of the centre, former graduate of the centre,
who asked all the sort of measures been introduced what you could call ornamental environmentalism.
And we have an Alkhawaja who says all the the plans for carbon neutrality really just to appease global calls for climate change.
So is it really about maintaining an external image or is this something more than you've answered that a little bit,
but I'd like you be nice to hear something very direct on this.
OK, something very direct. I think what's been really interesting is the Gulf states have been considered, have been fighting,
so to speak, to preserve the role of fossil fuels in climate negotiations and in UNFCCC circles, et cetera.
And some have even called them trying to obstruct, so to speak, climate negotiations.
And we really see a 180 degree change in this year where I think there are clearly realising the world is moving towards an energy transition sphere.
The world is really moving towards less fossil fuel consumption and more green.
So let's join that phase. I think a big part of it, then one could argue that a lot of the projects that have been passed for sure are part.
And this is actually the theme of my talk is it's not really driven by the domestic interest of protecting the environment domestically,
but really protecting this leading role as as leading in the energy sphere.
And now energy is inseparable from climate. So to be in leading in the energy sphere, you have to be a leading in the in the climate sphere as well.
So there's definitely parts of that. But you can also read in the subtext when things say, for example,
we will continue to use fossil fuels and there is this, there is this, I think, point that we well,
the Gulf states will join the climate and be not obstructionist anymore,
but will drive reduction in climate and emissions, for example, and improvement of the climate conditions.
But at the same time, it's going to be on their own terms of what they want to achieve, right?
So one could also then there say that maybe some of the projects that the the the the the programmes are really an ornament, as Matthew said.
And I think there's two points to this question or two points in my answer, I should say.
One is, I think there's definitely more. There's has to be significant change to the way energy has been consumed,
to the way the economy has been structure and also to a lot of the projects that exist now that really
require significant changes for that to achieve the climate targets that these countries have made.
And there, one could also argue, are these projects really just an ornament?
But in their defence, they're arguing that the projects have. We've yet to see the the proof of the pudding, so to speak.
We've yet to see what will happen in twenty thirty or twenty twenty five, for that matter.
Will the countries be on target? I think even if they are a bit of an ornamental facade, there is what we do see improvements on the climate front.
So even if their motivation isn't necessarily protecting the environment, but to appease the rest of the world vision, they also help the environment.
But I don't think that would be the most productive for the environment, obviously, and most efficient for maximising sustainability.
I hope that was direct enough for your purposes. Yes. Well, thank you very much. I hope he was.
I'm sure all the the audience appreciate it.
Thank you. Perhaps this will be our last question, and it addresses something that's brought up in other countries as a way of dealing.
Environmental issue is the issue of food, particularly food waste and changing patterns of consumption, particularly reducing meat consumption.
Has this had any presence at all in the countries that you've been looking at?
I suspect on evidence to back it up in the air. Not that I know of.
And there are, you know, food consumption baskets, for example. I think parts of the bottoms of that have also included meat products.
And that thing with that was food that is really important is the fact that most of the food consumed in Gulf states is actually imported, right?
It is not all the domestically grown. And so then there is not just the level, at least if we talk from an environmental,
let's say, emissions, but I think the question was on emissions level.
The emissions from the food then, is not just the fact that whatever comes from the meat consumption,
but also the transportation of that and securing the imports into the country.
So that, to my knowledge, is definitely not hasn't been something that's been addressed.
But also remember these states, as I mentioned, are welfare states.
Even subsidy reform has been very contentious. So also reforming or telling people, now we're going to give you less support welfare,
but also you should start changing your your behavioural patterns when it comes to food,
I think will be quite shocking and an environmental perspective.
But there are very small not within divisions, but there are small groups within a grassroot effort, so to speak, that talk about, for example,
sustaining the fish that comes out of the ocean because it's not sustainable and those kind of efforts,
but nothing at a division level, as far as I know. Thank you very much.
Unfortunately, we're rapidly approaching the end of our time, so we haven't been able to answer all the questions, but I'll hand you back to Walter.
OK. Yes, I'm sorry that I didn't get a chance to ask my question, but I've already gone to the end.
So on behalf of the Middle East Centre and on behalf of our very lively and competitive audience,
I want to thank you now for an excellent presentation. My absolute joy.
It's been wonderful to be with all of you and many thanks for the audience in the Q&A and for arresting me today.