The agreement to phase out fossil fuels passed at COP28 in Dubai on Wednesday, presented as a potential milestone, will have little short-term impact on the Gulf oil industry, officials and experts believe.
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The influential Saudi energy minister, whose country is the world's top oil exporter, was quick to downplay the impact on the adoption of the text in a statement to the latest Saudi outlet Al Arabiya Business.
Prince Abdel Aziz ben Salamane stressed that this agreement will have “no impact on exports” of his country. According to him, the text “does not impose anything” on producing countries and allows them to reduce their emissions “according to their possibilities and interests”.
It is not an “agreement on the immediate or gradual phase-out of fossil fuels, but rather a transition process,” he emphasized.
The prince had previously spoken out strongly against including fossil fuel reductions in the agreement. Ultimately, the agreement omitted any reference to a “gradual reduction” or “phasing out” of these energies.
The deal, which appeases nearly 200 countries, is the result of compromises negotiated by Emirati COP28 President Sultan Al Jaber, who is also head of national oil company ADNOC.
The UAE's official news agency, WAM, called the text a “win-win” agreement and viewed COP28 as a “decisive moment in the fight against climate change.”
The French Minister for Energy Transition, Agnès Pannier-Runacher, emphasized “a victory for multilateralism and climate diplomacy”.
In her opinion, 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 is that.” Climate and the Planet, they win.”
Economic opportunities of the transition
Saudi Arabia and the United Arab Emirates, major oil producers, are also investing in renewable energy and want to decarbonize their economies.
Like other producers, such as the US, they are increasing their production capacity to cope with the expected increase in demand.
However, according to analysts, the economic opportunities of the energy transition are not being ignored by the Gulf monarchies.
“They will be producing and exporting oil for decades to come,” Ben Cahill, a research fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies, told AFP.
“But the Emirates are also investing in building a more diversified energy system and see themselves as a global player in financing the energy transition,” he said.
Middle East expert Andreas Krieg described the deal as “an important, groundbreaking statement.”
“I think this is a shift in discourse for Gulf states who understand that the desire to phase out fossil fuels will be offset by relatively stable demand for oil and certainly gas in the coming decades. Demand comes 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 agreement.
“The UAE benefits from fossil fuel production, but initiated this transition long before other producers,” she said.
“It was easier for them” to stick to the agreement, while the Saudis “were not equally inclined to a compromise position.”
According to Krieg, Saudi Arabia's initial position “must be seen in the light of growing competition among Gulf states.”
“However, because the global consensus was so strong and overwhelming, Saudi Arabia did not want to be isolated.”
For Kristian Ulrichsen, Middle East fellow at the Baker Institute in Houston, Texas, COP28 was particularly important for the United Arab Emirates.
“The UAE invested a lot of political and diplomatic capital in COP28 and wanted exactly this kind of historic declaration that would involve the UAE in setting the global agenda and creating a new consensus for the way forward,” he said.