Carbon Opportunities in the Gulf
By Shivangi Muttoo
The Gulf Cooperation Council (GCC) countries, in particular Qatar and the UAE, rank among the world’s worst performing countries in terms of per capita carbon dioxide (CO2) emissions. Perturbed by the increasing international concern, these countries have now announced plans to reduce emissions. As a result, the region could emerge as a hub of clean technology and renewable energy in the future. It may also benefit from the emerging carbon trading system.
Collectively, members of the GCC emitted 0.72 billion tons of carbon in 2006 which was 2.53 percent of the world’s total. However, with a population of just over 40 million, the GCC per capita emissions is around 26 tons, which is more than five times China’s per capita emissions of 4.6 tons.
CO2 emissions will continue an upward trajectory without serious efforts for their reduction because the GCC countries rely primarily on oil and gas combustion for electricity generation, which is a major contributor to the emissions. Power demand in the region has increased at thrice the global average over the past few years. Electrical air-conditioning and heavily subsidized electricity are contributing to this enormous demand for power. The domestic demand for power in the UAE will more than double by 2020. Moreover, due to scarcity of water resources in the region, the GCC nations rely on sea water desalination to meet the growing demand. The desalination process emits 40-180 million tons of CO2 in a year (depending on the size of the plant). Around 65 percent of the world’s desalination takes place in the region. At present, desalination projects worth USD 100 billion are underway which will exacerbate carbon emissions in the future. Further, the abundance of hydrocarbon resources in the region is attracting energy intensive industries such as petrochemical and cement amongst others. These industries are also a source of CO2 emissions in the region.
Several countries such as Australia and the USA are planning to impose high taxes on imports from countries which emit high levels of CO2. This move, if implemented, will severely hit the hydrocarbon industries in the GCC. Additionally, the growing international concern over CO2 emissions and their adverse impact on global warming prompted the GCC countries to regulate carbon emissions and launch several initiatives. Bahrain has become the first country in the Middle East to establish world’s largest carbon recovery plant. The plant aims at cutting down 90% of the emissions of a major petrochemical unit by capturing CO2 and then using it as raw material for urea and methanol processing. UAE has developed a unique scientific tool to assess the impact of CO2 emissions from electricity generation and desalination plants by 2030. Qatar and Oman are investing heavily in carbon capture and storage facilities.
The effectiveness of these initiatives still remains to be seen but it’s a step in the right direction and the implications for the region in the coming years will be significant.
The region has the potential to emerge as a hub of clean technology. GCC countries are innovating and conducting experiments in clean technology which may transform the region into a growth centre for the emerging environment technology. Science and technology parks have already started sprouting up all over the Gulf. Abu Dhabi has launched MASDAR- an initiative to spur the development of technology in the fields of renewable energy, water conservation and carbon mitigation. The clean technology innovations are being driven by the need to reduce the massive carbon footprint.
Green initiatives are spurring investments in renewable energy. The region has one of the highest concentrations of sunlight in the world. The GCC countries are ideally located geographically to make use of solar energy. It is estimated that 5000 MW of electricity will be generated in the region through renewable energy sources by 2015. Solar powered cooling and solar desalination are the most significant developments on the renewable energy front in the GCC, which may be utilized by other MENA countries.
Clean technology research and innovation place the region in a unique position to capitalize on the emerging market for emissions trading. Carbon trading is essentially an approach to mitigate emissions by providing economic incentives for achieving quantifiable reduction. Carbon capture and storage (CCS), essential for carbon trading, is being tested in some of the GCC nations. If successful, the region has the potential to earn enormous revenue from high levels of CO2 emissions. The GCC carbon trade potential is estimated at USD 5 billion per year. The revenue earned from carbon trading can be invested in research and development of new and cost-effective environment technology or in socio-economic development projects.
Still, certain factors can limit ‘carbon opportunities’ for the region. Installing CCS reduces an industrial plant’s efficiency by 30-40 percent. Therefore, large companies will probably be reluctant to build and invest in full scale CCS. Moreover, initiatives such as MASDAR and CCS facilities require investments worth billions of dollars. Any future downturn of the economy will hamper huge investments in clean energy initiatives. In such scenarios, the region can reduce emissions only marginally in the coming years.
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