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Renewables and gas reset the carbon clock

With the theme ‘practical steps towards a sustainable future’, Abu Dhabi Sustainability Week examined how to deliver the Paris Climate Agreement and also debated the role of fossil fuels in a clean energy roadmap. Kelvin Ross spent a week at the event and highlights the hot topics and talking points

Dr Sultan Ahmed Al Jaber

Credit: IRENA

Abu Dhabi Sustainability Week was the first global gathering dedicated to sustainability since the COP22 climate change conference in Morocco last November.

The event last month welcomed six heads of state and 73 government ministers and overall the week’s events attracted 38,000 visitors from 175 countries.

It’s the third time I have attended ADSW in the United Arab Emirates and it is noticeable how, over recent years, its discussions have shifted from broad calls for action on renewables deployment to – post-Paris Agreement – delivery of specific roadmaps and initiatives to deliver on the agreements made at COP21.

This year’s ADSW was notable because for the first time it welcomed a major delegation from Saudi Arabia. The kingdom used the event to unveil plans to invest up to $50 billion in renewable projects – mainly wind and solar – by 2023 to generate 9.5 GW.

And a key speaker at several conferences was Shri Piyush Goyal, India’s Minister of State for Power, Coal, New & Renewable Energy and Mines. He outlined India’s target to have an installed capacity of 100 GW of solar energy, 60 GW of wind and 15 GW from other renewables by 2022.

ADSW was opened by Dr Sultan Ahmed Al Jaber, the UAE’s Minister of State and Special Envoy for Energy and Climate Change and also chairman of Abu Dhabi clean energy company Masdar. He said that “for the first time in the industrial age, carbon emissions are levelling off and even starting to drop. In this new era, renewables and hydrocarbons enjoy a truly symbiotic relationship that is reshaping the economics of energy.”

And he added that while for decades the Gulf region had led the oil and gas industry, now “we are extending our reach to become the centre of gravity for all forms of energy.”

Adnan Z. Amin

Credit: IRENA

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Shri Piyush Goyal outlines India’s renewable energy targets

Credit: IRENA

Al Jaber said that the deployment of renewables “liberates hydrocarbons” and “where solar excels at peak hours, natural gas provides a necessary low-emission, low-cost, baseload power foundation. Combining both is a winning partnership that makes perfect economic sense.”

He said that “while oil and gas will remain critical drivers of the global economy for decades to come, we recognize the immediate and long-term advantages of a fully diversified energy mix”, and that renewables and natural gas in tandem had “begun to reset the carbon clock”.

Speaking the following day at the launch of the World Future Energy Summit, Al Jaber revealed that Masdar had invested $2.7bn in clean energy projects since it was formed in 2006.

But he stressed that “we will not deploy a single dollar if we do not think that this dollar is secure”.

He outlined how the renewables finance landscape has changed in the last half decade.

“Of course each investment has its own risks, but in the past five years everything has changed.”

He said that it was a fact that in the past, renewables were “costly and because of that, Masdar had to swim against the tide. But now renewables can compete on a standalone basis.”

Also speaking at the opening of ADSW was the executive director of the International Energy Agency, who said that the global power sector needs to double its investment in renewables if it is to meet the Paris climate goals.

Fatih Birol said that last year the entire budget of the global power sector was $1.8 trillion and added, “I’m afraid only 16 per cent of that went on renewables and energy efficiency”.

“The rest goes mainly on oil and gas and other energy sources. In order to reach the targets that we agreed in Paris we need renewables.”

He said the business case for renewables was more solid than ever. “Renewable energy is becoming cheaper. Our numbers at the IEA give us a lot of hope.”

He highlighted that last year, more than 50 per cent of global new power generation capacity added was renewable. “The others, coal, plus oil, plus gas, plus nuclear all put together were less than renewables. This shows us that renewables is not a romantic story any more, it’s a business.”

Statoil signed a floating wind turbine deal with Masdar at ADSW

Credit: IRENA

But he stressed that “renewables alone cannot bring us to our two-degrees target. We need energy efficiency policies – they will deliver.”

And he said that “we need other energy sources”, highlighting that nuclear and natural gas both have a role to play alongside renewables.

“It would be wrong to tell the world about just one single fuel. We need to provide a package according to the need.”

He stressed that the “challenge for all of us is how do we find an optimal energy policy” that covers climate change, energy security and energy efficiency.

Trump and clean energy

The topic of Donald Trump entering the Oval Office and the effect this would have on the climate change agenda was debated several times.

The boss of the International Renewable Energy Agency (IRENA) is taking a wait-and-see approach on Trump’s actions on climate change, but has stressed that the clean energy sector in the US is a business case too powerful to ignore.

Adnan Z Amin said that “from a business perspective, renewable energy is a good investment”.

At a press briefing, he said that globally there were 9.4 million people working in the renewables industry, with the greatest proportion in China, and in the US there were 400,000 employed in the sector, compared with 85,000 in the coal industry.

And he added that “a lot of US states with Republican leadership are making a lot of money from renewable energy”.

Indian minister Goyal vowed that his country will not deviate from its renewable energy targets if Trump puts the brakes on America’s commitment to tackling climate change.

He was responding to concerns that an American withdrawal from the climate change table would prompt India to row back on its sustainability goals.

Speaking on the first day of ADSW, he said: “I can use this sustainability platform to let the world know that India is absolutely committed to renewable energy targets and clean energy growth and nothing will stop that.”

He said that India “doesn’t interfere in other countries’ political processes – if the people have elected a leader then we respect that”.

The first carbon capture and utilization project in the Middle East

Credit: Kelvin Ross

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Masdar’s solar-powered desalination project in Abu Dhabi

Credit: Kelvin Ross

“So, irrespective of what other countries do or do not do, India stands committed to being part of green energy.”

India signed up to the Paris climate agreement and at the end of last year published a 10-year energy blueprint which predicted that 57 per cent of India’s total electricity capacity will come from clean energy sources by 2027.

And Goyal stressed that he believed India would have no difficulty in finding the private investors for its huge solar, hydropower and wind plans.

“Frankly, I don’t see any strength of challenge to getting finance for these programmes. Gone are the days when governments had to grapple with subsidies. You don’t need to convince investors anymore – it is really in their own interests. It makes good economic sense to invest in energy efficiency and clean energy.”

He said that since India announced its ambitious renewable energy plans, “we have only seen the interest grow”.

Yet he was keen to add a dose of realism to the renewables drive. He said that India wanted “to engage with renewable energy, but we are also grappling with affordability and the baseload issue”. And while it was tackling the baseload dilemma, he said India would continue to have to rely on coal. But he stressed that “we can do it smarter” and explained that India would be looking to employ the latest supercritical technology on its oldest coal plants as well as utilize coal-to-gas technology.

The Saudi perspective

Meanwhile, Saudi Arabia’s energy minister told ADSW that although the kingdom was planning an initial 10 GW of renewables, oil and gas would be ‘needed for decades’.

Saudi Arabia’s first round of renewable energy tenders are expected to deliver up to $50 billion by 2032 to bankroll the 10 GW of clean energy. However, Khaled Al-Falih used the stage to stress that oil and gas had a role to play in the global clean energy narrative.

And he was adamant that without oil and gas being utilized alongside renewables, “we will have a shock to the global economy”.

Afterwards, some in the audience felt his speech was decidedly off-message for a sustainability conference. But others believed he had added a dose of realism to the clean energy debate.

Al-Falih, who is also the chairman of Saudi Aramco, said: “Sustainability needs to take advantage of all energy sources. Technology is a clear enabler for sustainability and there is substantial room still to be made to make oil and gas more sustainable.”

He told the audience: “I am a realist. As much as we hope for renewables, they will not penetrate fast enough – they will not bring the standards of living that people aspire to fast enough.”

Solar panels top the traditional Arabic facade of apartments in Masdar City

Credit: Kelvin Ross

And he maintained that “we are going to need cleaner oil and gas for decades to come”.

“If the oil and gas industry stops investing [in the power sector], we are going to have a shock to the global economy and people will then revert to less sustainable sources of energy.

“By constraining fossil fuels we are going to be a less sustainable global economy.” He said that many people believe that bad news for fossil fuels is good news for renewables, “but we have found the opposite”.

Al-Falih said that Saudi was investing in several emissions-reduction technologies, including carbon capture and utilization.

He also outlined plans to establish interconnections with Jordan, Egypt, Yemen and even parts of Africa, which he said would allow Saudi to “exchange renewable electricity”.

The $50 billion renewables programme will be launched for tenders “in the next few weeks” and will comprise projects for solar, wind, geothermal and waste-to-energy.

And Al-Falih stressed that “10 GW is only the beginning – I can almost guarantee that we will be bigger [in renewables] than the UAE, because our scale is much bigger”.

Reacting to news of the Saudi renewables initiative, Martin Haupts, chief executive of Dubai-based international solar developer and investment manager Phanes Group, said: “It’s a very encouraging development that carries significance not only for the Kingdom, but to the entire renewable energy industry across the region and the world.

“Saudi Arabia is vast, with enormous renewable energy potential. Their plan to deploy almost 10 GW from a standing start in six years represents an unprecedented commitment to renewables and a roadmap to not only a more balanced power portfolio, but also a more active investment climate.”

Haupts said that Phanes Group “believes the Saudi renewable energy market may present attractive opportunities for firms of all sizes and specialties to invest and develop projects.

“However, with so much of their legal and regulatory infrastructure in flux, what is key to them achieving their short- and medium-term ambitions is their ability to offer predictability and certainty to investors.”

Commercial carbon capture

Away from the conferences of ADSW, I visited several key clean energy projects in the UAE, including the MENA region’s first commercial-scale carbon capture, utilization and storage facility.

The chief executive of the Al Reyadah project in Abu Dhabi told me that he believes the facility can act as a springboard for the technology globally.

“The only way to do carbon capture and storage is to make commercial use of what you capture,” maintained Arafat Al Yafei. “Doing CCS is a noble cause which we badly want to do, but to do it without a revenue stream is very difficult.”

Al Yafei explained that “when we started planning this project we realized that other CCS projects had not lasted because the revenue streams had dried up.”

The $122 million Al Reyadah project is a joint venture between Abu Dhabi National Oil Company (ADNOC) and Masdar. It aims to sequester up to 800,000 metric tonnes of carbon dioxide per year.

It harnesses the CO2 emitted by major Abu Dhabi steel producer Emirates Steel Industries and injects it as a substitute for rich gas into the emirate’s oil reservoirs to help enhance their output.

“CO2 is one of the best agents to inject into the oil,” said Al Yafei, “because it changes the viscosity.”

Construction on the plant started in July 2013 and the project is one of only 22 large-scale CCUS ventures either in operation or under construction worldwide, and is believed to be the first to capture CO2 from an iron and steel works.

Al Reyadah, which means ‘leadership’ in Arabic, is the first company in the MENA region focused on developing commercial-scale CCUS projects.

The technology works in three stages. Carbon dioxide is first captured on site at the Emirates Steel manufacturing complex before being compressed and dehydrated. The third step involves conveying the CO2 via a 42-km underground pipeline for enhanced oil recovery injection into two ADNOC onshore oilfields.

“This is a new concept in the region that we are trying to make commercially viable”, said Al Yafei. “We know that CCUS will expand not just in this region but around the world.”

He said there was huge potential for the technology in all oil-and-gas-rich countries.

The plant started commercial operations in November last year and Al Yafei said “it is a practical solution to ensure that CO2 emissions are reduced. We cannot have clean fossil fuels without CCUS.”

And he added: “The dream is big, and we are going step by step.”

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