Squeezed budgets from lower oil prices and rising energy demand will significantly heighten the demand and use of renewables and energy efficiency technologies in the Middle East.
That’s the key finding of a new white paper from Lloyd’s Register, based on an industry executive briefing at the Abu Dhabi International Petroleum Exhibition and Conference, where participants debated the challenge that regional economies face in establishing a cost-efficient low carbon future while not jeopardizing their energy economics and security.
Most participants were of the view that the growth of the low carbon market is not a threat to the prominence of hydrocarbons, which will be a primary source of energy for at least five decades. Instead they felt that “renewables open a gateway for hydrocarbon producers, and wider industry, to expand the scope of their R&D to cut costs and enhance operational efficiency”.
Alasdair Buchanan, Lloyd’s Register’s Energy Director, said: “This is a timely issue, considering the International Energy Agency recorded a 25 per cent reduction in field investments in 2015 to $583bn and said in September this year that oil prices could stay within today’s $50 a barrel range until mid-2017.”
He added that the unnerving outlook for oil-centred economies in the Gulf, such as Saudi Arabia, Qatar, Kuwait and the UAE, can be increasingly offset by low carbon solutions.
“The environmental incentives underpinning political appetite for renewable energy policies and technologies are also stronger than ever.”
“The Middle East would benefit from an integrated energy policy, which would provide signposts to guide all the stakeholders towards a low carbon future. There is a considerable level of multilateral cooperation and collaboration already happening here – this has created a strong and united movement to see positive change. The adoption of new technologies to help define a low carbon future with widespread and cost effective implementation is the next step in helping the region realise this vision.”
Participants at the executive briefing unanimously agreed that the COP21 Paris Agreement spells a new chapter in the historically fragmented narrative of international climate policy. The success is best illustrated by the US and China’s agreement in September to formally ratify the Agreement – the world’s two largest economies that are responsible for 40 per cent of global carbon emissions are now on board.
However, Governments and financial institutions in the Middle East and beyond must enhance existing frameworks that encourage exploratory projects. The executive briefing heard how successful R&D and the resulting renewable energy technologies rely heavily on a well-measured trial and error approach.
“All energy stakeholders need easy access to funding for R&D, which includes laboratories, testing sites and specialist human resources, as well as the means to share intellectual property (IP) and register patents that reach international standards. Siloed efforts are unlikely to succeed,” highlights Buchanan.