Running out of oil, how will the Gulf move forward?

Even if the gulf is affected, it will affect the Malayali. For the past six decades, Gulf has been a constant presence in Malayali life. Gulf is the pulse of Malayali’s daily life. The role of oil money in making Kerala what it is today is not insignificant. There is a gulf in Malayali’s happiness and sadness. Oil is the cornerstone of that Gulf economy. What will the Gulf do if that oil production ends? Climate change and dwindling oil reserves have begun to affect oil production economies. Therefore, the Gulf countries have started planning their plans for the new era and are seriously considering various ideas about it. After oil, what comes next is a question that is not only for the Gulf, but also for the Malayali.

A global shift to renewable energy may sound like an economic death knell for the Gulf region, where fossil fuel reserves are the basis of unlimited wealth. But the world’s energy supply is accepting the inevitable shift away from fossil fuels, at least domestically.

Countries like Saudi Arabia and the United Arab Emirates (UAE) are building some of the world’s largest renewable power plants to transition themselves away from fossil fuels. While such projects will help them meet their 2030 emissions (emissions) targets, for now, they include 15 countries with poor emissions records, along with other Gulf countries such as Bahrain, Oman, Kuwait and Qatar.

Oil is for export

Shifting the economy to renewable energy is not out of concern for the environment. One of the main drivers for this transition is to optimize fossil fuel reserves for export and thereby maximize profits, research associate professor at Qatar University’s Center for Sustainable Development Mohammed Al Saidi told DW.

Saudi Arabia was, in 2020, the world’s fourth-largest consumer of oil and sixth-largest consumer of fossil gas, due to which little is earmarked for markets abroad.

Despite rising temperatures and the frequency and severity of extreme weather events associated with overuse of fossil fuels, demand for oil is projected to increase until around 2040. Oil producers reckon that when demand eventually runs out, any oil left in the ground will become a “stranded asset”. This will result in loss of their profit making opportunity.

Another important motivation for the domestic shift to renewable economies is to attract international investment, Al-Saidi explained. “It’s very important for image, and image means money.”

When the climate crisis hits home

While continued oil exports will fill the region’s coffers, it may threaten the region’s very existence. Global temperatures will continue to rise as countries continue to use fossil fuels extracted from Saudi Arabia and neighboring countries. It will also affect the Gulf proportionately.

A global warming of 1.5°C by 2050 would mean a four degree increase in the Gulf. Heat waves above 50 degrees Celsius have already hit the region, and the average temperature is much higher in the region than the rest of the world.

Average summer temperatures in much of the Gulf will exceed survival levels under certain climate change scenarios. Planetary warming will make dust storms worse, and rising sea levels will affect low-lying areas.

“They are in a conflict because they depend on oil revenue, but their own countries are at great risk of climate change,” said John Truby, a visiting law professor who studies the relationship between sustainability and technology at the University of Newcastle in the UK.

The gamble of carbon assimilation and storage

While continuing to export fossil fuels, the region strives for carbon assimilation and storage, while limiting the risk of climate damage.

Carbon capture and storage (CCS) technology, as it’s known, is the process of intercepting emissions and storing them underground or in other products, which has long eluded oil producers in reaching this goal. Because in theory fossil fuels can be used without causing climate change.

But decades of research have failed to find broad solutions, and climate activists see it as a dangerous distraction from actual climate action.

So far, such technologies absorb less than 0.1% (43 million tons) of global emissions. According to Bloomberg, it is estimated that current procedures for projects may increase by just half a percent by 2030.

However, the technology is likely to be widely discussed at the annual UN climate summit in the UAE. And the Intergovernmental Panel on Climate Change (IPCC) is talking about it as one of the necessary measures to limit warming to 1.5 degrees. . COP28 President-elect Sultan Al-Jaber called for greater focus on carbon assimilation and storage capacity in his speech setting the agenda for the talks.

The European Union and other countries have opposed this approach, saying the focus should be on phasing out fossil fuels, rather than many techniques.

The Gulf region aims to diversify

Eventually, this money-flowing tap will have to be turned off. With the International Monetary Fund (IMF) warning that declining oil demand could hit the region’s coffers within 15 years, efforts to find alternative sources of income are underway in the Gulf.

Saudi Arabia sees green hydrogen production as the lifeblood of its new economy. It is also working with the UAE to build an industry of renewable commodity production such as aluminium. Hydrocarbons are beginning to be used for unsustainable, plastic and petrochemical production.

Exporting solar energy has been touted as a huge economic opportunity. In the Gulf countries, every square meter of land installed with solar energy produces the same energy as 1.1 barrels of oil each year.

Other countries are looking to copy Dubai’s diversification model, where fossil fuels now account for only five percent of its revenues. According to Al-Saidi, the majority of the income comes from tourism and wealthy immigrants and investors.

Oman is embarking on one of the biggest goals to reduce its dependence on fossil fuels. Oil accounted for 39% of its GDP in 2017, but plans to reduce this to 8.4% by 2040 by focusing on tourism, logistics and construction.

The Gulf countries’ exploitation of their fossil fuel reserves to finance the transition to a fossil fuel-free future depends on different objectives across the region. This paradox remains a concern for environmentalists and human rights activists.