Gradual energy transition holds the key to a sustainable future

Gradual energy transition holds the key to a sustainable future
The UN Climate Change Conference, also known as COP28, will provide an opportunity to move to an economic path of growth which could ultimately diversify the economy while making a positive impact on the climate. (Shutterstock)
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Updated 01 April 2023

Gradual energy transition holds the key to a sustainable future

Gradual energy transition holds the key to a sustainable future
  • COP28 will help shine the spotlight on the region’s ambitious decarbonization goals

RIYADH: Concerns about energy security and the need to accelerate decarbonization seem to be growing with 2023 rolling on, as geopolitical issues that came to the fore last year show no sign of abating.

Amid the ongoing energy crisis catalyzed by these tensions, countries are realizing the necessity to embrace renewables as dependence on traditional energy imports could be impacted due to various factors including the internal affairs of energy exporting nations.

Even though energy transition is very much necessary to warrant a better future, a sudden transformation to renewables is expected to do more harm than good, especially considering the fact that the energy crisis has been battering the world’s poorest countries for several years.

“The IEA estimates that some 75 million people who recently gained access to electricity are likely to lose the ability to pay for it, meaning that for the first time since we started tracking it, the total number of people worldwide without electricity access has started to rise,” Abdullah Al-Abri, a consultant at the International Energy Agency told Arab News.

He added: “To solve the issue of the energy crisis in the poorest nations, the global community needs to invest more in sustainable energy solutions and provide competitive capital and expertise.”

The vitality of a gradual energy transition

Experts believe that a gradual energy transition, where both renewables and traditional sources operate, hand-in-glove could be the solution to smoothen the journey toward sustainability.

“There will be a transition period when investment in both fossil fuel and renewables must continue concurrently, without losing sight of the fact that renewables are the future of global energy,” Ian Harfield, managing director of ENGIE Energy Solutions, Gulf Cooperation Council, told Arab News. 

There will be a transition period when investment in both fossil fuel and renewables must continue concurrently, without losing sight of the fact that renewables are the future of global energy.

Ian Harfield, Managing director of ENGIE Energy Solutions, Gulf Cooperation Council

He added: “To fortify energy systems against extreme weather, we need to diversify the renewable energy mix, incorporating hydroelectric, solar, wind and green hydrogen, and large-scale storage systems.”

Manish Laligam, managing director, of the Middle East Region of Protiviti Member Firm, shares identical views and said: “To satisfy the pledges under the Paris Climate Accord, developing countries where energy consumption is increasing faster than the rest of the globe are considering a combination of gas and renewable energy sources.”

Earlier in March, Francesco La Camera, director-general of the International Renewable Energy Agency, told Arab News divestment from fossil fuels must be a gradual process.

“We have to understand that the old system, the one that is centralized and based on fossil fuels, cannot shut down in a day,” La Camera told Katie Jensen, host of the Arab News program “Frankly Speaking.”

“There will be a slow decline of oil and gas. And to maintain a smooth decline of oil and gas, we need some investment again in oil and gas. If not, there will be a disruption.”

Al-Abri opined that it is necessary to develop climate-resilient fossil fuels to ensure a smooth energy transition.

“The question is not about fossil fuels versus new energies – the matter is more of how to develop fossil fuels that are climate resilient while ensuring that new energies are also developed to mutually satisfy the growing demand and climate agenda,” said Al-Abri.

Meanwhile, experts believe that the ongoing geopolitical tensions including the Ukraine conflict are expected to accelerate the energy transition journey. 




COP28 will help shine the spotlight on the region’s ambitious decarbonization goals. (AP)

“Geopolitical tensions have only underscored the critical need for renewable energy — green energy sources are more resilient to global disruptions. International efforts are then needed to set benchmarks, share insights, and promote industry best practices,” noted Harfield.

In January, during the World Economic Forum, Fatih Birol, executive director of the International Energy Agency, warned the world is going through an unprecedented energy crisis.

“Our world has never seen an energy crisis of this depth and of this complexity. The biggest driver of renewable energy growth today is energy security,” Birol said.

COP28 holds crucial significance

Amid all these sustainability efforts and ongoing energy transition, the UN Climate Change Conference, also known as COP28,  is set to be held in Dubai from Nov. 30 to Dec. 12 this year.

The upcoming conference is expected to have a crucial significance in the energy transition journey as countries in the Middle East and North Africa region — spearheaded by Saudi Arabia — are playing a crucial role in turning the earth green with their net-zero targets.

“COP28 will help shine the spotlight on the region’s ambitious decarbonization goals, most aligned with national socioeconomic visions,” said Harfield.

Laligam opined that COP28 will accelerate the region’s plans to achieve a clean economy, driven by renewable energy sources, technology developments, and climate-smart solutions. 

HIGHLIGHT

Amid the ongoing energy crisis catalyzed by these tensions, countries are realizing the necessity to embrace renewables as dependence on traditional energy imports could be impacted due to various factors including the internal affairs of energy exporting nations.

“Many Middle Eastern countries have developed the Hydrogen Leadership Roadmap to position their nation as top hydrogen suppliers by fostering low-carbon sectors. Across the past two years, numerous solar, wind, and battery storage projects have been started across the Middle East,” Laligam added.

In March, Issam Abu Suleiman, regional director of the Gulf Cooperation Council at the World Bank, said COP28 will provide an opportunity to move to an economic path of green growth which could ultimately diversify the economy while making a positive impact on the climate.

Abu Suleiman further added that the conference is expected to provide chances to push toward green technology and carbon sequestration investments, which are crucial for the world to achieve net-zero emissions by 2050.

This year’s COP is also expected to include oil and gas companies in discussions, as without their contribution, it will be difficult to achieve a sustainable future.

During a recent exclusive interview with Arab News, Fahad Alajlan, president of the King Abdullah Petroleum Studies and Research Center, also reiterated this view and said that an inclusive approach is required to smoothen the energy transition journey.

“In the past, oil and gas companies have been excluded from discussions. If we look at emissions today, more than 50 percent comes from the energy sector. So, it is very important that we involve oil and gas companies in this discussion, to become part of the solution rather than demonizing and excluding them,” said Alajlan.

Al-Abri said that COP28 would play a key role, not just in the MENA region, but the entire world.

“To the region, I think COP28 could shed light on how producer economies are working to address the climate agenda through the energy transition, de-emissionization practices, and the incorporation of innovation and solution integration. COP28 could also be instrumental to the world as I think the hydrogen and new energies agenda would be more emphasized and opportunity for cross-learnings on how to establish the low-emission industrial clusters,” noted Al-Abri.

As the biggest oil-producing nations in the Middle East are spearheading the energy transition globally, the world will witness more monumental milestones in this journey, which will ensure that the future is green.


Respite for oil market amid rate hike worries

Respite for oil market amid rate hike worries
Updated 01 June 2023

Respite for oil market amid rate hike worries

Respite for oil market amid rate hike worries
  • Oil markets may have been oversold in the last two trading days, says analyst

RIYADH: Oil steadied on Thursday as a potential pause in US interest rate hikes and the passing of a crucial vote on the US debt ceiling bill were offset by a report of rising inventories in the world’s biggest oil consumer.

US Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the US House of Representatives passed a bill suspending the government’s debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures fell 10 cents, or 0.14 percent, to $72.50 a barrel by 1339 GMT while US West Texas Intermediate crude rose 7 cents, or 0.1 percent, to $68.16. Both benchmarks fell on Tuesday and Wednesday.

“Oil markets may have been oversold in the last two trading days,” said CMC Markets analyst Tina Teng. “Sentiment rebounded amid the debt bill’s passage in the House and (the) Fed’s rate hike pause signal.”

HIGHLIGHTS

Market sources citing American Petroleum Institute figures on Wednesday said that US crude inventories rose by about 5.2 million barrels last week.

• Brent crude futures fell 10 cents, or 0.14 percent, to $72.50 a barrel by 1339 GMT while US West Texas Intermediate crude rose 7 cents, or 0.1 percent, to $68.16.

Mixed demand indications from China, the world’s biggest oil importer, have nonetheless weighed on the market, as has industry data showing a rise in US crude inventories.

Market sources citing American Petroleum Institute figures on Wednesday said that US crude inventories rose by about 5.2 million barrels last week.

“The current mood is one of pessimism,” said Tamas Varga of oil broker PVM. “Investors have been pragmatic and risk averse of late.”

Also in focus is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries and allies including Russia will discuss whether or not to cut oil production further.

Barclays forecast

British multinational bank Barclays has slashed the average price of its Brent crude forecast for this year from $92 to $87 a barrel. The bank also slashed its price forecast of Brent for 2024 as it cut the average projected price to $87 a barrel from $97. 

Chinese company in Brazil 

China’s CNOOC Ltd. has begun production at the Buzios5 well off the coast of Brazil, the company said in a statement on Thursday. 

The well is the fifth phase of the Buzios oil field off Brazil’s southeast coast. At an average water depth of 1,900 meters to 2,200 meters, the field is the world’s largest deep-water pre-salt oil field, with daily production of 600,000 barrels, the company said. 

CNOOC’s Brazilian subsidiary owns 7.34 percent of the Buzios shared reservoir, which is 88.99 percent owned by Brazilian state-owned oil and gas company Petrobras.  CNOOC paid $1.9 billion to Petrobras last year to secure a 5 percent stake in a production sharing agreement at the field. 


UAE’s in-country value projects driving billions to local firms

UAE’s in-country value projects driving billions to local firms
Updated 02 June 2023

UAE’s in-country value projects driving billions to local firms

UAE’s in-country value projects driving billions to local firms

ABU DHABI: More than $27.23 billion has been redirected to the local economy since the UAE Ministry of Industry and Advanced Technology (MoIAT) and ADNOC launched major in-country value programs to support domestic industries.

Speaking at the Make in the Emirates Forum, Abdulla Al-Shamsi, Assistant Undersecretary of MoIAT, said more than $14.43 billion of investment was redirected to the local economy last year alone, an increase of 25 percent year-on-year.

“The National In-Country Value Program is a nationwide program that speaks one language across many different sectors,” Al-Shamsi said. “It’s one methodology and this is something we’re very proud of because it benefits the private sector and when the private sector sees this it helps them prepare, invest, and spend.”

The forum heard how the National ICV Program is “functionating well and accelerating.”

The forum also heard how industrial zones are playing a critical role in the in the country’s sustainable industrial development and broader economic prospects. Local industrial leaders described how they are utilizing alternative energy resources such as solar and hydrogen to reduce their carbon footprint.

The second edition of the Make it in the Emirates Forum concluded on Thursday with the UAE showcasing its unique value proposition to international investors.

Investors were invited to explore opportunities and competitive advantages, with panel discussions focusing on the National In-Country Value (ICV) Program, the role of industrial zones, competitive financing as a key enabler and local talent in the private sector.

The UAE’s industrial exports reached $47.6 billion in 2022, growing 49 on 2021. The industrial sector's contribution to GDP rose to $49.5 billion in 2022, a 38 percent increase on 2020.

The Make it in the Emirates Forum is organized by the Ministry of Industry and Advanced Technology in partnership the Abu Dhabi Department of Economic Development (ADDED) and ADNOC.

On the first day of the forum, the UAE government announced $2.7 billion in industrial offtake agreements, building on the $29.9 billion of offtake agreements announced at the 2022 edition of the forum.


Saudi fintech firm secures $3.2m in seed funding

Saudi fintech firm secures $3.2m in seed funding
Updated 01 June 2023

Saudi fintech firm secures $3.2m in seed funding

Saudi fintech firm secures $3.2m in seed funding

RIYADH: EdfaPay, a Saudi-based fintech startup that helps companies use their smartphones for payment, has raised $3.2 million in a seed funding round.

The funding round was led by Sanabil 500 MENA, Nufud Wealth International, Atmiid Investment, Basmah Commercial Investment, and a group of local and international angel investors.

EdfaPay aims to utilize the capital to strengthen its operations in the Kingdom and expand to Pakistan and South American countries.

Founded in 2022 by Ghormallah Alghamdi and Nedal Sabbah, it uses NFC technology to allow companies to collect payments through smartphones.

In February 2022, the firm secured $1.6 million in a pre-seed funding round led by Nuwa Capital, InspireUs VC, and Wallan Investment Group.

The fintech channeled its acquired funds into launching its financial services across the Kingdom and supported its market-entry efforts.

The Kingdom’s fintech investments reached $400 million in 2022, recording a 79 percent increase compared to 2021.

The Saudi Central Bank, also known as SAMA, is one of the country’s key players in enabling fintech across all subsectors.

Earlier this week, SAMA granted licenses to Spotii and Madfu, two fintech companies that aim to offer consumer financing options.


Saudi Central Bank grants open banking certifications to 2 fintech firms 

Saudi Central Bank grants open banking certifications to 2 fintech firms 
Updated 01 June 2023

Saudi Central Bank grants open banking certifications to 2 fintech firms 

Saudi Central Bank grants open banking certifications to 2 fintech firms 

RIYADH: Saudi Arabia is fostering personalized financial products and services tailored to customer needs with the Kingdom’s monetary authority, granting open banking certifications to two fintech companies. 

The Saudi Central Bank, or SAMA, has permitted Umg Alholol Trading Co. and Drahim App to test their open banking solutions in its regulatory sandbox, reported the Saudi Press Agency. 

This brings the total number of innovators permitted to operate under the central bank’s regulatory sandbox to 45. 

Of the 45 firms, 18 have graduated effectively and become licensed by SAMA to provide their solutions to consumers. 

On Tuesday, SAMA granted open banking certification to Dubai-based Tarabut Gateway, which aims to intensify its operations in the Kingdom.   

Tarabut Gateway, the region’s leading regulated open banking platform, has become one of the early recipients of SAMA’s permit to operate in Saudi Arabia.   

Talking to Arab News, Abdullah Almoayed, CEO and founder of the fintech company, said that consumers in the Kingdom can now expect a wide range of innovative and personalized financial services.     

“We are aware of the unique challenges faced by small and medium enterprises in Saudi Arabia, particularly regarding cash-flow management and access to funding. We will address this issue head-on by assisting SMEs to access the funding they need via open banking-enabled financial services and products,” Almoayed said.     

He said: “The new era of financial services we stand for is user-centric and contributes to customers’ financial well-being.”     

Those moves and initiatives are projected to help the Kingdom come one step closer to achieving the objectives of the Financial Sector Development Program in making the Kingdom among the leading nations in financial technology.   

The central bank has been working toward increasing the adoption of the fintech sector to boost the effectiveness and flexibility of financial transactions.    

Moreover, it has also been promoting financial inclusion for the various segments of society. 

On Wednesday, SAMA permitted Spotii and Madfu to provide consumer finance through the buy now, pay later platform. 

That said, Saudi shoppers can soon find more flexible payment options as two more BNPL companies enter the consumer finance market.


PwC Middle East inaugurates its regional headquarters in Riyadh

PwC Middle East inaugurates its regional headquarters in Riyadh
Updated 01 June 2023

PwC Middle East inaugurates its regional headquarters in Riyadh

PwC Middle East inaugurates its regional headquarters in Riyadh

RIYADH: PwC Middle East, a leading professional services firm in the region, officially inaugurated its regional headquarters in Riyadh on Wednesday.

This move demonstrates the company’s commitment to the region, including creating 6,000 new jobs and continued investments in digital technology, environmental, social, and governance capabilities.

PwC Middle East obtained its regional headquarters license from Saudi Arabia's investment and commerce ministries.

The company established its headquarters before Jan. 1, 2024, a deadline set by the regional headquarters program commissioned by the Investment Ministry and the Royal Commission of Riyadh.

The inauguration ceremony, held at a local hotel in Riyadh, was attended by Saudi Investment Minister Khalid Al-Falih, Hazim Zagzoog, a royal court adviser, and Kevin Ellis of PwC EMEA.

“I am delighted to join PwC Middle East as it inaugurates its new regional HQ in Riyadh, which will help to build the RHQ ecosystem in Saudi Arabia and set global standards for how a professional services sector RHQ should operate,” Al-Falih said.

“It is a natural continuation of a longstanding and mutually beneficial relationship. I also commend PwC on its strong record of employing more than 1,000 talented Saudis in its workforce,” he added.

Hani Ashkar, a senior partner at PwC Middle East, expressed enthusiasm about obtaining the license for their regional headquarters and the honor of supporting Saudi Arabia’s remarkable transformation as it progresses toward its Vision 2030 and beyond.

“At PwC Middle East, we are fully committed to supporting Saudi Arabia’s next phase of its transformational agenda as we digitize, decarbonize, localize, privatize and modernize,” Ashkar said.