Energy security, regional security key to expanding GCC-EU ties

Energy security, regional security key to expanding GCC-EU ties

The GCC region will remain very much relevant to the energy markets, even if oil becomes less important in the future (AFP)
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Bahrain this week hosted the seventh GCC-EU Business Forum, right after the conclusion of the annual Manama Dialogue. Both stressed the intertwined connections between the energy transition, climate change and energy security.

The business forum started in 2016 and has developed into an important annual event that allows the exchange of views between the business communities and officials from the EU and the Gulf Cooperation Council.

A lot has changed since 2016. The GCC’s economic growth has been phenomenal, with its gross domestic product rising by about 70 percent since then to reach $2.3 trillion in 2023, making it the fastest-growing region globally. The GCC also has a sharper focus on diversification, climate change mitigation and renewable energy. The EU too has changed; its GDP has grown to $18.4 trillion, up 32 percent since 2016, and it has adopted the comprehensive European Green Deal, which aims for carbon neutrality and commits sizable funds to finance multiple policies to reach that objective by 2050. A partnership with the GCC is essential to meet that goal, since this region can produce renewables on a massive, low-cost scale, just as it has traditionally been key to conventional energy.

Besides oil and gas, the GCC region is best suited to solar and wind energies and has favorable conditions for green and blue hydrogen production too. This means that the GCC region will remain very much relevant to the energy markets, even if oil becomes less important in the future.

The GCC region will remain very much relevant to the energy markets, even if oil becomes less important

Dr. Abdel Aziz Aluwaisheg

This year has witnessed remarkable growth in investments in the energy transition in GCC countries. For example, Saudi Arabia’s NEOM Green Hydrogen Project, one of the world’s largest commercially based hydrogen facilities, is expected to produce 600 tons of clean hydrogen daily in 2026 and 1.2 million tons of green ammonia annually. When complete, the project will mitigate the impact of 5 million tons of carbon emissions per year. Meanwhile, Oman this year awarded a $6.7 billion contract for one of the world’s largest green hydrogen plants in Duqm, which is expected to come online in 2028. And Qatar last year started work on a $1 billion hydrogen plant.

Saudi Arabia, a regional pioneer in solar energy for decades, is now building some of the largest solar farms in the world. This year, it started another one in Makkah province that is expected to begin operations by the end of 2025, with a generation capacity of more than 2 gigawatts. Qatar last year opened Al-Kharsaah solar power plant with an 800 megawatt capacity.

And, just a few days ago, the UAE announced that the Al-Dhafra solar farm — believed to be the world’s largest operating single-site solar power plant — had come online ahead of the COP28 climate change conference, which opens in Dubai on Nov. 30. The 2 GW facility will power nearly 200,000 homes and eliminate more than 2.4 million tons of carbon emissions annually. It created 4,500 jobs during construction. The UAE’s solar power production capacity has now reached 3.2 GW and it is aiming to increase its renewable energy capacity to 14 GW by 2030.

Unfortunately, the energy transition is costly in the short term and probably the medium term too, putting it beyond the reach of many developing countries and making it necessary to manage energy transitions. When GCC and EU foreign ministers met last month in Muscat, they agreed to work together toward a sustainable, just, affordable, inclusive and orderly energy transition. They stressed the principles of “fairness and equity,” which mean common but differentiated responsibilities, taking into consideration different national circumstances and capabilities in implementing climate agreements. For the same reasons, it is equally important to continue to invest in oil and gas production to meet global demand, including from developing countries, which may not be able to afford state-of-the art renewables during the energy transition.

The ministers also called for the successful conclusion of the “Global Stocktake” as the backbone of the ambition cycle of the Paris Agreement and the speedy implementation of commitments previously made. Just as importantly, they agreed on joint GCC-EU action to mitigate climate change and adaptation, develop renewables and improve energy efficiency. They also called for more climate investments by private investors.

The GCC region has significantly contributed to the achievement of climate change mitigation, including Saudi Arabia’s Middle East Green Initiative, with a budget of $2.5 billion to support its governance and projects, and the establishment of an international water organization in Riyadh. The UAE has also launched a water initiative to address global water scarcity, in addition to the joint UAE-EU initiative on the Global Renewables and Energy Efficiency Pledge, which aims to triple renewable energy capacity and double energy efficiency and is expected to be announced at COP28.

Israel’s war against Gaza has put energy security in jeopardy, as the war in Ukraine did before

Dr. Abdel Aziz Aluwaisheg

The EU and GCC have also agreed to further engage on a joint agenda to decarbonize energy systems by deepening technical cooperation in this area, including on hydrogen, energy efficiency, the integration of renewables and the development of electricity interconnections, with the ultimate goal of achieving climate neutrality. The Joint Action Program the two sides adopted in 2022 includes important provisions on the modalities of such cooperation.

For GCC-EU cooperation to happen at the required scale, especially for the private sector to invest significantly in energy transition and climate change mitigation projects, more work needs to be done to enhance energy security and regional security as a whole. Energy security involves the security of supplies, protection of production and export infrastructures and safeguarding of international shipping lanes. Regional security covers more, including cybersecurity, fighting terrorism, tackling organized crime and more.

In addition to its unspeakable humanitarian toll, Israel’s war against Gaza has put energy security in jeopardy, as the war in Ukraine did before. The longer the war goes on, the more harm it is inflicting on energy security. Energy production and transport capacity have been affected, as has international shipping. There is also some evidence of capital flight.

To maintain energy security, greater international cooperation is needed, including through the Combined Maritime Forces umbrella. Energy security also requires managing the energy transition toward a fully renewable future, so that investment in conventional energy keeps pace with demand. If we fail to do so and renewables are unable to meet the energy needs of consumers, shortages and higher prices will make it difficult to afford energy costs, especially in poor countries and vulnerable communities.

One of the new developments in the GCC-EU partnership is a decision to upgrade security cooperation. The EU has appointed Luigi Di Maio, Italy’s former foreign minister, as its representative to the region, with a focus on regional security and political dialogue. The instruments for this heightened engagement are currently being developed and should help the two sides carry out their joint commitments toward regional security and energy security.

  • Dr. Abdel Aziz Aluwaisheg is the Gulf Cooperation Council assistant secretary-general for political affairs and negotiation. The views expressed here are personal and do not necessarily represent the GCC. X: @abuhamad1
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