Climate policy will hit tipping points but some Middle East countries intend to get ahead of the coming avalanche

“The falling of small stones ... starts an avalanche in the mountains”, says the wizard Gandalf in the Lord of the Rings. From an environmental perspective, the small stones are the growing number of global initiatives and the avalanche is the radical transformation of the Middle East’s energy system.

In December, the UAE filed its updated Nationally Determined Contribution under the Paris Agreement on climate change, with various commitments such as a 23.5 per cent cut to greenhouse gas emissions by 2030. The hydrogen alliance between Adnoc, ADQ and Mubadala was announced a month later.

In early April, Saudi Arabia's crown prince Mohammed bin Salman announced the Saudi Green Initiative, with goals including the planting of 10 billion trees and the generation of half of the country's electricity from renewables by 2030.

Seven contracts were signed for solar power plants, hastening the kingdom’s second round of renewable energy tenders for the generation of 870 megawatts of power. A decision on tenders for 1.2 gigawatts of power is expected later this quarter.

Only five years ago, the second phase of Dubai's Mohammed bin Rashid Al Maktoum Solar Park set a record low cost at 5.60 US cents per kilowatt-hour. The latest Saudi round for the Faisaliyah (Shuaiba) plant near Jeddah has achieved 1.04 cents – a continuation of the astonishing fall in costs over the past half-decade.

These initiatives are very much in line with the zeitgeist of the latest US climate summit, which kicked off on Earth Day on April 22. Several big economies have committed to net-zero carbon emissions by 2050 or 2060, with the US and EU unveiling ambitious green stimulus plans.

These are underpinned by tangible achievements such as the global sales of electric vehicles that were up 140 per cent from a year ago in the first quarter, battery costs that are closing in on cost-parity with petrol cars and European carbon prices rising to $54 a tonne.

The EU is moving towards “carbon border tariffs” on imports from countries without comparable prices on carbon. International oil companies – from Equinor in Norway to ExxonMobil in the US – are under increasing pressure to disclose their greenhouse gas emissions and their plans to ultimately to eliminate them.

One of the most striking announcements from the climate event was the formation of the Net Zero Producers’ Forum that links big oil and gas exporters such as Saudi Arabia, Qatar, the US, Canada and Norway. The group’s initial statement mentioned the circular carbon economy, a favourite term of Riyadh’s, along with other aims such as emission reductions and economic diversification.

These countries face common but different challenges in their hydrocarbon industries. Canada produces high-carbon heavy oil, primarily from one province, Alberta. Qatar is the world’s leading exporter of liquefied natural gas, followed by the US and Australia.

The US is the biggest oil and gas producer and the centre of shale development. However, it is troubled by high levels of gas flaring. Norway is the top hydrocarbon producer in Europe and a pioneer of offshore technology and carbon capture. And Saudi Arabia remains holder of one of the world’s biggest oil reserves and de facto leader of Opec as the largest producer.

The intent of the net-zero group seems clear: to give major petroleum producers a reason to support climate action rather than fear it. Subnational jurisdictions with a major influence over federal politics, such as Alberta and Texas, also need reasons to come on board.

The Biden administration in the US is trying to build climate coalition at home and abroad that is more durable than that of former president Barack Obama, which was so casually demolished by his successor Donald Trump.

All the members have emission challenges to overcome and contributions of projects and expertise to make. However, the leading national oil companies and their host countries face the biggest challenge. As stewards of the natural sovereign wealth, they cannot simply switch into renewable energy, biofuels or electric-vehicle charging, as big European oil companies do.

Some of the goals of the net-zero forum are straightforward, such as the reduction of methane leakages and use of carbon capture and storage. Hydrogen, the magic fire that produces only water when burnt, is not specifically mentioned but could fit within the “clean-energy” rubric. Such types of technology clean up the petroleum industry without fundamentally transforming it. All five member countries are already leaders in carbon capture and storage.

Others involve a deeper transmutation of company and economy.

The circular carbon economy would be characterised by useful products such as carbon fibres, plastic and composite substitutes for metals and graphene spun out of oil and gas. These materials would be recycled and the waste carbon dioxide used to make cement and other long-lived ceramics or injected back into the ground for permanent safe disposal. Components of the circular carbon economy already exist but as an operational whole, it remains a concept.

“Diversification from reliance on hydrocarbon revenue” is a much more vague part of the joint communique. However, it has long been a goal of oil exporters despite being tough to achieve. The mutual support of the five members and others who may join in future is essential but not sufficient for such a radical reimagining.

Climate policy will increasingly hit tipping points. Increasing the scale of new and clean technology brings a fall in costs and therefore expands their market further. As they become profitable businesses, they attract the employment, investment and political support that used to go to high-carbon industries. Some Middle East countries hear the first rumblings and intend to get ahead of the coming avalanche.

Robin Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis