Energy transition requires a “practical”, realistic and collaborative approach to ensure that it is just and addresses the triple challenges of climate progress, energy security and economic prosperity, Dr Sultan Al Jaber, the UAE's Climate Change Special Envoy, said on Thursday.

“We need more realism about the scale of the challenge and more optimism about our capacity to solve it,” Dr Al Jaber, who is also Minister of Industry and Advanced Technology and group chief executive and managing director of Adnoc, said at the Bloomberg Emerging + Frontiers Forum 2022.

He stressed that increasing investment into the energy transition was crucial across the board, with contribution required from all industries and public stakeholders.

“If people’s basic energy needs are not met, economic development slows down and so does climate action. If we under invest in the energy system of today, before the energy system of tomorrow is ready, we will only make matters worse,” he said.

“Globally, there are less than one and a half million barrels of spare oil capacity. That is simply less than 2 per cent of global consumption.

“In a world where markets may face further disruption, that doesn't give us a lot of room to manoeuvre. In fact, it is a recipe for disaster. What we need is more of a recipe for progress.”

Spending in the oil and gas industry took a hit during the Covid-19 pandemic along with the push by governments to transition to cleaner forms of energy.

Total investment in the upstream part of the oil and gas sector fell 23 per cent below pre-coronavirus levels to $341 billion in 2021, the International Energy Forum and IHS Markit reported.

The oil and gas sector needs $600bn worth of investments until 2030 to keep pace with rising demand, Dr Jaber said earlier.

With renewables such as wind and solar constituting only 4 per cent of the global energy mix, oil and gas remain essential to meeting global energy needs.

The expansion of renewables and the decarbonisation of existing hydrocarbons have to take place in parallel, the official said on Thursday.

Global investment in the renewable energy sector climbed 11 per cent to $226bn in the first half of 2022 amid higher energy prices, a report by research company BloombergNEF (Bnef) said.

Investment in new large- and small-scale solar projects rose 33 per cent to a record-breaking $120bn, while wind project financing grew 16 per cent to $84bn, the report added.

Renewables are expected to drive an 8 per cent rise in global energy investment in 2022 to $2.4 trillion, the International Energy Agency said in a June report.

The energy body expects more investors to lean towards clean energy amid the universal drive to seek alternatives to fossil fuels.

But while global investment in renewable energy exceeded $365bn last year, less than 5 per cent of that amount was invested in energy storage, carbon capture and the hydrogen value chain, Dr Al Jaber said.

“This is simply not enough. In fact, according to some industry estimates, the energy transition will require more than $200tn over the next 30 years — that’s more than $6tn every year. Clearly no single country or corporation can foot this bill,” he said.

“Much more investment is needed in mitigation technologies and zero-carbon energies that can effectively transition heavy industry, manufacturing, construction, transportation and agriculture. The funding gap here is wide, and it’s important to understand the numbers.”

The UAE, as a global energy player, is “committed to the energy transition” and has so far invested $50bn in renewable energy projects across 70 countries, with plans to invest a further $50bn in the years to come, the official said.

The country already has three of the world’s largest single-site solar plants and is also investing in decarbonising the hydrocarbon industry, in carbon capture and storage, as well as exploring other technologies.

“As Cop27 approaches and as the UAE prepares to host Cop28 in 2023, we see our role in the UAE as a consensus builder,” Dr Al Jaber said.

“We want to bring together all parts of the world and all segments of society to deliver a practical, workable set of solutions for accessible, affordable and sustainable energy solutions that produce real results for the economy and for the climate at the same time.”

The Cop28 summit will also include the conclusion of the first ever “Global Stocktake” on the Paris Agreement.

With the energy transition process facing many challenges, it needs “measured, practical and sober planning”, the official said.

“In short, we need a realistic strategy to keep the increase in global temperatures within 1.5°C, while expanding access to affordable energy.”