US policy gaps are allowing Gulf energy to take future leads

“In a minute there is time for decisions and revisions which a minute will reverse,” as British-American poet TS Eliot described current US trade policy . US Energy Secretary Chris Wright is touring the Gulf now, and the UAE and Saudi Arabia have increased their oil and gas deal activity in the US. But the three major lurches in US policy create opportunities for the Gulf with other partners in new energy sectors. These three changes are to do with trade, science and the environment. The sharp turn by the Trump administration to impose an ever-changing deluge of tariffs on varying countries at varying rates and on varying products undoes the policy from Franklin D Roosevelt onwards of opening up international trade and betting on the US’s fundamental competitiveness in new technologies and business models. The second reverses the US’s scientific dominance during the post-Second World War era. It is the move to cut funding to universities, research organisations and scientific bodies such as Nasa and the National Oceanic and Atmospheric Administration, and limit their scope of inquiry and publication. The third is the abandonment of the goal of tackling climate change. Even Republican and pro-oil presidents, including Richard Nixon and George HW Bush, paid serious attention to environmental issues. President Donald Trump’s administration opposes action on climate change, withdrawing again from the Paris Agreement. It looks set to cut funding for most green energy initiatives, even those benefiting Republican-voting states and oil companies, such as carbon capture and storage, geothermal energy and blue hydrogen. For now, tariffs and increased Opec+ production have caused oil prices to crash. This intensifies the ever-present need for GCC states to continue diversifying their economies, and proofing them against future global climate policies. The new situation calls for a four-part approach. The UAE and Saudi Arabia, of course, will continue investing in the US, and will even step up their activity. In November 2022, the UAE and US launched the UAE-US Partnership for Accelerating Clean Energy (Pace), planning to mobilise $100 billion of investment by 2035. One such project was ExxonMobil’s proposed hydrogen project in Baytown, Texas, likely to be the world’s biggest once built, in which Adnoc took a 35 per cent stake in September. It remains to be seen how such joint investments will be taken forward. The new focus will be different: more activity in data centres and artificial intelligence, and traditional oil and gas deals, such as Mubadala’s latest purchase of gas production and a share in a liquefied natural gas plant from private equity group Kimmeridge. The second part of the strategy should be to accelerate the region’s advantage in energy-intensive, low-carbon materials and manufacturing. The US has now closed off any possibility that its clean energy industry will be internationally competitive. But other countries do not want to be solely reliant on China either. GCC countries have taken early steps in assembling electric cars and making polysilicon for solar panels, lithium for batteries. Emirates Steel and Emirates Global Aluminium have pioneered low-carbon production of these crucial metals, which could make them more attractive in Europe. Low-cost renewable electricity for AI is another growing area. State-backed firms and sovereign wealth funds are a means of building critical domestic industries, securing overseas supply chains and investing internationally to access strategic technologies. For all its economic weight, the US represents just 13 per cent of global merchandise imports. There is plenty of room for exporters to find other markets. Contrary to the protectionist trend of others, over the past three years, the UAE has signed free trade agreements with countries including India, Indonesia, Turkey, and is now about to begin talks with the EU, a bloc of 27 states. The strategy’s third stage should be based on science, education and research. Scientific excellence is up for grabs. It can also easily be squandered. Before 1940, Germans won 36 Nobel Prizes in science, British 21, Americans 13. From 1940 to 2010, the totals were 23 for Germany, 46 for Britain, 142 for the US. The reason is, of course, the exodus of Jewish scientists and political refugees from Nazi-ruled Germany to the US. It was not so much that these individuals themselves won Nobel Prizes in the post-war period – Albert Einstein, for example, had been awarded his in 1921 – but that they created research schools around them. These were backed by lavish funding from government, business and university endowments. The EU and Canada see the opportunity to secure brilliant minds deterred from living in the new America. China will no doubt be a dominant force in scientific research, and so will India. But the GCC has an opening, too. It has finance, it increasingly offers an excellent lifestyle, and its cultural diversity and easy linguistic compatibility is more welcoming to incomers than China. It avoids the torture that obtaining a student or work visa in the US or Europe has become. Abu Dhabi’s Khalifa University showed in February an impressive line-up of research, including very relevant technologies for the Middle East in desalination, recycling, sustainable farming, underwater drones, battery electrodes, fast electric vehicle chargers, carbon capture, solar thermal, hydrogen electrolysers, and synthetic fuel production, and studies of sea-level rise. Coupling such clusters of research in the UAE, Saudi Arabia and Qatar with capital and entrepreneurship could create the Gulf equivalent of California’s Silicon Valley, the UK’s Cambridge-Oxford corridor, or China’s Shenzhen. The fourth part is to engage on climate . Now that the US, often obstructive, is out of the room, global climate policy may move more quickly. The Gulf needs to ensure that negotiations reduce emissions sharply in a pragmatic way. It should push for fair treatment for technologies that play to its strengths, including carbon capture, hydrogen and synthetic fuels. Tariff decisions can indeed reverse in a minute. But strategic advantages are powerful and enduring in any environment. In trade, industry, science and climate diplomacy, the GCC can craft a distinctive approach, proof against any volatility. Robin M Mills is chief executive of Qamar Energy, and author of The Myth of the Oil Crisis

US policy gaps are allowing Gulf energy to take future leads

Sharp turns on climate policy and global tariffs are opening doors for new entrants to become industry leaders