What can hydrocarbon firms do to accelerate the energy transition?

The UAE has a proud heritage of providing energy to the world. This has helped to build the foundations for growth and development, and continues to be a vital pillar of the economy. But one of the biggest transitions the country has seen in recent years stems from its stated ambition to move from a leading hydrocarbons producer to a leader in the energy transition. The National Climate Change Plan provides the roadmap to get there, with Dh600 billion ($163.5bn) set to be invested in clean and renewable energy over the next three decades. The Net Zero by 2050 pledge also makes the Emirates the first nation in the region to commit to net zero. And hosting the UN Climate Change Conference in the UAE next year will add further momentum. For us, as an international energy company with operations in 11 countries, we are on the front line of this change, and like our fellow Abu Dhabi utility and energy companies, share the collective vision. But how can a hydrocarbon business play a role in the energy transition and even help accelerate the change? The starting point is to make the case that energy companies have a vital role to play. Take natural gas, for instance. It’s essential in providing a bridge to a lower carbon future, with roughly 50 per cent lower carbon emissions than coal for power generation. It’s also abundant and a network of infrastructure exists to ensure it can reach communities safely and efficiently. In regions like South-East Asia, with its young and dynamic demographics, the projections are for single-digit increases in gas demand for at least the next decade. This is enabling growth and development for communities and we are proud to be playing our part, having recently started production at our flagship gas project, Pegaga, in Malaysia – the culmination of 10 years of development and more than $1 billion in capital expenditure. Gas has to be part of the solution. That’s why we have committed to expanding our position across the gas value chain and now have a 70 per cent gas-biased portfolio. But while gas has an important role to play in the transition, it’s only one part of the equation. I believe there are three key pillars that the oil and gas industry must focus on. First, we must be clear about our intent. This is why Mubadala Petroleum has become Mubadala Energy. This new brand isn’t just about a new lick of paint. It’s about reflecting our new corporate strategy – rooted in playing our part in the energy transition by expanding across the gas value chain and into new energy sectors such as blue hydrogen and carbon capture. This won’t be easy. It is a competitive landscape with a number of energy companies coalescing around similar strategies. But we have a unique footprint to start building momentum in this space, while also investing to decarbonise our business. I believe it is important to signal this change to accelerate progress, and our new brand aims to do just that. Second is the primacy of technology. In areas like blue hydrogen, we’re not there yet. Only by nurturing innovation and putting robust, long-term policy incentives in place, can we get there. This applies across the spectrum; from production to power-system integration and into ways of decarbonising operations. Finally, it’s important that we approach these challenges in a spirit of partnership. No one has all the answers, and many projects are still in the pilot stage. But by partnering, we can build knowledge and experience, while also having greater confidence in the investment case by sharing risk. We have seen this in the UAE with a range of major players in the space coming together to create new champions in nascent areas of the energy ecosystem. And as Mubadala Energy, we see collaboration as central to our new strategy, which is why we are working with a number of our partners on energy transition initiatives. The transition is real and happening now. It is not uniform, and in different regions we will see many different transitions as we balance the need for reliable and safe energy for communities, with the pressing priorities of sustainability. As Mubadala Energy embarks on its next chapter, I am confident that this balance can be struck. Moreover, while there is a long way to go, accelerating the transition is not an option; it’s a must.