The UAE’s Ambivalent Strategy: Between Oil Security And Green Transition

Beatrice Ala

From November 30 to December 12, the United Arab Emirates (UAE) hosted in Abu Dhabi the 28th edition of the UN-sponsored Conference of the Parties (COP28), the largest global conference on climate change. Following last year’s COP27, held in Egypt’s Sharm el-Sheikh, this year’s conference further highlights the peculiar -if not ambiguous- ways in which this region deals with the energy transition.

DUBAI, UNITED ARAB EMIRATES – DECEMBER 13: Delegates applaud after a speech by Sultan Ahmed Al Jaber (3L), President of the UNFCCC COP28 Climate Conference, during a plenary session on day thirteen of the UNFCCC COP28 Climate Conference on December 13, 2023 in Dubai, United Arab Emirates. (Photo by Fadel Dawod/Getty Images)

Officially, the aim of the COPs is to unify the Parties’ efforts to achieve the goals of the Paris Agreement: to limit warming well below 2°C, preferably to 1.5°C, and to zero global net carbon dioxide emissions by 2050. However, a rapid and compact transition to renewable sources of energy, in addition to still being a long way off, would be counterproductive for big oil companies, which are instead pushing for a holistic model that includes the continued and sensible use of fossil fuels.
The last COP27 had concluded without decisive results or new commitments on climate change mitigation. In particular, there was no decisive new measure to ensure that global warming is limited to 1.5°C, and there was no joint declaration in the outcome document to phase out all fossil fuels.

This year’s COP28 thus set off without too many expectations regarding the realization of decisive agreements. Weighing most heavily were the assumed conflicts of interest involving the COP President, Emirati politician Sultan Ahmed Al Jaber. Al Jaber, in fact, is the UAE’s Minister of Industry and Advanced Technologies, He assumes leadership positions in two pivotal companies within the UAE’s energy sector: on one hand, the Abu Dhabi National Oil Company (ADNOC), the state-owned oil company, and on the other hand Masdar, one of the largest Emirati renewable energy companies, involved in green projects in 40 countries.
Regarding the COP, the Emirates thus adopted an ambivalent strategy, presenting itself as an interested and active stakeholder in the fight against climate change, yet endorsing more cautious positions presented by actors with major oil interests.

The compromise between the demands of actors aiming towards a more forceful implementation of renewables and the interests of big oil companies is clearly visible in the outcome of the negotiations for the Global Stocktake, the final document: the Parties finally agreed to a vague “transitioning away,” mitigating what was meant to be a firm call to “phase out” from fossil fuels.
Although the agreement in terminology may seem minor, it’s the details contained in prominent statements such as the Global Stocktake that actually express the policies announced by the actors and the stated course of action.
According to the declarations, the Parties’ commitment would go towards an energy transition to clean sources and the abatement of emissions; how this is implemented, however, is left to each actor, and the management of the transition becomes, from this perspective, extremely pragmatic.
Fossil fuels, constituting 80 percent of global energy production, still have a fundamental centrality, and oil companies have every interest in pursuing a transition that contemplates all useful energy sources. Moreover, fossil sources are still the mainstay of global energy security, especially in the aftermath of the global energy crisis triggered by the Russian-Ukrainian conflict.

While pressure from oil industry stakeholders in the outcome document ensured that an overly strong stance for the elimination of fossil fuels was avoided, this year’s COP did produce some diplomatic successes.
First, COP28 opened on the first day with the signing of the agreement that makes operational the Loss and Damage Fund, designed to economically assist developing countries that suffer extensive damage from the adverse effects of extreme climate change. For their part, the UAE announced their commitment to contribute $100 million to the Fund, inaugurating the funding process.
In addition, one of the most significant decisions was the signing of the Oil and Gas Decarbonization Charter by 50 companies, representing more than 40 percent of the world’s oil production. By signing the document, major oil and gas producers, including ADNOC, Saudi Aramco, ExxonMobil, and Shell, committed to align with net zero emissions targets by 2050 and zero methane emissions by 2030.

DUBAI, UNITED ARAB EMIRATES – DECEMBER 13: Sultan Ahmed Al Jaber, President of the UNFCCC COP28 Climate Conference, speaks during a plenary session on day thirteen of the UNFCCC COP28 Climate Conference on December 13, 2023 in Dubai, United Arab Emirates. The COP28 has brought together stakeholders, including international heads of state and other leaders, scientists, environmentalists, indigenous peoples representatives, activists and others to discuss and agree on the implementation of global measures towards mitigating the effects of climate change. (Photo by Fadel Dawod/Getty Images)

The COP28 is the crowning achievement for the UAE in its latest efforts to establish itself as an indispensable player and strategic interlocutor at the regional and international levels. The Emirati leadership has indeed made significant progress in using its wealth to diversify its economy and secure an energy leadership position in the post-fossil fuel era.
In particular, the pivot role that Abu Dhabi intends to assume makes use of soft power, projecting its leadership abroad mainly in the trade, energy and technology sectors.
Regionally, the UAE can indeed project itself as a pioneer of transition in the Gulf, and energy soft power plays a great role in establishing Emirati leadership in the area. This is a strategy that has already been announced at the national level: in 2017, the Emirates launched the Energy Strategy 2050, which aims to triple the contribution of renewable energy to 50 percent by 2050, invest up to US$54 billion in the sector by 2030, and reduce the carbon footprint of electricity generation by 70 percent by targeting 44 percent renewables.

At the diplomatic level, Abu Dhabi can actually boast that it was the first country in the region to ratify the Paris Accords, making a declared commitment to economy-wide emission reductions and announcing a strategy of zero emissions in 2050.

On the international level, the United Arab Emirates are instead consolidating their economic interests by leveraging the oil sector. The world’s economic and trade pivot is definitely shifting toward the East; evidence of the UAE’s strategic interest in the eastern axis is, at the diplomatic level, its entry into the BRICS, which is mirrored by a marked increase in bilateral trade with China and Russia. In this perspective, the oil sector is of paramount importance, ensuring the security of trade and presenting the UAE as a reliable partner.
According to official statements following the latest UAE-China meeting regarding new investments in trade, transportation and technology, the UAE is China’s first trading partner in the Arab and GCC countries as of 2021. Conversely, China is the UAE’s third largest global trading partner: the value of non-oil trade between the two countries grew by 18 percent in 2022 compared to the previous year (US$72 billion), and Foreign Direct Investment trade between the two countries amounted to US$12 billion in early 2021.

On the other hand, the rift between Russia and the West in the wake of the Russian-Ukrainian conflict did not shake the relationship between Moscow and Abu Dhabi, which instead reshaped and evolved, bringing benefits to both sides. Indeed, bilateral trade between the UAE and Russia reached $9 billion in 2022, increasing by 68 percent from the previous year. Moreover, despite the sanctions imposed by the Western axis on Russia, the UAE has used its neutrality in the political arena to harness all the economic soft power that comes from oil trade: the UAE has emerged as a crucial hub for the storage and re-export of Russian oil, and has more than tripled oil imports from Russia, reaching a record 60 million barrels in 2022.

ABU DHABI, UNITED ARAB EMIRATES – OCTOBER 02: The Minister of Industry and Advanced Technology of the United Arab Emirates and COP28 President-Designate, Sultan Al Jaber speaks during the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi, United Arab Emirates on October 02, 2023. Many companies operating in the field of oil, energy and gas production from different countries attended the exhibition. (Photo by Waleed Zein/Anadolu Agency via Getty Images)

In conclusion, the Emirates’ strategy is highly ambivalent, and mirrors a regional reality that is solidly tied to the oil trade but intends to repurpose itself as a global hub for new energy sources for the transition.
This year’s COP saw for the first time an international agreement in which signatories declared themselves in favor of transitioning away from fossil fuels. From the Emirati perspective, this is certainly a diplomatic victory that confirms its versatility and credibility in handling high-impact issues such as the energy transition. On one hand, Abu Dhabi’s interests remain firmly tied to the oil sector, which allows the Emirates to present itself internationally as a necessary energy partner for major states such as China and Russia. On the other hand, diplomatic engagement, substantial funding in renewables and sustainable projects confirm the UAE as a pivot actor in the energy transition in the region and beyond.

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The UAE’s Ambivalent St…

by Beatrice Ala time to read: 6 min