Gulf States’ Decarbonization Efforts and Where Japan Can Contribute: Support Mechanisms

2 February 2024

Japanese version: 1 November 2023

Takashi Endo
General Manager, Middle East Regional Office

Takeaways

UAE’s hosting of COP28 marks Gulf States’ rise as key players in global decarbonization
Gulf States are keen on green investing but Japan lags behind the West in ways that it is contributing to implementation in the region
Japan can play a bigger part by providing mechanisms to utilize emissions credits and coordinate efforts with ASEAN countries

Gulf States’ potential for helping advance decarbonization

I’ve been serving as the first general manager of the Mitsubishi Research Institute’s Middle East Regional Office in Dubai, United Arab Emirates (UAE), since March 2021. Though outside temperatures reach dangerous levels for about half the year, inside the air conditioning keeps them shiver-inducingly low. This kind of energy-intensive lifestyle will be untenable once decarbonization renders petroleum and natural gas products inviable.

Meanwhile, net-zero worldwide carbon emissions by 2050* will require expanding use of carbon capture and storage (CCS) to deal with carbon dioxide (CO₂) and next-generation means for storing energy like ammonia and hydrogen. This is just as important^† as transitioning to renewables and conserving energy. The Middle East is full of oil and gas fields that are a good fit for CCS, and there is plentiful land just right for the solar farms needed to produce low-carbon hydrogen.

The Middle East also has sovereign wealth funds (SWFs) with great records in asset management to do the capital investments^‡ needed to pull off the energy transition.

*Reducing net green-house gas emissions to zero. Synonymous with carbon neutral

†According to the International Energy Agency (IEA), to achieve net-zero emissions by 2050 the world will have to increase low-carbon hydrogen production capacity 420 times and CCS 134 times their 2022 levels

‡The IEA says that between $80 billion and $100 billion worth of clean-energy investment will be needed in newly industrializing and developing countries by the beginning of the 2030s

Japan lags behind the West in contribution to decarbonization work in the region

Hosting COP28 in November–December 2023, UAE is poised to lead climate diplomacy, outlining a “pathway for practical, realistic, economically viable energy transition.”¹ Masdar, a state-owned clean-energy investor set up by the UAE in 2006, has already invested some $14.3 billion in clean energy projects in over 30 countries worldwide.

But Japan needs to catch up as the Gulf States often implement their policies and technology in partnership with Western countries. For example, the UAE government published its hydrogen strategy in July 2023, in which it declares that it will produce 15 million tons of hydrogen, or 3.5% of global demand, by 2050. This strategy was developed with the help of a German research institute through a bilateral cooperation framework with the German government.

Japan should propose new mechanisms to guide the Gulf States forward

Japan’s relations with the Gulf States have traditionally been defined by “resource diplomacy” designed to give it stable access to the region’s oil. But during his July 2023 tour of the Middle-East, Prime Minister Fumio Kishida promised assistance to help them transition to becoming a global green energy hub. What we now need to do is push rapidly ahead with building substantive mechanisms to link intergovernmental visions with projects undertaken by the private sector.

I have a suggestion for how this could be done.

The cooperative approaches permitted by Article 6.2 of the Paris Agreement allow countries to include CO₂ reductions achieved abroad in their own reduction target achievements. Having been signed with 27 countries, the Joint Crediting Mechanism (JCM), the bilateral carbon crediting scheme Japan leads, is both the largest and most successful of these cooperative approaches. Among the Gulf States, two have signed on: Saudi Arabia in 2015 and UAE in 2023.

JCM’s organic development could be advanced by linking up with ASEAN countries as well as the Gulf States. For example, we could use Japanese companies’ technology to implement co-combustion using ammonia to reduce CO₂ emissions at coal-burning power plants in Thailand funded with investments from UAE’s and other states’ SWFs.

Leveraging JCM in this way would allow Japan and Thailand to split the carbon credits for the resulting CO₂ reduction in Thailand, and UAE to gain the opportunity to develop an investment destination and as well as demand for clean ammonia fuel.

On the heels of COP28, Mitsubishi Research Institute, too, will continue to support instantiations of mechanisms like this.

Works Cited

1Emirates News Agency (2022) “UAE Special Envoy for Climate outlines pathway for practical, realistic, economically viable energy transition”
https://wam.ae/en/details/1395303085899