The UAE’s decision to name the CEO of state oil company Adnoc, Sultan Ahmed al-Jaber, as president of the Cop28 climate change summit in Dubai later this year generated predictable criticism from many quarters. However, the firm and its state owner are doubling down on the argument that one of the world’s largest oil producers can also be a pioneer of decarbonisation and clean energy.

Jaber’s appointment to the Cop28 role—a choice less jarring when considering his eight years as the UAE’s special envoy for climate change—is symptomatic of Abu Dhabi’s contention that the world will continue to need its cheap-to-extract oil for decades, despite accelerating decarbonisation. The state’s focus is on reducing the environmental impact of its production, with Adnoc’s own target being to cut the greenhouse gas emissions-intensity of its operations by 25pc from a 2018 baseline by 2030.

The company has taken significant steps in this direction over the past six months, focused mainly on shrinking the carbon footprint of its vast electricity consumption. In September, an international consortium won a $3.8bn contract to install a subsea cable providing grid, rather than generator-produced, power to its offshore operations. And in October, it signed an offtake agreement with utility the Emirates Water and Electricity Company to receive up to 100pc of its grid power requirements from renewables and nuclear by end-decade.

Stepping up

In January, the emirate signalled its intention to step up a gear—especially on carbon capture—by announcing a planned $15bn allocation to an array of “low-carbon solutions”, although the sum is equivalent to only a tenth of Adnoc’s capital budget over the next five years. The firm frequently touts its completion of the world’s first commercial-scale CCUS project in 2016 as evidence of its longstanding commitment to decarbonisation—despite the motivation lying more in the desire to replace scarce natural gas with CO₂ for oilfield reinjection. But beyond a stated aim to increase CCUS capacity fivefold, to 5mn t/yr by 2030, Adnoc had given little concrete indication of its next moves.

100GW – Masdar target for global renewables capacity by 2030

However, it announced in mid-January a partnership with UAE state-owned clean energy developer Masdar and Emirati developer Fujairah Natural Resources to pilot a technology that mineralises captured CO₂, followed by notice of a project to sequester 18,000t/yr of CO₂ from fertiliser subsidiary Fertiglobe’s operations for injection into the emirate’s onshore carbonate aquifers.

Fertiglobe, part-owned by Dutch chemical company OCI, is important in Abu Dhabi’s wider plans to weather profitably the energy transition by dint of its production of ammonia, a key potential carrier of low-carbon hydrogen, which the UAE has declared ambitions to become one of the world’s leading producers of by end-decade. Also in January, Fertiglobe, Japan’s Mitsui and South Korea’s GS Energy signed a shareholders’ agreement with Ta’ziz, the state-owned vehicle overseeing the development of a chemicals cluster at Ruwais in western Abu Dhabi, on a project first conceived in 2021 to develop a 1mn t/yr blue ammonia plant at the nascent hub.

As global interest in low-carbon hydrogen as a major tool for decarbonisation grew in 2021, Adnoc initially focused on Japan and South Korea as potential buyers of its planned blue hydrogen production—reflecting the resource-poor nations’ early assignment to the fuel of a core role in their emissions-reduction strategies, as well as deep existing energy relationships with Abu Dhabi.

European demand

Incipient tie-ups with Europe have emerged over the past year as the continent has accelerated its plans to deploy hydrogen at-scale. In September, the Emirati oil giant sent its first blue ammonia test cargo to a German copper producer.  

However, the EU’s main interest is in green rather than blue hydrogen. Masdar, which aims to operate 100GW of renewables generation capacity worldwide by 2030, is spearheading the emirate’s global investments in the sector, buoyed recently by a capital injection from Adnoc, which acquired a 43pc stake in its green hydrogen business in late 2022.

Abu Dhabi has two renewables-based hydrogen projects in the early stages of development at its Kizad industrial zone, including a 200MW facility planned by Masdar, Fertiglobe and France’s Engie. In December, Masdar’s plans to develop a major green hydrogen project in Abu Dhabi with German gas company Uniper were confirmed. And in January, Masdar signed a memorandum of understanding (MoU) with Dutch companies Port of Amsterdam, SkyNRG, Evos Amsterdam and Zenith Energy Terminals to collaborate on the development of a green hydrogen supply chain from the Gulf state to the Netherlands, for deployment especially in sustainable aviation fuel, bunkering and steelmaking.

The emirate’s burgeoning hydrogen links with northern Europe were further expanded two days later, when Adnoc signed an MoU with Germany’s Thyssenkrupp to “to create new markets for hydrogen and promote global clean energy value chains”—specifically to cooperate on the development of commercial-scale ammonia-cracking plants for extracting the hydrogen after transportation. The pact was unveiled at Abu Dhabi Sustainability Week—an event providing another reminder of the emirate’s insistence that it is part of the solution to rather than the problem.

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Author: Clare Dunkley