Energy This Week: What does Trump mean for oil & climate? Cop29 "make or break" - again, & AI "cleaner, cheaper, better, faster"
Oil down on Opec demand cuts
Donald Trump’s election as US president poses several crucial energy and climate questions. He is expected to tighten sanctions on Iran and Venezuela, probably driving up oil prices. On the other hand, his pro-oil agenda at home would be supportive of domestic production.
Oil prices gained last week but dropped on Friday. Brent crude closed at $73.87 per barrel, then slumped by a further $2 per barrel on Monday before staying flat on Tuesday. US production was crimped by Hurricane Rafael, currently moving through the Gulf of Mexico. The market is digesting the contrary impacts of some of Mr Trump’s proposed policies.
Opec reduced its demand forecast for this year and next, for the fourth month in succession, with cuts to expectations for China and other Asian countries. Its forecasts remain well above those of the International Energy Agency, with Opec seeing 1.8 million barrels per day of demand growth this year and 1.5 million bpd next, contrasting with 0.9 million bpd and 1 million bpd respectively from the IEA.
Cop29 opens under shadow of Trump election
The Cop29 climate talks in Azerbaijan’s capital of Baku opened on Monday. UAE President Sheikh Mohamed made a working visit to the event. Cop28 President Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc, passed the baton to his successor Mukhtar Babayev, Azerbaijan’s Minister for Ecology and Natural Resources.
But other high-profile global politicians are absent, including German chancellor Olaf Scholz, outgoing US president Joe Biden and incomer Donald Trump. Climate experts see Mr Trump’s election as negative for action, given that he withdrew from the Paris Agreement when last in office. Mr Biden’s team is still trying to salvage whatever environmental achievements they can, and to raise hopes that Mr Trump will retain some climate-friendly policies that benefit Republican states or oil companies.
Several leaders face difficult political struggles at home, and backlash against “net-zero” policies. Britain’s Prime Minister Keir Starmer, attending Cop as premier for the first time, and Italy’s Prime Minister Giorgia Meloni, are the two main exceptions.
Climate talks need to decide on new finance and carbon credit rules
Key items on the agenda include a new financial plan to replace the promised $100 billion for developing countries, and to establish rules for international carbon markets.
The event is “make-or-break”, says the director general of the Abu Dhabi-based International Renewable Energy Agency, Francesco La Camera. The UAE released a new nationally-determined contribution, laying out its plans to reduce greenhouse gas emissions by 47 per cent by 2035 compared to 2019.
On the first day, delegates provisionally concurred on standards for carbon credits, but there were several delays as wrangling went on over the agenda. Separately, Saudi Arabia has launched a voluntary carbon market exchange platform, which intended to auction more than 2.5 million tonnes of “high-quality” credits on Tuesday.
Ambitions for climate finance float around the $1 trillion level, with UN climate officials suggesting that $890 billion is needed next year, rising to $1.5 trillion by 2029. The Arab Group suggests a figure of $441 billion annually, raised to $1 trillion by attracting private finance, in the form of grants or concessionary loans.
Protesters for Palestine campaigned at Cop29, saying, “This is the same fight. This is a fight about humanity” and pointing to the environmental damage and “ecocide” caused by Israeli military operations. Religious leaders meeting in Baku the week before Cop29 advocated spiritual and ethical reform and care for nature.
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Famous Indian yogi Sadhguru spoke up for small farmers, the importance of soil and its ability to sequester carbon. Feeding humanity in a warming world requires a holistic approach to climate-smart agriculture, writes Amna Al Dahak, the UAE’s Minister of Climate Change and the Environment.
Hottest year on record as warming climate brings more floods
This year is almost certain to be the warmest on record, with October the 15th month out of 16 in which global temperatures exceeded the limit of 1.5°C above pre-industrial levels. Rainfall in the UAE is likely to increase by 20 to 30 per cent because of climate change, says the National Centre of Meteorology. A special committee has developed plans to deal with a repeat of April’s record floods.
AI promises more and better energy and food – if done right
The massive annual Adipec conference in Abu Dhabi last week focused on artificial intelligence. Used well, AI can meet the energy business’s need to be “cleaner, cheaper, better, faster”, but it needs to be melded with complex human nature, political and social systems. AI can accelerate and scale climate solutions across the Middle East, says Shaikha Salem Al Dhaheri, secretary general of the Environment Agency Abu Dhabi. UAE-based Hodler Investments seeks to use wasted energy to power data centres in Ethiopia.
East Med pipeline struggles with political and environmental hurdles
Plans for an ambitious $7 billion gas pipeline from the East Mediterranean waters of Israel and Cyprus to Greece and the rest of Europe face barriers of finance, climate agendas and geopolitics. The gas link would help diversify Europe’s supplies away from Russia and unlock more gas development in the sea. But Israel’s wars and Turkey’s opposition to routes not involving it and the Turkish-supported Republic of Northern Cyprus are obstacles. Mr Trump’s first administration backed the pipeline, but on return to office, he is more likely to support US liquefied natural gas exports to Europe.
Iraq’s long-running oil dispute may have moved a step closer to resolution, with the federal Cabinet approving plans to allow companies operating in the semi-autonomous Kurdish region to receive compensation for their costs of producing and transporting oil. This could lead to a restart of the important Iraq-Turkey pipeline. Advance payments will initially be made at a rate of $16 per barrel.
Adnoc moves gas plans ahead
Adnoc has progressed its new Ruwais liquefied natural gas project by signing a 15-year deal to sell LNG to Germany’s Securing Energy For Europe. Adnoc Gas plans to spend up to $15 billion between 2025 and 2029 to meet rising domestic demand. It expects to pay up to $5 billion to acquire a 60 per cent stake in Ruwais LNG from its parent, Adnoc. Austrian energy company OMV has no Russian LNG in its contracts, its chief executive told The National in an interview in Abu Dhabi, though Austria still buys Russian gas delivered by pipeline.
Adnoc’s shipping arm, Adnoc L&S, expanded its fleet by signing contracts worth $4.4 billion to build 23 tankers for ethane, ammonia and LNG with Chinese and South Korean shipyards. National Marine Dredging Company plans to make an acquisition in the Gulf region by year-end. NMDC is listed on the Abu Dhabi Securities Exchange. NMDC is performing marine dredging works at Ruwais LNG and working on an extension of Adnoc Gas’s pipeline in the Northern Emirates.
Fertiglobe confident Texan blue ammonia project can advance despite Trump
Despite Mr Trump’s return to the presidency, the chief executive of Fertiglobe, Adnoc’s fertiliser subsidiary, is still confident that its low-carbon ammonia project in Texas will secure the tax credits it needs to go ahead. Indian firm Avaada Group is exploring setting up a green hydrogen and ammonia facility in the UAE, with capacity up to one million tonnes per year.
Russia’s hostility to Europe has claimed another energy victim. Sweden cancelled a major wind-farm project in the Baltic Sea, over concerns that the turbines could confuse radar used to detect incoming Russian missiles.
Electric aircraft appear a promising option for short-range low-carbon flight, but Rolls-Royce has ended its efforts in electric air-taxis.