“Green economy & Technology in the United Arab Emirates: green light or green paper?”

Carmen Guintrand
Studente Sciences Po Paris

The UAE government is using the green transition as part of its narrative to expand its national, regional and international influence, and to attract expatriates, who now constitute nearly 90% of the population. For a few decades, the House of Nahyan has conducted a diversification of the Emirati economy to transition from an oil-dependent economy to a more sustainable and greener system. From the first oil harbor to a tourism hub, projects like the Dhs 2 billion Dubai Green Project, envisioning a green oasis by 2023, help cities like Dubai survive the decline of fossil fuels. Concurrently, the UAE’s industry is working on its dynamization through large investments in blue hydrogen. Technology is a key instrument to envisage new development prospects and expand the Emirates’ power of attraction. 

However, Emirati green projects are often criticized by climate activists, who denounce them as part of a mere political narrative. In fact, new projects of building “carbon-free” cities, renewables plants and significant greenfield investments – which represent 52% of the inbound FDI in Dubai (Dubai Investment Development Agency, 2021), show that it is likely that the UAE cannot go green without generating growth – while green trends tend to call for degrowth. Thus, to what extent can the UAE economy use technology to move away from its oil-dependent system and develop a greener economy?

Green plans in the UAE are ambitious and forward-thinking. Yet, the means used to implement those projects often undermine the green discourse,

The United Arab Emirates has a long history with hydrocarbons. Oil and gas allowed them to legitimate their state independence and to rapidly develop their economic infrastructure. In 1975, crude oil exports represented 2/3 of the GDP in the UAE. Hence the challenge to transition from what made their success is great.

Apart from the current ecological crisis, the discovery by the United States of its petroleum potential in 2008 and its self-sufficiency since 2020 incentivized the United Arab Emirates to move away from its intensive exploitation of hydrocarbons and develop a greener energy system.

Today, Dubai is a landmark example of this recent economic transition. The “City of Future” puts significant financial means to achieve great ambitions and diversify its economy. Since 2018, oil constitutes less than 1% of Dubai’s GDP. With a dynamic economy and the best public infrastructure in the region, Dubai is now a model for Gulf states, being the Middle East’s top destination for foreign investors.

Nonetheless, Emirati leaders aim to do “whatever it takes” to retain the Emirates’ position as a global energy supplier. The 18-year-old Emirati environmental activist Arushi Madan reported that “Dubai has pledged billions of dirhams to meet its goal of providing 75 percent of its energy from clean energy sources by 2050”. Blue hydrogen is “an essential part of the transformation of [the Emirati] energy industry” (Mestrallet, 2021). Focusing efforts on the development of blue hydrogen is a pioneering strategy when today 98% of hydrogen produced are “gray”, i.e. relying on carbon-intensive methods (HSBC, 2020). Established in January 2021, the Abu Dhabi Hydrogen Alliance intends to put the UAE in a forwarding position in terms of renewables and energy innovation. Electricity converted into hydrogen can boost their exports of large volumes of renewables. Today, the UAE is OPEC’s third largest producer of blue hydrogen. 

However, Greenpeace MENA senior campaigner Ahmed el Droubi seems rather skeptical about such green projects: “I don’t see these moves as a clear change in approach unless they are implemented simultaneously with a clear strategy of divestment from fossil fuels”. Such projects are in fact not grounded on genuine intentions to go green for the planet. Capitalizing on blue hydrogen essentially is an economic strategy. Therefore, the Emirates’ green transition is risky and possibly not sustainable in the long-term, as such projects are not part of a global vision but rather justified by pure economic interests. Hence some paradoxes which we will now examine. 

Short-termism is a hazardous economic, political and environmental strategy. Recently, the International Energy Agency reported that “global oil demand is set to surpass pre-pandemic levels in 2022” to 99.7 million barrels a day. Perhaps the Covid-19 crisis represented the one opportunity for the Emirati to challenge their hydrocarbon consumption and shift their model, which they did not.  Emirati leaders chose the short-term egoistic opportunity of sticking to their risky for the planet hyper-consumption model rather than taking the individual risk to challenge their carbon-intensive habits and seize the urgent environmental opportunity. 

The question of opportunity is key in their green v. carbon debate because the UAE has built its economic model on energy and finance. ADNC’s chief executive revealed in place of the UAE that “we will not leave any opportunity unturned” and insisted that energy transition will need oil to function. Hence the massive onshore oil fields discovered in November 2020 and the government’s plan to reach 5 million b/d by 2030. Indeed, the OEC noticed that after having reduced its local dependence on oil, the Emirates has become the 14th largest importer of refined petroleum in the world – in 2020, it imported $9.15B. 

Yet, Emirati leaders are not the only ones to blame. Their strategy is inscribed in the broader context of competition and search for higher profit, which undermines the possibility to reduce hydrocarbon exports. Arushi Madan is concerned that “with the continued declining in oil price, it is becoming tempting for nations to increase their oil consumption, if this continues then they are already deviating from the promises they made at COP21. If [it is the case], again the producers will produce more and the cascaded reaction leading to increase in carbon emissions and subsequent failure of COP21 targets and promises.” Since they have instituted the global oil dependency, Western states have a major role to play in leading the world’s green transition.

There is definitely a challenge to reconcile technological progress to a greener economy which the UAE illustrates. Emirati leaders have come a long way from their primary oil-dependency to reconsider their fossil fuels consumption, and notable progress has been made to go green. They have not chosen to abandon the energy sector but decided to reform it by relying on an energy mix and investing in renewables like blue hydrogen. It seems that the Emirati have the habit of preferring to generate new innovations rather than renovate or reuse, whereas current ecological trends would like us to degrow – the Masdar City Project is typical of this attitude. Therefore, the narrative of “carbon-neutral growth” is not purely superficial. The Emirati leaders’ main challenge is to be careful to remain pragmatic and reasonable in generating useful innovations and developing technologies for green growth.

French engineer consultant, energy & climate expert Jean-Marc Jancovici advocates with rather brilliant arguments that “between CO2 or GDP, we must choose”. His position belongs to a utopian world where it would be possible to radically revolutionize our capitalist society. But what we wish for sometimes differs from what is possible. Reconciling green and technology is possible under two conditions: significant progress in tech should enable us to reduce our carbon emissions, and tech should not be considered the solution to all our problems – for short trips, always prefer walking or cycling rather than driving for example. A wise argument suggests that we can go green, but not entirely, and that only a balance between humans, their productions of energy and their creation of value is healthy to us.