As we recover from the coronavirus pandemic, we have an opportunity to lay the foundations for sound, sustainable and inclusive growth and create employment in the industries of the future. We owe it to future generations to address the urgent and linked challenges of public health, climate change and its impacts, and biodiversity loss. A well-managed energy transition is central to this and it is great to see ADIPEC addressing this critical topic.
In November 2021, the UK will host COP26 and we are driving global ambition on climate change in order to deliver on the Paris Agreement. We are leading from the front as the first industrialised economy to make a legally binding net zero commitment.
As governments in the Middle East start investing in cleaner futures, we are increasingly finding common ground between our industrial and energy strategy priorities and the Vision Strategies of the Gulf. Like that of hydrocarbons, the Gulf has abundant renewable resources. With energy demand rising, the Gulf benefits from regular sunshine with ample space for solar development and falling costs of large-scale solar projects. This, coupled with other significant natural resources such as wind, geothermal and biomass, offers the region the opportunity to dramatically reduce its carbon footprint. The UAE is making impressive progress with ambitious targets set out in its Vision 2021 and Energy Strategy 2050. Saudi Arabia too has set renewable energy targets as part of its Vision 2030 strategy.
These set strong examples and offer opportunities for governments to collaborate and align with the private sector on clean growth.
UK companies are already working with governments and businesses in the region to find common solutions in R&D, capital investment, training and education. The Department for International Trade, based at British Embassies across the Middle East, is busy connecting energy stakeholders in the Gulf with potential partners in the UK to jointly deliver sustainability, ground-breaking technologies and increased efficiency across the energy sector.
The UK was the first major economy to pass laws for net zero carbon emissions – ending our contribution to climate change. Our net zero commitments mean that by 2050, greenhouse gas emissions will have to be avoided completely or balanced with schemes such as planting trees.
The UK is building collective government and industry responsibility to combat climate change, and we see the fossil fuel industry as an ally in the transition. Fossil fuels will continue to play an important role in the global energy mix as we transition to a greener, cleaner future. Excitingly, work is ongoing in the UK to establish a new NetZero Solution Centre that will enable the North Sea to become the first net-zero hydrocarbon basin in the world. The oil and gas sector has many of the essential skills and capabilities in its supply chain to support emerging technologies such as carbon capture and storage, and hydrogen. ADNOC’s target to increase its CCUS programme to capture five million tonnes by 2030 is a good example of this sort of expertise.
Our 2008 Climate Change Act set legally binding emissions targets that provides fi rms with the confidence to invest in the future. We now have world-leading capabilities in areas including offshore wind, smart energy systems, sustainable construction, precision agriculture, green finance and electric vehicle manufacturing. Between 1990 and2017, we reduced our emissions by 42 per cent – the fastest rate in the G7 - whilst growing our economy by 73 per cent.
In 2018, a record 52.8 per cent of UK electricity came from low carbon sources. 2019 saw over3,700 hours of coal free generation, including two continuous weeks without coal. The UK currently has the largest amount of installed offshore wind in the world (a third of global capacity) - 9.8GW, with plans to increase to 14GW capacity by 2023. By 2030, offshore wind will produce more than enough electricity to power every home in the UK, based on current electricity usage, boosting the government’s previous 30GW target to 40GW.
The UAE’s transition to cleaner energy is helping us make the shift to net zero in the UK too. Masdar is leading investment, research and development, and commercialisation of renewables in the UAE, and has made multi-billion pound investments in three off shore wind farms in the UK to supply clean energy to nearly one million homes. It has also invested millions in the UK’s electric vehicle charging infrastructure. These days, one in five zero emission cars sold in Europe is made in the UK. UK law also sets out that by 2040 all new cars sold will be zero emissions. The Government plans to bring this forward to 2035, or earlier if a faster transition is feasible, subject to consultation. We will have invested almost £1.5 billion to support the transition to zero emission vehicles by 2021.
Our 25 Year Environment Plan includes direct action to address the biggest environmental priorities of our age: air quality, nature recovery, and waste and resource efficiency.
Closer collaboration between energy sectors and the UK’s academic and research communities is bringing new technologies to the market – all supported by world-class education, research and technology transfer centres. The UK recently launched a new £40 million Clean Growth Fund, investing alongside the private sector.
This venture capital vehicle will accelerate commercialisation in early stage green businesses. Overseas, the UK is helping developing countries to take climate action with our commitment to double our International Climate Finance contributions to at least £11.6 billion over the next five years. The UK’s International Climate Finance has already supported 57 million people to cope with the effects of climate change and it is critical for delivering on the Paris Agreement that other advanced economies follow suit. The Department for International Trade is helping to drive UK clean growth and strengthen the UK’s competitive advantage by using its promotional trade and investment levers to champion the growth of the UK supply chain, support large businesses to diversify, and drive an export revolution amongst the many SMEs with innovative low carbon goods and services.
The economic prize is clear. Clean growth presents the most significant economic growth opportunity of the 21st century. The cost of renewables and other low carbon technology has fallen far more than anticipated; it is already cheaper to build new renewable energy capacity (including four-hour battery storage) than to continue operating 39 per cent of the world’s existing coal capacity.
Solar and wind are already cheaper than coal power in two thirds of the world – and are predicted to undercut commissioned coal and gas almost everywhere by 2030. Globally, some of the cheapest PV projects financed in the last six months will be able to achieve costs of $23-29/MWh, assuming competitive returns to their equity investors. Those projects are live here in the Gulf as well in Australia, China, and Chile, where they will challenge the existing fleet of fossil fuel power plants.
Solar and/or onshore wind are now the cheapest source of new bulk powering all major economies except Japan. This even includes China and India, where not long ago coal was king, and in the United States, where the shale gas revolution has lowered the costs of gas-fi red power generation.
Solar plants can go up in weeks or months instead of years for big fossil fuel plants or large-scale hydro. Renewable technology is also scalable and therefore affordable and other renewables offer the chance to ‘leapfrog’ grid technology in the same way as mobile phone networks have leapfrogged landline technology.
Clean growth presents a similar, if not greater, economic opportunity. Just as many communities in the global South went direct to mobile phones, so they can go directly from ‘no power’ to renewable power.
Investment in new power generation is expected to be $13.3 trillion before 2050.
Approximately 83 per cent ($11.03 trillion) of this is going to zero-emissions technologies, of which $9.5 trillion is allocated to wind and solar power. The International Renewable Energy Agency in April found that boosting investment in renewables would increase jobs in the sector to 42 million globally by 2050, four times more than today.
Working together, we can develop zero emission solutions faster, increase economies of scale, and bring down costs more quickly. We are committed to working with governments, civil society and industry to accelerate climate ambition in the road to COP26. This will allow all countries to share the opportunities sooner; clean, affordable and secure energy; clean air and water; a more resilient environment; and a safer climate for all countries and communities.
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