While public awareness of the dangers of global warming still has a long way to go in the Middle East, it is beginning to be taken increasingly seriously. Recent interest in the promotion of Clean Development Mechanism (CDM) policies is seeing the Gulf take a more development-oriented approach to the problems associated with global warming.
The risks associated with global warming to the broader Middle East are numerous. Some scientists have projected that the concomitant rise in sea levels could mean that by 2050 Egypt’s northern coast, including the ancient city of Alexandria (now the country’s second largest city), will be underwater.
The Gulf is already suffering from the warming of the oceans through a phenomenon known as coral reef bleaching, whereby a rise in sea temperature causes symbiotic algae that live on coral reefs to die, making the coral appear white. Equally, many of the luxury seaside developments now taking root across the Gulf could well fall pray to encroaching sea levels.
But perhaps most significant for the region in the medium-term is that the recent interest in global warming has become a new reason to encourage alternative fuels and a move away from fossil fuels, the Gulf countries’ chief export by far. It has also put pressure on the oil and gas industries in the region to go green and lower the emissions created during extraction. Due to their small populations compared to the amount of carbon dioxide they emit, Qatar, Kuwait, Bahrain and the UAE are among the top five emitters per capita in the world.
Kyoto the center of debate
For the past decade, the Kyoto Protocol has been at the center of the debate over what to do about global warming. Signed in 1997, Kyoto aimed at cutting developed countries’ emissions by 5.2% by 2008-2012. However, it has never really taken off, undermined by the demands of rapidly developing economies like China’s for the energy that drives their growth and by the reluctance of some developed countries, most notably the US (which has pulled out of Kyoto), to impose emissions restrictions on industry that might slow down its economy.
In practice, the Kyoto Protocol provides two main ways to control emissions. The most common thus far is emissions trading, a system whereby companies are given a pollution cap to which they must adhere. Unused pollution credits can be sold on free markets to companies that require them. The EU currently runs the largest operating emissions market, the EU Emission Trading Scheme. To apply this idea to Kyoto, the trading would have to be internationally standardized with one market catering to all countries rather than companies.
The main alternative to emissions trading is articulated in Article 12 of the Kyoto Protocol as the CDM. It calls for developed countries with a commitment to reduce greenhouse gas emissions to invest in emission reduction projects in developing countries instead of upgrading their own system. CDM advocates believe this will achieve the same targets in emission reduction at a lesser cost and have the added bonus of encouraging foreign direct investment (FDI) and technology transfers in the developing world. Some 434 CDM projects have so far been registered worldwide, with India and Brazil the top two advocates of the system.
Gulf countries are now trying to increase their involvement in finding solutions to tackle the challenge of climate change while maintaining economic growth. In September 2006, Saudi Arabia hosted the first International Conference on the Clean Development Mechanism, calling for more CDM projects in the region. Mohammad al-Sabban, a senior economic advisor to the Saudi minister of petroleum, described CDM projects as a win for the investor, a win for the country hosting the project, and a win for the environment.
There is a wide variety of CDM projects Gulf countries could benefit from, ranging from promoting the use of clean technology to the reduction of gas venting and flaring to carbon sinks. Some of these technological innovations could even help hydrocarbon exporters extend the longevity of their reserves by 10-15%.
CDM projects have already taken hold in other Arab countries—for example Egypt’s Zaafarana wind power plant on the Red Sea or Morocco’s Essaouira wind power plant on the Atlantic Ocean. At the Riyadh conference, participants suggested a variety of CDM applications of relevance to GCC countries, such as water desalinization plants powered by renewable energy to oil industry specific projects such as carbon trapping, where carbon dioxide is injected into oil fields rather than released into the atmosphere—which can have the effect of increasing the recoverable reserves of maturing oil fields. Countries in the Gulf have also become more aggressive in accounting for their CO2 emissions, with gas flaring now far less common than in the past, and an improvement in the shut-off valves for flare headers, to ensure minimum leakage into the atmosphere.
CDM helps bottom line
Participants at the Riyadh conference from the financial world noted that CDM projects, with their inherent public benefit, could be compatible with Islamic finance—a factor that could make it easier to raise funds regionally. But one major attraction of CDM, particularly for host Saudi Arabia, is to attract FDI as part of the kingdom’s effort to diversify its economy and encourage the transfer of technology.
Indeed, Saudi Arabia’s keenness to move ahead with CDM projects was striking. Al-Sabban, the conference’s chair, promised proactive implementation of CDM policies; public-private cooperation on projects; the rapid development of a legal and structural framework; the creation of workshops to educate local businesses and incentives to reward leading CDM projects.
Such enthusiasm could go hand-in-hand with many GCC countries’ recent focus on encouraging local research and development, especially considering the very specific needs of these countries. CDM technology is, in many ways, on the leading edge of technological innovation. These companies are beginning to realize that companies on the other side do research, says Dr. Jim Holste, the associate dean for academic affairs at Texas A&M University in Qatar, which specializes in petroleum industry research and teaching. If you simply sit back as a consumer of technology, you’re always behind.
One example of technological innovation Holste gives is the recovery of associate gas—gas dissolves in an oil field. Currently associate gas is flared (burnt) which is wasteful and not good for the environment, he said. Synfuels—a Dallas, Texas, based company—has been developing new methods to recover these gases and convert them to liquid fuel (GTL) with a much leaner installation than ordinary GTL facilities. There have been discussions between Synfuels and Kuwait and Qatar about implementing the new technology. It has the ability to be profitable on a much lower scale, Holste says.
CDM, then, could kill two birds with one stone: help GCC countries do their bit against global warming and encourage research that can give a longer lease of life to ageing oil fields.
