This publication serves as the first in-depth DMCC thought leadership report on the global and regional energy sector. Against a backdrop of the world's biggest climate gathering of COP28 in Dubai, this report evaluates the MENA region's competitive advantages in the dynamic energy landscape and energy transition. The report also explores the market trends and prices, oil and gas movements and the rise of low-carbon and renewable energy technology.
With the volatility in the oil market, the norm of $60-$70 per barrel is being replaced. Despite present uncertainties, the future confidently points to $80+ per barrel, given a strong oil demand and a limited supply pipeline.
Investments in hydrogen and low-carbon fuels and gases soared to a substantial $27 billion, reflecting the growing interest in these cutting-edge solutions. The field of carbon capture and storage (CCS) and carbon removal also attracted investments totalling $11 billion, underlining the increasing importance of carbon management strategies in the global energy landscape.
The hydrogen sector has captured significant attention, with projections indicating a varied picture for clean hydrogen usage by 2050. Estimates range from 45 million tonnes per year to 450 million tonnes. Energy Intelligence suggests a promising decline in the cost of hydrogen (LCOH) by 2030. As we navigate this decade, the emphasis will be on projects with clear local demand, reflecting a pragmatic approach to hydrogen's role in the global energy transition.
Ahead of COP28, the UAE National Energy Strategy unveiled its updated energy strategy, aiming to triple its renewable energy contribution in seven years, with an investment of up to $54 billion. The strategy outlines new emissions reduction goals where a portion will come from revised power mix targets, which sees an enduring role for natural gas with substantial growth in renewables by 2050.
The National Hydrogen Strategy 2050 is aligned with the We the UAE 2031 vision. It contains targets like a 25% reduction in emissions in “hard to abate” sectors, production of 1.4 million tonnes of hydrogen per year, and the launch of an extensive hydrogen R&D centre.
In a world of uncertainty, the energy transition pathway can realise various outcomes. DMCC’s exploration of the energy transition trajectory identified four main pathways:
Firms should develop an awareness of how the shifting geopolitical and geoeconomic landscape impacts traditional energy supply chains. To mitigate risks, firms should undertake supply chain audits and critical assessments to better manage their supply chains. This includes reshoring efforts for industrial operations.Learn More
The energy sector should prepare for regulatory volatility due to political upheaval and changing national strategies and policies towards energy consumption. The diverse and volatile landscape of energy policies worldwide means firms should brace for sudden shifts in regulations in the energy sector.Learn More
Uncertainty should be minimised by firms by avoiding the adoption of a single “house view” and considering a range of perspectives on potential market outcomes that better prepare and insulate against unexpected developments, especially in periods of elevated volatility.Learn More
Maintain a transparent investment climate from all stakeholders in the energy sector to attract capital and ensure sustainable energy development. This includes stable national energy policies, streamlined processes facilitating ease of investment, and more access to relevant data such as energy demand forecasts in key markets.Learn More
Access to conventional energy supplies is essential to maintain energy security and a smooth transition to cleaner energy sources. Governments should also maintain a diverse energy portfolio to provide resilience against supply disruptions and fluctuations in renewable energy generation.Learn More
Public-private partnerships should be encouraged as they play a key role in fostering innovation. In the Middle East, strategic partnerships with local players like NOCs are key to establishing market credibility and facilitating the transfer of advanced energy technologies. Local content regulations will make firms who choose greater localisation better positioned.Learn More