MIDDLE EAST – Wood Mackenzie’s Middle East Energy Transition Outlook (ETO) report sheds light on the distinct challenges confronting the region, predominantly stemming from its vast reservoirs of oil and gas, resulting in notably suppressed domestic energy prices.
This research series delves into potential trajectories for the Middle East’s energy landscape. Presently, the region heavily leans on hydrocarbons, constituting a staggering 97% of its energy makeup, while renewables are projected to account for a mere 15% by 2050 in the baseline scenario.
Despite this status quo, the report underscores a window of opportunity for the Middle East to emerge as a pivotal figure in the global energy shift.
Nations like Saudi Arabia and the United Arab Emirates aim to take the lead in adopting carbon capture, utilization, and storage (CCUS), along with the adoption of low-emission fuels such as hydrogen, ammonia, and methanol.
Nevertheless, even with these ambitious targets, the report forecasts the region’s emissions to hover around 2 billion tonnes of CO2 by 2050.
The transition towards renewables encounters hurdles, with electric vehicle penetration estimated at a mere 6% by 2050, attributed to policy gaps and the enduringly low cost of gasoline.
Wood Mackenzie’s roadmap to achieving net-zero emissions in the Middle East underscores the imperative to electrify the industrial sector, implement novel technologies, transition 75% of its road transport fleet to electric, and ensure a surge in power demand sourced entirely from decarbonized origins.
Carbon capture methods and nature-based solutions are earmarked as pivotal for reaching this ambitious objective.
The report commendably recognizes the region’s strides in diversifying its economy, with select countries channeling investments into petrochemical production and low-carbon hydrogen.
Policymakers increasingly view renewables as a viable solution, spurred by apprehensions about supply security amid geopolitical tensions.
Despite the inherent challenges, the Middle East remains a prominent figure in the LNG trade, with natural gas projected to play a fundamental role in the energy metamorphosis.
By 2050, a majority of gas-fired power capacity will likely necessitate integration with CCUS technology or adoption of low-carbon fuels, aligning with a grid dominated by renewable energy sources.
Wood Mackenzie’s Middle East Energy Transition Outlook (ETO) report highlights the unique challenges facing the region due to its abundant oil and gas reserves, resulting in remarkably low domestic energy prices.
The report, part of Wood Mackenzie’s research series, explores potential outcomes for the Middle East’s energy sector. Currently, the region relies heavily on hydrocarbons, constituting 97% of its energy mix, with renewables expected to reach just 15% by 2050 in the base case.
Despite this, the report emphasizes the opportunity for the Middle East to become a key player in the global energy transition. Countries like Saudi Arabia and the United Arab Emirates are aiming to lead in carbon capture, utilization, and storage (CCUS), as well as low-emission fuels like hydrogen, ammonia, and methanol.
However, the report notes that despite ambitious targets, the region’s emissions are projected to remain at around 2 billion tonnes of CO2 by 2050. The transition to renewables faces challenges, with electric vehicle penetration expected to reach only 6% by 2050 due to policy gaps and the low cost of petrol.
To achieve net-zero emissions, Wood Mackenzie suggests the Middle East must electrify its industrial sector, deploy new technologies, electrify 75% of its road transport fleet, and ensure increased power demand comes from fully decarbonized sources. Carbon capture and nature-based solutions are highlighted as crucial for achieving this goal.
The report also acknowledges the region’s efforts to diversify its economy, with some countries investing in petrochemical production and low-carbon hydrogen. Policymakers are increasingly considering renewables as a solution, driven by concerns over supply security amid geopolitical conflicts.
Despite challenges, the Middle East remains a major player in the LNG trade, with natural gas expected to play a key role in the energy transition. By 2050, most gas-fired power capacity will likely need to be equipped with CCUS or use low-carbon fuels to support a renewables-heavy power grid.
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