Economy

Diversifying the Path

Energy trilemma

In the pursuit of a sustainable energy future, policymakers are confronted with the classic trilemma: the need to drive the development of a cleaner energy mix, ensuring reliable and secure supply to meet demand, and enabling an economically viable energy value chain.

Despite being home to the world’s sixth-largest oil and gas reserves, the UAE is at the forefront of global discussions to advance the sustainable energy agenda. The country’s commitment to the Paris Agreement and ongoing engagement with the UN Framework Convention for Climate Change are evidence of the national stance on sustainable energy. At home, this is also underpinned by the UAE Energy Strategy 2050, which outlines national targets to achieve 50% clean energy capacity and decarbonize the power and water sector by 70% over the next 30 years. Notably, there is also USD163 billion in funding allocated for investment in renewable energy by 2050. The realization of this strategy calls for a two-pronged approach: the optimization of traditional energy sources and substantial investment in clean energy.

Moreover, Abu Dhabi has developed a world-class sustainability investment vehicle through the launch of Masdar City in 2008 as one of the world’s first carbon-neutral developments. Since then, Abu Dhabi has prioritized both nuclear and solar as viable clean energy sources. What’s more, the recent commissioning of the 1,177-MW Noor Abu Dhabi project will contribute to the capacity mix and helped Abu Dhabi reach its 7% renewables target for 2020. Furthermore, the new Al-Dhafra solar IPP scheme will cover an area of 20sqkm and surpass Noor Abu Dhabi as the world’s largest single-site solar project. In regards to nuclear, another key milestone is the Barakah Nuclear Plant, which will bring 5.6GW (four units of 1.4GW) of reliable baseload low-carbon nuclear energy to the Abu Dhabi power mix and offset more than 21 million tons of greenhouse emissions per year when fully operational.

Behind concerted efforts to build clean energy capacity are robust policies. The role of the Abu Dhabi Department of Energy (DoE) is to formulate the strategic outlook and supporting policy development in this regard. This covers both the supply and demand dynamics of the energy ecosystem. As such, DoE has outlined an integrated energy policy framework to further this agenda. The framework identifies focus areas and sector coupling opportunities. A central element of this is the “Energy Cube,” an integrated energy model that has been developed in close collaboration and with data support from all energy stakeholders in the government. The Energy Cube provides a visualization of energy supply and demand dynamics under different assumptions to generate scenario outcomes. Overall, it helps to stress test components of the framework’s policy choices; consequently, this aids in the understanding of the interplay across the entire Abu Dhabi energy value chain and aids the decision-making process.

The integrated energy model facilitates DoE’s role in integrating efforts across the government to address the energy trilemma through improved coordination and collaboration. This encompasses supply-side gas, electricity, and water energy carriers with demand-side transport, industry, and buildings elements to assess overall system costs, emissions, and the security of supply measures. In addition, DoE recently launched the Abu Dhabi DSM and Energy Rationalization Strategy 2030, which aims to reduce the Emirate’s electricity consumption by 22% and water consumption by 32% by 2030 (against a 2013 baseline). This strategy is broken down into nine key pillars of focus and policy areas, which, in parallel, will be supported by ongoing improved digitalization and in particular deeper penetration of smart meters and customer-orientated energy use information to encourage behavioral change and more efficient use of resources.

More broadly speaking, Abu Dhabi has long recognized the need to diversify its economy and shift toward renewables and clean energy to sustain its socioeconomic growth. This sustainable development means the Emirate can contribute to the global effort of climate change reduction while also benefiting from the health and social wellbeing factors of a cleaner, more sustainable environment. As such, a more sustainable energy system would create an opportunity for Abu Dhabi to leverage and optimize its natural resources, including solar irradiation, to support non-petroleum-dependent industries, vital for economic growth. In time, all these policies and associated measures will no doubt help shape a sustainable energy future for Abu Dhabi.

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