Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Asia House’s Celine Madaghjian analyses the recent developments in Gulf-Asia Cooperation at COP28.
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Key takeaways
Introduction
The COP28 conference marked a significant step forward in fostering Gulf-Asia strategic collaboration in sustainability and beyond. The UAE’s ambitious climate pledges and financial contributions alongside those made by Asian countries such as South Korea and Japan pave the way for joint renewable energy projects. COP28 also facilitated sideline discussions on expanding cooperation in other sectors such as trade and investment. Overall, the conference highlighted a shift towards an approach that integrates traditional energy reliance with technological investments in renewable energy.
UAE leads with major pledges at COP28 amid varied global participation
The UAE made significant pledges and financial contributions during COP28, including the US$30 billion towards climate-related projects – US$5bn of which is for less developed countries. The UAE also pledged US$100mn to a newly created ‘loss and damage fund’ to aid developing countries that contribute the least to climate change but are the most vulnerable to its impact. Furthermore, the UAE delegation announced that Abu Dhabi is set to host the Global Climate Finance Centre in collaboration with financial institutions and organisations such as the World Bank, HSBC, BlackRock, and Ninety-One. The research hub aims to identify and address obstacles in funding low-carbon initiatives, and advance financial solutions to climate change.
The UAE spearheaded initiatives during COP28 that have been widely supported by Asian nations, which can in turn underpin greater collaboration on sustainability. Japan has pledged US$10mn to the ‘loss and damage fund,’ and a new pact to rapidly install worldwide renewable infrastructure by 2030 proposed in part by the UAE has been widely supported by South Korea, Japan, Malaysia and Bangladesh. In addition, 117 nations including the UAE, Japan and South Korea have promised to triple their renewable energy capacity by 2030.
Saudi Arabia clarified its stance against the phasing out of fossil fuels throughout COP28 and was less active in the negotiation process. Crown Prince Mohammad bin Salman missed his scheduled opening COP28 speech, and the Energy Minister Prince Abdulaziz bin Salman missed his UN plenary session. The latter also stated that the Kingdom was against any phase down and phase out of fossil fuels . This stance is attributed to Saudi Arabia’s desire to protect its oil and gas industry and its view that Carbon Capture, Utilisation and Storage offers technological solutions to maintaining the fossil fuel industry. It made no new climate commitments during COP28 but did host its Saudi Green Initiative on the sidelines to show evidence of recent steps towards its climate commitments.
Greater GCC-Asia Collaboration at COP28
UAE-led global pledges will drive greater Gulf-Asia sustainability collaboration as both sides mobilise investment, manufacturing capacity, and technology to achieve these goals. For instance, China is the world’s largest solar panel manufacturer, and the Gulf produces the world’s cheapest electricity from solar panels. Enhanced renewable pledges could drive Gulf-China cooperation in this industry.
COP28 also provided a key forum for sideline deals. UAE national renewable energy company Masdar has partnered with Indonesia’s state-owned electric power company PLN to expand the Cirata floating solar plant in West Java from its renewable energy production capacity of 145MW to 500MW. The agreement builds on existing UAE investment and increases the plant’s ability to power 50,000 homes and reduce 214,000 tonnes of annual carbon emissions. Representatives of the firms also discussed potential green hydrogen projects that could decarbonise steelmaking and transportation industries in Indonesia.
Masdar and the Malaysian Investment Development Authority (MIDA) agreed to establish an implementation roadmap to develop up to 10GW of clean energy projects in Malaysia, building on Masdar’s US$8bn investment made in October. These include a variety of solar, wind, and battery energy storage systems. Masdar also concluded five deals with Malaysian energy and technology firms that can unlock up to 8GW of renewable energy in Malaysia. Among these is a 2GW solar project development with Citaglobal Berhad and Tiza Global; a 2GW wind project with Tadau Energy and PSK; and a 1GW solar photovoltaic power project in collaboration with Malakoff. COP28 has therefore been a space for Gulf and Asian states to spearhead existing deals and develop them further, encouraging greater Gulf-Asia collaboration in the renewable energy sector.
COP28 also saw several UAE-Asia bilateral meetings that enhance cooperation in sectors other than sustainability. The UAE’s Minister of State for Foreign Trade Dr. Thani bin Ahmed Al Zeyoudi and the Philippines’ Secretary of Trade and Industry Alfredo Pascual agreed to a negotiation scope for a Comprehensive Economic Partnership Agreement (CEPA). This move aims to strengthen trade, investment, and joint ventures to aid SMEs in both countries. Dr. Al Zeyoudi also met with Vietnamese Prime Minister Pham Minh Chinh amidst the finalisation of their CEPA. The discussions emphasised the importance of private sector collaboration in enhancing trade and investment, leading to the signing of Memorandums of Understanding between Abu Dhabi Ports and the Vietnamese Maritime Administration, and between Vietnam’s Ministry of Information and Communications and Abu Dhabi based financial services company Sirius International. Such initiatives highlight how COP28 is facilitating economic ties between the Gulf and Asia beyond environmental concerns.
Balancing fossil fuel reduction and technological innovation at COP28
Climate negotiations at COP28 concluded with a deal that calls for countries to transition away from fossil fuels. This stance is more favourable for Asian and Gulf states, such as the UAE, Saudi Arabia, China, and India, that do not want a complete phase out of fossil fuels. The deal paves the way for enhanced sustainability cooperation between both regions, particularly in terms of reconfiguring the fossil fuels industry to become more sustainable. For example, during COP28, Abu Dhabi National Oil Company signed a strategic collaboration agreement with the Japanese company Mitsubishi Heavy Industries to advance the development of global hydrogen and ammonia value chains. They also discussed the need to jointly explore carbon management technologies that would decarbonise the oil and gas sector.
Such deals suggests that trade and investment in renewable energy production between Asia and the Gulf will grow, accompanied by increased cooperation in technological developments focused on capturing and storing carbon dioxide emissions. COP28 has spurred a shift in global climate collaboration, particularly between Gulf and Asian countries, laying the groundwork for future partnerships in sustainable development between both regions.
