Home The Washington Diplomat NUSACC kicks off 50th year with webinar on Arab ‘energy transition’

NUSACC kicks off 50th year with webinar on Arab ‘energy transition’

NUSACC kicks off 50th year with webinar on Arab ‘energy transition’
Pulitzer Prize-winning author Daniel Yergin spoke Jan. 31 at an online NUSACC panel. (Photo courtesy of NUSACC)

The tense US relationship with China, a drop in global oil demand as a warming world turns to renewables, and growing economic diversification across the Arab world are the three main drivers of change outlined in David Yergin’s latest book, “The New Map: Energy, Climate, and the Clash of Nations.”

Yergin, a Pulitzer Prize-winning author of four books dealing with energy issues, headlined the first of a series of “Thought Leaders” webinars hosted by the Washington-based National US-Arab Chamber of Commerce (NUSACC). More than 400 business leaders, DC-based diplomats and senior government officials tuned into the Feb. 1 event.

“It seems to me that we are in a new terrain, and we need a map,” said Yergin. “ That’s what led me to write The New Map—to provide some framework for thinking and understanding about where these changes are leading us.  I hope it provides both for 2021 and beyond.”

National Public Radio, Bloomberg and USA Today have all recognized Yergin’s latest work as a “Book of the Year,” and it has received excellent reviews so far.

“The Arab world doesn’t want to choose between the US and China, nor do Arab countries want to be caught in the middle,” Yergin said in explaining the three overall themes of his 574-page tome. The second takeaway is what I call the energy transition—the changing attitudes to oil—which affects all of us. It goes beyond the US now being energy independent, to what is the stance of governments in both Europe and the US toward oil because of their climate policies.

Chinese oil workers repair a valve at a rig near Faregh, deep in Libya’s Sahara Desert. The rig is operated by China Oilfield Services Ltd. (Photo by Larry Luxner)

“For the oil-exporting countries, it provides an impetus to diversify that was not there in the past, when it was assumed that demand would just keep growing,” he said. The third takeaway, he said, “are changes in the region itself, with that renewed emphasis on diversifying economies and … among other things, provide jobs for the young people who need jobs.  And that is a priority.”

Arab diplomats on the call agreed that the region must be prepared for a post-petroleum future.

“I was both at Kyoto for COP3 and in Paris for COP21, and I firmly believe that climate change is an existential threat for the countries of the Middle East,” said Fareed Yasseen, Iraq’s envoy in Washington. Likewise, said Egyptian Ambassador Motaz Zahran, “recent gas discoveries in the Eastern Mediterranean offer a dividend of peace, and also an incentive for peace. In parallel to traditional sources of energy, there is an important drive toward renewables.”

Peak oil and the rise of hydrogen

Zahran said he expects renewables to generate about 20% of Egypt’s energy needs by next year, more than doubling that ratio to 42% by 2035.

Yergin said a more recent focus is hydrogen as an alternative fuel—whether in the form of blue hydrogen, which is created from fossil sources where carbon emissions are captured and stored, or green hydrogen, which is made from non-fossil sources.

David Hamod is NUSACC’s president and CEO.

“Hydrogen was on the sidelines four years ago, and it has now become a central policy focus.  That’s certainly true for the EU, and it is also an opportunity for a country like Iraq,” he said, adding that “we’ve talked a lot about energy transition but, so far, it’s been energy addition because conventionals have grown, as have renewables and alternatives. For instance, natural gas really is a partner with wind and solar, because of the intermittency that exists in those energy sources, and the need for stable energy.”

Yergin concluded: “It’s got to be a mix. You just can’t go overnight from a world that today is 80% dependent on fossil fuels to something else. This will require breakthrough technologies, including carbon capture. Major advances in batteries, which provide the ability to store electricity, will be another key technology frontier.”

Oil consumption will likely peak around 2030, he predicted. Yet in a study he conducted along with former US Energy Secretary Ernest Moniz on behalf of two nonprofit groups—the Bill Gates Foundation and the Breakthrough Energy Coalition—Yergin found a major problem looming: a technology deficit, whether in battery storage, carbon capture or hydrogen utilization.

“A lot of targets are being set without the technological wherewithal to get there. The direction is clear, but innovation takes time,” he said. “The lithium ion battery was invented in an Exxon laboratory in 1976, but it was not until 2008 that the first Tesla cars appeared commercially on the market. That’s 32 years.  Solar and wind are 50-year-old industries, but it’s only in the last 10 years that they have really become commercially competitive in a big way.”

Arab world ‘perfectly primed’ for solar revolution

The Middle East, with all its sunshine, is particularly well-positioned to take advantage of solar energy, with worldwide solar installations projected to grow by 30% this year.

“We know that over 80% of solar panels are made in China,” he said. “There is tension around trade, technology, and supply chains, and this looks to become more complicated over the next few years. But no question: Solar is growing a lot, and the region is perfectly primed for that.”

Traffic flows along a busy highway in downtown Dubai, cultural and tourism hub of the United Arab Emirates. (Photo by Larry Luxner)

Responding to a comment from Saud Al Nowais, commercial counselor at the Embassy of the United Arab Emirates, Yergin noted that Abu Dhabi—which alone accounts for 93% of the UAE’s nearly 100 billion barrels of crude reserves—is an excellent example of diversification.

“Twenty years ago, all of Abu Dhabi’s GDP was basically derived from oil. Today, 60% of the emirate’s GDP is non-oil. That is an extraordinary achievement,” he said. “It didn’t happen overnight, but to reach that in 20 years … shows the value of diversification.”

Yergin predicted that OPEC will eventually be replaced by the “Big Three”—Russia, Saudi Arabia and, surprisingly, the United States.

“The energy position of the US has moved from being an oil importer, representing 60% of American oil consumption, to being an oil exporter now. This is the result of the shale revolution, [which] really did disrupt the world oil market to a degree that was not anticipated.”

He concluded: “What we saw last April, when prices went into this unbelievable negative territory, is that the United States—led by a certain dealmaker in the White House and pushed by US senators representing oil states—ended up brokering an end to the oil price war that had broken out. This really demonstrated that world oil today revolves around the Big Three. What each of these countries does in pursuing its own national interests will have a big impact on shaping the world oil market.”

Larry Luxner

Miami native Larry Luxner, a veteran journalist and photographer, has reported from more than 100 countries in Latin America, Africa, Eastern Europe, the Middle East and Asia for a variety of news outlets. He lived for many years in San Juan, Puerto Rico, and the Washington, D.C., area before relocating to Israel in January 2017. Larry has been news editor of The Washington Diplomat since 2005.