Alliances for Sustainability:

InterRegional for Strategic Analysis held a panel discussion on 14 September 2023 entitled "Alliances for Sustainability: The Future of EU-GCC Climate Cooperation." The panel featured Dr. Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations (ECFR) and former research fellow at the Institute for International Affairs in Italy, and was attended by researchers from our center in Abu Dhabi. The panel discussion focused on European factors that have driven opportunities for EU-GCC cooperation in combatting climate change. It also shed light on related opportunities for bilateral cooperation and examined the most important current challenges that could hinder EU-GCC cooperation in this sphere.

Contributing Factors

According to Dr. Bianco, Europe sees climate action as a central part of its political agenda, and an integral component of European economic and defense policy for the immediate future. This is due to several key factors that are driving rapprochement between the Gulf and Europe in combatting climate change, and which include the following:

1. Climate change threatens European industrial sector: Climate change currently poses a serious threat to industry, manufacturers, and the private sector in Europe. This is also true in other countries around the world, including in the Gulf. Countries face particular challenges regarding balancing between implementing new and innovative modes of production and manufacturing to achieve desired economic growth, and adhering as much as possible to environmental standards for sustainability and reducing carbon emissions.

2. Europe’s energy crisis intersects with climate change concerns: Despite the EU and European governments’ successes in dealing with the 2022 energy crisis, Dr. Bianco indicated that Europe paid a high economic price for those solutions. The sometimes exponential spikes in energy costs, which Germany has endured for months, has led European governments to resort to various emergency fixes. For example, Germany was forced to resume burning coal for energy production, even though it has also been a vocal proponent of increasing renewable energy capacities in Europe. There is an increasingly urgent need to diversify European imports through communicating and forming partnerships with Gulf producers.

3. Fallout of the Ukrainian war for EU energy security: In 2022, the Russian war on Ukraine and the devastating European energy crisis that ensued was a shock for the European energy sector. This has changed the nature of political agreements that Europe will sign, since the type of investments that it pursues are now directly tied to energy relations. This could explain EU-GCC rapprochement, since the Gulf is a key global producer of energy.

3. Opportunities for technological climate cooperation: The Gulf has a broad interest in innovation, technology, and creativity, and in using modern technologies to combat climate change. This could open up numerous opportunities for EU-GCC cooperation in the field of technological advancement and research, and strengthening scientific collaboration. The private sectors in Europe and the Gulf could also find opportunities to work together, fund technological research, strengthen implementation of technologies, and build new climate action infrastructure.

4. Europe hopes for increased Gulf climate engagement: Europe expects the GCC countries to be very involved in climate action during the coming period in order to achieve many climate goals. Gulf countries have ramped up their commitment to reducing carbon emissions related to fossil fuel industries. This is perhaps closely linked to Saudi Arabia’s "circular carbon economy," which it launched while hosting the G20 summit in 2020. During the summit, Saudi Arabia announced that it wanted to build much larger new plants for capturing carbon, and which could help support infrastructure in Saudi Arabia and elsewhere.

5. Gulf countries lead the way in energy efficiency: According to Dr. Bianco, all of the GCC countries have at various points sought to develop cooperation with European companies in order to implement energy efficiency measures related to fossil fuel industries. The outcome of that cooperation has played a major role in pushing the EU to strengthen and accelerate cooperation with the Gulf in the field of energy efficiency.

Mechanisms for Cooperation

According to Dr. Bianco, Europe has many pressing reasons to pursue cooperation with the Gulf to combat climate change and develop energy collaborations. There are promising opportunities that could reap major dividends for EU-GCC cooperation in this field. The potential mechanisms for such cooperation include the following:

1. The India-Middle East-Europe Economic Corridor (IMEC): The UAE and Saudi Arabia both signed a memorandum of understanding to establish an economic corridor connecting India to Europe via the Middle East. This was discussed during the G20 summit held on 19 September 2023. The IMEC would link these regions through building a transnational railway to strengthen trade and export routes between Asia and Europe. The agreement paves the way for further deals to bolster clean hydrogen exports to Europe from the Arabian Peninsula. The memorandum of understanding also contains a very important annex for Europe regarding building electric and digital cables as well as clean hydrogen pipelines. This key infrastructural project could strengthen these kinds of links between India/Asia, the Arabian Peninsula, and Europe.

2. Promising Gulf initiatives in the clean energy sector: The UAE and Saudi Arabia both have ambitious plans to export clean energy. Abu Dhabi plans to export green hydrogen by 2031, while Riyadh is aiming to begin exporting green hydrogen by 2036 via its new city NEOM, which is relatively closer to the Mediterranean Sea. This is a significant opportunity for Europe. The energy transition and ending the use of fossil fuels will require various initiatives and pilot tests to explore the use of hydrogen, which are currently being carried out in the Gulf. Furthermore, this is happening at a juncture when green hydrogen is increasingly important for Europe.

3. Opportunities to cooperate as part of the European Green Deal: The European Green Deal was launched in 2021 and centers around a full transition to a green economy across all sectors, including agriculture, aviation, water security, individual behavior, energy conservation, and green buildings. The agreement serves as a comprehensive framework to achieve the transition to a green economy. It closely aligns with many of the Gulf’s aspirations for economic growth across new sectors. This became clear as the number of real estate projects and buildings expanded in the UAE, creating attractive opportunities for new buildings to be constructed sustainably and therefore contribute to lower energy consumption.

5. Technology bolsters cooperation and investment in decarbonization: There are new technologies that can help to strengthen EU-GCC climate cooperation. Technology is at the heart of the new agreement signed in June 2022 between the French company Veolia and the city of NEOM in Saudi Arabia. The agreement sought to develop the first desalinization plant that uses 100% renewable energy. This plant would ensure that all of mineral deposits and salts would be removed from the water in order to produce the highest levels of water purity. This residue would then be turned into an industrial product through reusing the waste products of the desalinization process in other industrial processes. This is an excellent model of the circular economic approach. Although this technology is very expensive, Dr. Bianco argued that this could be an opportunity for further EU-GGC cooperation, since it could open up further opportunities for European companies in the Gulf’s energy sector.

Upcoming Challenges

According to Dr. Bianco, as the COP28 conference set for 30 November 2023 approaches, there will be various challenges for EU-GCC climate cooperation, including the following:

1. Applying the Carbon Border Adjustment Mechanism to the Gulf: The Carbon Border Adjustment Mechanism (CBAM) will pose a key obstacle to potential EU-GCC cooperation in combatting climate change. This mechanism will affect Gulf manufacturers as well as all other relevant actors outside the EU. According to Dr. Bianco, it could more severely affect oil-producing countries and therefore undercut EU-GCC cooperation if Gulf countries do not reduce their carbon emissions and focus on developing environmental standards.

CBAM will impose tariffs on imported products sold in EU markets according to the products’ carbon content. Dr. Bianco indicated that she believed that environmental standards similar to Europe’s have already been adopted in the Gulf, so there was no need to impose a carbon tariff impinging upon fair competition.

2. Fossil fuels from the Gulf remain controversial in Europe: The West has various hopes and expectations for the UAE. The UAE will act as an intermediary between various climate actors, since a UAE national will be the president-designate for COP28, and aims to help find a feasible middle ground. However, Dr. Bianco said that there are still fears that too much time is being spent on the issue of fossil fuels. This could mean there will not be sufficient time to discuss tangible steps that could be taken to reduce reliance on fossil fuels by tripling global renewable energy capacities by 2030. More time could also be given to discussions on funding innovative technologies to remove and reuse carbon dioxide and to improve carbon capture.

The growing controversy in the EU about the Gulf as a leader in the fossil fuel industry could hinder EU-GCC cooperation in combatting climate change. According to Dr. Bianco, this is a very sensitive issue for both sides. However, she said the EU is increasingly receptive to the idea that cooperating with the GCC will be very important for the energy sector and climate change goals. Dr. Bianco indicated that Ditte Juul Jørgensen, the director general for energy of the European Commission, had visited the UAE in September 2023 and held several high-level meetings. These meetings are seen as a positive sign for EU-GCC rapprochement.

4. Effects of Russia-GCC rapprochement on cooperation with Europe: In the political sphere, growing Russia-GCC rapprochement could affect potential EU-GCC relations in the climate sector. Dr. Bianco stated that the Russian military intervention posed an existential threat to some eastern European countries and that it would be very difficult for those countries to have ties with countries friendly to Russia. Some European governments have cut all ties with Russia. Additionally, there was a drastic shift in EU policy towards Iran when the latter signed a military deal with Russia.

5. Limited infrastructure for transporting Gulf energy to Europe: One of the agenda items for Europe and the Gulf is exploring how to ensure that neighboring countries can fully participate in and benefit from EU-GCC cooperation for combatting climate change through developing transportation networks. Dr. Bianco said that there is a need for better infrastructure and ports along the route, such as along the Egyptian Red Sea coast, or along the Mediterranean in Tunisia and Morocco, and perhaps Libya. This would help develop the infrastructure for transporting clean energy from the Gulf to Europe more quickly. It would also bolster bilateral cooperation. Hydrogen transport is a very sensitive issue, especially since it is an unstable gas, and therefore requires workable solutions to ensure it can be safely transported to Europe.

In conclusion, Dr. Bianco indicated that there were various opportunities to strengthen EU-GCC cooperation, but that they would all require significant financial and political commitment. This could lead to identifying new opportunities within the green energy transition. Dr. Bianco affirmed that the UAE bears significant responsibility at COP28 to endeavor to find solutions on how to distribute climate funding, and to think about creative methods to achieve this. This could include partnerships between the private sector, governments, and international investors so that funding can reach beneficiaries.

Dr. Bianco also predicted that COP28 would result in an agreement on expediting the renewable energy transition, not only in the Gulf but also in North Africa and the Middle East. This would include identifying pathways and frameworks for new cooperation on funding, and expanding and exchanging modern climate technologies as quickly as possible.