"NDC update: In December 2020, the UAE submitted an updated NDC to the UNFCCC. Our analysis of its new target is here."
The COVID-19 pandemic’s public health crisis and the subsequent drop in international oil consumption has negatively affected the United Arab Emirates’ economic growth prospects. While the UAE will lower oil production together with other OPEC members in 2020 and 2021 to stabilise international oil prices, longer-term impacts on international oil consumption and production patterns remain to be seen.
Before the outbreak of the COVID-19 pandemic, the UAE had taken some initial, but still insufficient steps on climate change. At the same time, it is also constructing its first coal-fired power plant, which goes against the transformation required to be consistent with the 1.5°C temperature goal of the Paris Agreement. The CAT rates the UAE’s climate pledge under the Paris Agreement as “Highly Insufficient”.
The CAT expects that the UAE’s GHG emissions in 2020 will be 6–9% lower than 2019 due to an unprecedented slowdown of domestic economic activity, international trade, and oil demand. The IMF and World Bank estimate a deep economic downturn of 4.5–6.6% of GDP in 2020, followed by a recovery of 1.3–1.4% of GDP in 2021.
The government has introduced several rescue and recovery measures in direct response to the immediate COVID-19 health and economic crises. As of October 2020, the implemented measures, such as the “Ghadan-21” fiscal stimulus programme of AED 9 billion (USD 2.5 billion), have not incorporated domestic and international proposals for a ‘green’ and low-carbon economic recovery. The government also announced an additional, longer-term stimulus plan focusing investments on the digital economy such as 5G telecommunication, although no specific details and budget scope had been communicated as of October 2020.
Despite the development of renewable and nuclear energy projects, emissions from electricity generation are expected to increase to 2030 due to a continued expansion of fossil fuel-based sources of electricity. In line with its energy strategy, which projects coal reaching a 12% share of total electricity generation in 2050, in May 2020 the UAE completed the first unit of its inaugural 2.4 GW coal-fired power plant. The construction of new coal-fired generation is inconsistent with the need to phase out coal from electricity production in the Middle East by 2034 in order to limit warming to 1.5°C.
In June 2019, the UAE commissioned a 1.2 GW solar PV plant, the nation’s first major renewable energy project. The government has also recently issued tenders for around 5 GW of additional solar capacity and, in August 2020, construction of the first 1.4 GW nuclear reactor was completed as part of the larger 5.6 GW Barakah nuclear power plant project.
On 1 January 2018, the UAE began deregulating energy prices and thus phasing out fossil fuel subsidies, which is expected to limit the growth of emissions, but in itself is not sufficient to stop emissions from increasing. Petrol and diesel prices are subject to a 5% value-added tax (VAT) rate, whereas crude oil and natural gas are still exempt. Diesel prices are however still far below the global average.
With its Nationally Determined Contribution (NDC), the UAE pledged to pursue “a strategy of economic diversification that will yield mitigation and adaptation co-benefits”. Part of these efforts is increasing the share of renewable and nuclear energy in the “total energy mix” to 24% by 2021. Although this is not clearly specified in the NDC, we assume that this target refers to the electricity mix based on a number of government statements. We rate UAE’s NDC “Highly insufficient”, as the scope and level of ambition of its NDC is lacking.
Also, under current policies, emissions are projected to grow by 50% by 2030 from today. The deregulation of energy prices is an important element to limiting emissions growth, but alone not sufficient to stop the emissions rise.
The UAE’s NDC does not provide an economy-wide greenhouse gas (GHG) emissions reduction target. Instead, it describes several measures targeting all sectors of the economy, without presenting abatement targets in terms of emission reductions. The level indicated as the NDC target in our graph above reflects the only quantifiable element—the target for clean energy by 2021—slightly more ambitious than current policy projections. Providing an economy-wide GHG emissions reduction target would be an important first step to strengthen the NDC in 2020, when all Parties to the Paris Agreement are invited to submit new or revised NDCs.
Before the COVID-19 pandemic, the UAE’s greenhouse gas emissions under implemented policies were projected to reach between 286-310 MtCO2e/year in 2030, excluding emissions from land use, land use change and forestry (LULUCF). This would represent a 46–58% increase above 2010 levels. One important policy included here is the deregulation of energy prices, i.e. the phase-out of fossil fuel subsidies, which the UAE started in August 2015. This phase-out is essential for addressing climate change over the short term, and for bringing the UAE into line with the emission levels connected to the clean energy target in its NDC. However, implemented policies are not sufficient to stop emissions from increasing beyond 2020.
While it is challenging to project the impact of the COVID-19 pandemic on future emissions, the CAT estimates the UAE’s emissions could decrease by around 10% to 16% below our pre-COVID-19 projections in 2030. This projected decrease in emissions could be strengthened if the government were to implement a ‘green’ economic recovery coupled with more stringent climate policies, such as shifting away from carbon-intensive investments like new coal-fired power plants.
In 2017, the UAE announced its Energy Strategy for 2050, aiming for 44% renewable energy, 38% natural gas, 12% “clean coal” and 6% nuclear in the nation’s 2050 electricity mix (WAM, 2017). We find the targets for the energy split in the strategy would have no additional impact on emissions even if the strategy were fully implemented.
The exact definition of the efficiency target included in the energy strategy is unclear, so the full potential impact on emissions of the complete strategy cannot be quantified at present. For more information, see our description of “Current Policy Projections” in the energy sector.
On 14 June 2017, the UAE cabinet adopted the country’s first National Climate Change Plan covering the period of 2017–2050, overseen by the UAE Council on Climate Change and the Environment. It is designed as a framework for all mitigation and adaptation efforts across the country as well as setting mandates reflected in the UAE Vision 2021 and the UAE Green Agenda 2015–2030 (MOCCAE, 2017). The plan sets out a process to establish a national GHG emissions management system by 2020, to develop a national adaptation plan, and to diversify the UAE’s private sector. The CAT current policy projections do not quantify the national climate change plan because it also does not yet appear to include clearly defined emission reduction actions.