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Hydrocarbon Resources and Their Spillover Effects

Hydrocarbon Resources and Their Spillover Effects

Despite the high oil revenues reaped from hydrocarbon resources and their spillover effects on all oil and non-oil producing countries, most MENA region economies suffer from structural problems and fragile political systems, preventing them from adopting effective politico-economic transformations.

The capital was available, but investments were typically misdirected to form in all cases ‘rentier’ economies, with Arab countries economies remaining very undiversified.  They primarily rely on oil and low value-added commodity products such as cement, alumina, fertilisers, and phosphates. 

Demographic transitions present a significant challenge: the population increased from 100 million in 1960 to about 400 million in 2011.  Sixty per cent are under 25 years old.

Urbanisation had increased from 38 per cent in 1970 to 65 per cent in 2010.

Rural development being not a priority; the increasing rural migration into the cities searching for jobs will put even more strain on all existing undeveloped infrastructures. 

Current economic development patterns will increasingly strain the ability of Arab governments to provide decent-paying jobs.  For instance, youth unemployment in the region is currently double the world average.

The demand for food, water, housing, education, transportation, electricity, and other municipal services will rise with higher learning institutions proliferating; the quality of education below average does not lead to employment. 

Power demand in Saudi Arabia, for example, is rising at a fast rate of over 7 per cent per year.

Amman, Cairo, and other Arab cities gradually lose their agriculture space because of the suburbs’ expansion.  Gated communities and high-rise office buildings are sprawling while ignoring low-income housing. 

In the meantime, the real world feels the planet is in danger of an environmental collapse; economists increasingly advise putting the planet on its balance sheets. For over a Century of Burning Fossil Fuels, to propel our cars, power our businesses, and keep the lights on in our homes, we never envisioned that we will paying this price.

Hydrocarbon Resources and Their Spillover Effects

In effect, a recent economic report on biodiversity indicates that economic practice will have to change because the world is finite.

For decades many have been aware of this reality. However, it is a giant leap forward for current economic thinking to acknowledge that Climate change is a symptom of a larger issue. The threat to life support systems from the plunder and demise of the natural environment is a reality.

Society, some governments, and industry are recognising that climate change can be controlled by replacing fossil fuels with renewable energy, electric cars and reducing emissions from every means of production.

Talking about replacing fossil fuels would mean a potential reduction of the abovementioned revenues.

However, would the spreading of solar farms all over the Sahara desert constitute compensation for the losses?

Geopolitical Implications of Global Decarbonization for the MENA

Geopolitical Implications of Global Decarbonization for the MENA

NATURAL GAS NEWS‘ Geopolitical Implications of Global Decarbonization for MENA producing countries by Pier Paolo Raimondi and Simone Tagliapietra, Oxford Institute for Energy Studies (OIES) is an expert’s hindsight in the foreseeable future of the region.

Endowed with half of the world’s proven oil and gas reserves, the Middle East and North Africa (MENA) region represents a cornerstone of the established global energy architecture. As the clean-energy transition gains momentum worldwide, this architecture might shrink—challenging the socio-economic and geopolitical foundations of the region in general, and of its oil and gas-producing countries in particular.

The picture above is for illustration purpose and is of Natural resource wealth and public social spending in the Middle East and North Africa published back in 2015.

Geopolitical Implications of Global Decarbonization for MENA producing countries

February 21, 2021

This challenge has two dimensions: domestic and international. Domestically, a decline in global oil and gas demand would reduce revenues for producing countries. Considering the profound dependency of these countries on oil and gas rents (the ‘rentier state’ model), this could have serious economic and social consequences. Internationally, the global clean-energy transition might push producers towards a fierce competition for global market share, exacerbating geopolitical risks both regionally and globally.

In 2020, MENA oil and gas producers experienced a situation that some observers have described as a preview of what the future might look like for them beyond 2030, as global decarbonization unfolds. The COVID-19 pandemic resulted in an unprecedented crash in global oil demand. At the same time, oil prices collapsed (for the first time in history, the benchmark West Texas Intermediate entered negative territory) due to a lethal combination of falling demand and OPEC+ coordination failure. All this generated a perfect storm for MENA oil- and gas-producing countries, which led to unprecedented macroeconomic imbalances.

The evolution of oil markets, national stability, and prosperity as well as international influence are closely linked in the MENA region, but MENA oil- and gas-producing countries are far from homogenous. Different countries are likely to experience different impacts from the global clean-energy transition, depending on a number of domestic and international factors.

International factors

MENA producers are likely to be affected by the differences in the trajectories for oil and gas markets, the speed of the energy transition in different world markets, increased competition between energy producers, and increasing penalties for carbon intensity in production.

While gas is set to play a role in the global energy mix for decades, oil is expected to lose relevance as a result of decarbonization policies and technological developments in electric vehicles. BP’s 2020 Energy Outlook warned about the imminence of peak oil demand. In its business-as-usual scenario, oil demand is set to recover from the pandemic by 2025 but drop slowly thereafter. In its rapid-energy-transition scenario, oil demand drops from around 100 million barrels per day (mb/d) in 2019 to 89 mb/d in 2030 and just 47 mb/d in 2050. Such a scenario would represent a challenge for MENA oil producers. By contrast, in the business-as-usual scenario, gas demand is expected to increase from 3.8 trillion cubic meters (tcm) in 2018 to 5 tcm in 2040, underpinned by a massive coal-to-gas switch in Asia and elsewhere. Such a scenario would be beneficial for MENA gas-producing countries such as Qatar and Algeria, which could remain geopolitically relevant by providing an important transition fuel to a decarbonizing world.

In the MENA region, Qatar seems to be the best positioned to preserve its geopolitical role, thanks to its significant liquified natural gas (LNG) capacity and its geographical location between Europe and Asia. Nevertheless, gas-producing countries will not be immune to the challenges posed by decarbonization policies in the long run. Gas demand is especially difficult to predict starting in the second half of the 2030s, as a result of increasing cost competition in power generation from renewables, as well as stricter environmental regulations (e.g. the EU Methane Strategy). It will thus be of paramount importance for MENA gasproducing countries to cut emissions in their gas value chain, in order to preserve their position and geopolitical influence.

The speeds of the energy transition in different world regions will also affect MENA geopolitical shifts. For instance, Europe’s oil and liquids demand is expected to decrease from the current 13.3 million tons of oil equivalent (Mtoe) to 8.6 Mtoe in 2040, according to the International Energy Agency’s stated-policies scenario. By contrast, Asia-Pacific countries’ oil and liquids demand is set to increase from the current 32.5 Mtoe to 37.9 Mtoe in 2040. Thus, MENA producers more exposed to the European market are likely to suffer more—and earlier—from the global decarbonization process than others more exposed to Asian markets. That is, energy demand will increasingly dominate energy geopolitics, especially in an oversupplied energy market.

In such a scenario, export portfolio composition and diversification will determine the evolution of geopolitical influence for MENA oil and gas producers. Exporters that depend heavily on European markets will see their geopolitical position erode and their revenues fall. For example, Algeria, which mostly exports gas via pipeline to Europe, has been an essential element of the European gas supply architecture. Unless it manages to decarbonize its gas exports, this important role will shrink as the European Green Deal is implemented. In 2019, 85 per cent of Algeria’s total gas exports flowed to Europe, 62 per cent via pipeline (mainly to Italy and Spain). By contrast, LNG provides more flexibility to gas exporters, which will enable them to respond effectively to the geographical shifts of the energy demand. Qatar is the world’s top LNG exporter. In 2019, Qatar exported 83 per cent of its total gas exports via LNG. Of this volume, 67 per cent was directed to Asia Pacific countries. Asian markets are expected to drive energy demand growth in general and LNG in particular until 2030. Oil and gas producers will increasingly try to gain market share in such growing energy markets.

While energy demand will be crucial in the future, energy supply issues will not disappear. Competition among producers will persist, and even increase in the foreseeable future. The peak of oil demand will create a harsher world of more intense competition and tighter revenues for MENA oil producers. Regional oil and gas producers are likely to pursue different supply strategies, which will need to deal with the consequence of the global energy transition.

The transition indeed raises an existential dilemma—requiring a choice between maximizing production, which would weaken higher-cost exporters, and coordinating production cuts to increase prices, which could deprive governments of vital revenues. These are not trivial issues, as maximization of production would put into question established assumptions about saving reserves for future production and avoiding stranded assets. An intensification of competition among producers could thus undermine coordinated actions (e.g. OPEC agreements), which are important to oil price stability. This was illustrated by the collapse of OPEC+ talks in March 2020—spurred by disagreements between Saudi Arabia and Russia on the introduction of production quotas, as the two were also competing for market share with US shale oil producers—and the consequent fall in oil prices.

Another example of the growing competition among producers is the growing opposite visions between the United Arab Emirates (UAE) and Saudi Arabia that emerged openly during OPEC talks in late 2020. Although they managed to reach an agreement within OPEC, the UAE’s ambitious plans to increase its oil capacity from about 4 mb/d to 5 mb/d by 2030 puts further pressure on the traditional alignment among Gulf OPEC producers. Moreover, in late 2020 the Abu Dhabi National Oil Company announced a $122 billion investment plan for 2021–2025, suggesting that the UAE had abandoned its more cautious approach to the oil sector. The plan suggested that MENA national oil companies might gain a growing share of world oil and gas production in the future. That is also due to (Western) oil companies’ decisions to cut their capital expenditure and other investments. Such decisions are motivated mostly by low oil prices and their commitment to decarbonization.

In a more competitive world, some MENA producing countries such as Saudi Arabia and the UAE have the economic advantage of vast oil reserves (298 and 97 billion barrels, respectively), the lowest production costs (under $4 per barrel), and the least carbon-intense production. In the next years, due to expected higher carbon prices, carbon intensity will play a key role in determining which oil and gas producers will be able to preserve their geopolitical influence. MENA oil producers with higher production carbon intensity, such as Algeria and Iraq, might thus lag behind.

Domestic factors

The global energy transition can also impact MENA oil- and gas-producing countries’ governance, due to their heavy dependence on revenues from these resources. To address this issue, regional oil and gas producers have launched several strategies (referred to as Visions) aimed at economic diversification (e.g. by increasing productivity, strengthening the private sector, and developing non-oil sectors), as well as increasing the share of renewables in the energy mix. These Visions were largely developed as a response to the 2014 oil price drop; COVID-19 and the acceleration of the global energy transition make it necessary to accelerate them. A country’s chances of success at this are likely to be affected by domestic factors including population size, government capacity, and financial ability to implement diversification measures.

Countries with a large, young, and growing population (Algeria, Saudi Arabia, and Iraq) will encounter significant obstacles to the transformation of their rentier-state model. By contrast, countries with a smaller population, like the UAE and Qatar (9.7 and 2.8 million inhabitants, respectively) are likely to find it easier to adjust.

The ability to govern and finance major domestic socio-economic transformation will also be crucial. For example, North African countries could exploit their geographical vicinity to Europe and become major clean-electricity suppliers. In this sense, the recent EU Hydrogen Strategy considers imports of 40 GW of green hydrogen from the EU’s eastern and southern neighbours. However, countries like Algeria and Libya are experiencing major social and political instability, which undermines such scenarios and discourages the needed foreign investments. Thus, countries with major governance issues like Algeria, Libya, and Iraq are expected to lag behind on energy and economic diversification. The risk is that these countries will focus political energies on an intensifying fight for a share of the diminishing global oil and gas market, rather than on a strategy to reorient their economy. By contrast, countries with stronger governance are better equipped to transform their economies, bear the negative consequences of the transition in the short term, and navigate the geopolitical evolution.

The availability of large foreign exchange reserves will be crucial for the transformation of MENA producing countries. With such reserves, countries could offset the negative economic effects of lower oil demand and revenues in the short term, while investing in renewable energy projects for the medium and long term. Thus, countries like Saudi Arabia, the UAE, and Qatar (with $500, $108 and $38 billion of foreign reserves, respectively) are potentially well equipped to manage the negative effects of lower revenues and foster economic transformation. Additionally, countries with large sovereign wealth funds could use them as an integral part of the diversification effort, for example to finance research and development and renewable-energy projects in MENA countries.

Producers with large foreign exchange reserves, sizable sovereign wealth funds, and small populations to appease are potentially the best placed to navigate the uncharted waters of the global energy transition.

MENA oil and gas producers have also considered developing their high renewable-energy potential, especially solar. This could help them pursue several goals, including economic diversification and reduction of greenhouse gas emissions. It could also free additional oil and gas volumes, currently used to meet fast-growing domestic energy demand, for sale abroad to produce additional revenue—thus avoiding the negative economic effects of growing energy consumption and positioning themselves as major renewable powers in a low-carbon future.

More recently, MENA oil and gas producers have begun to consider the growing interest in hydrogen as a way to preserve their geopolitical influence and remain pivotal actors in the future energy system. Given the region’s abundant renewable energy and carbon capture and storage potential, MENA countries could be at the forefront in both the green and blue hydrogen markets. In the short and medium term, blue hydrogen could benefit from its cost advantages. In the longer term, the MENA countries could exploit their excellent solar conditions and low-cost renewables in order to produce and export green hydrogen. Three MENA oil producers (Saudi Arabia, the UAE, and Oman) have announced major hydrogen plans. For example, in July 2020 an international consortium announced plans for a $5 billion green renewables and hydrogen plant in Saudi Arabia, which aims to begin shipping ammonia to global markets by 2025. In September 2020 Saudi Arabia shipped 40 tons of blue ammonia to Japan in a pilot project undertaken by Saudi Aramco and the petrochemical giant Sabic.

Conclusions

The global energy transition will inevitably affect MENA oil- and gas-producing countries, both macroeconomically and geopolitically. However, not all MENA countries will see their geopolitical influence change in the same way. Some countries are better equipped than others to offset the negative effects domestically and internationally. Internationally, MENA oil and gas producers will start to focus more on energy demand differences among world regions. MENA countries with lowest-cost and least-carbon-intensive production are better positioned to preserve their geopolitical influence. Moreover, export portfolio composition and diversification will crucially define whether a country will lead or lag behind in the energy transition. Oil and gas producers are also endowed with an abundant renewable potential, another possible route to future energy leadership.

Nevertheless, competition among producers will remain or even increase, potentially undermining coordinated efforts to stabilize oil prices. Due to the strong link between hydrocarbons and the nature of the state in the MENA region, the domestic sphere will be a key element in the geopolitical shifts. Population size, strong governance, and the financial ability to adapt to change will help some MENA oil and gas producers to preserve their geopolitical role, while managing domestic socio-economic transformation.

Originally publishes by the Oxford Institute For Energy Studies.

The statements, opinions and data contained in the content published in Global Gas Perspectives are solely those of the individual authors and contributors and not of the publisher and the editor(s) of Natural Gas World.

Malta can truly kick-start a green revolution

Malta can truly kick-start a green revolution

The start to a green revolution – Cyrus Engerer and Stephanie Fabri elaborate on how Malta can truly kick-start a green revolution.

Malta can truly kick-start a green revolution

By Cyrus Engerer and Stephanie Fabri

As the world struggles with COVID-19, the challenges of climate change and wider environmental problems loom large. It is clear that the economic response to the impact of COVID-19 must benefit the environment while plans to address climate change and environmental issues must benefit the economy and society. The only way these twin imperatives can be met is through a green revolution that transcends our economy and society.

This was our task when we both chaired the first Intelligent Planning Consultative Forum that was established by Environment Minister Aaron Farrugia. The aim of the forum was to bring together all stakeholders involved in the planning and construction sectors to start coming up with ways in which we can transform and transition planning and construction which is smart, green and sustainable.

The result of this forum and the discussions we led is the green policy document on green walls and roofs together with the recently-launched scheme by the government to incentivise such improvements.

This incentive scheme should be seen as the first step towards having greener and more sustainable buildings. The benefits of such interventions are major given that they result in low energy consumption and decreased carbon emissions while mitigating the effects of roof flooding. This happens as the green infrastructure, walls or roofs, acts as a protective layer for buildings, absorbing heat and excess water.

Additionally, the utilisation of local fauna in such projects would create various pollination havens across the island, helping to restore natural biodiversity – a key aim of the EU’s 2030 biodiversity strategy. The utilisation of Maltese fauna could have the additional benefit of requiring minimal maintenance and reduce the consumption of water.

Such initiatives also have macro effects including the creation of additional value-adding activities and green jobs. Together with other initiatives and incentives, the demand for such products could even help kickstart a whole new industry focused on green construction.One of Malta’s biggest opportunities in the Green Deal is greening the construction sector

In fact, one of Malta’s biggest opportunities in the Green Deal is greening the construction sector which remains a significant contributor to economic growth. The EU recently launched the New European Bauhaus and, in a statement, European Commission president Ursula von der Leyen said that “the New European Bauhaus is about how we live better together after the pandemic while respecting the planet and protecting our environment. It is about empowering those who have the solutions to the climate crisis, matching sustainability with style”.

This is something we believe can truly support the country in its next phase of design, planning and construction. Malta and Europe have a number of common challenges. Whereas the original Bauhaus was focused on new designs, the biggest challenge we face is of renovation, regeneration and retrofitting.

We are surrounded by buildings and infrastructures, home to both embodied carbon and embedded histories. A design and architecture for this problem requires a quite different sensibility. It implies a refining in place, understanding repair and retrofit cultures and developing new logics predicated on care and maintenance.

These approaches, in line with the EU Recovery Strategy, necessitate new ways of unleashing the societal value latent in people and place. Producing anew in this way is far more challenging than simply making new things –although new things will emerge.

Malta has a unique potential in this and, if leveraged properly, we can truly kick-start a green revolution in our planning and building industries. We are confident that the new phase of the Intelligent Planning Consultative Forum will look into this and, together with the environment minister, a new era of Malta’s planning and construction industry can commence, one that is smart, green and sustainable.

The green wall and roof initiative and support scheme is a step in the right direction.

Cyrus Engerer is a Labour MEP and Stephanie Fabri is an economist and a lecturer at the University of Malta.

French Agency for the Development of AlUla (Afalula)

French Agency for the Development of AlUla (Afalula)

In 2018, France and Saudi Arabia signed a cultural partnership agreement and created the French Agency for the Development of AlUla (Afalula) writes Cécilia Pelloux, Contributor Travel in this Forbes article.

The picture above is of Design displaying the view from within the resort over the landscape of Sharaan “Every urban act is … [+] ROYAL COMMISSION FOR ALULA

A New Era In Architecture Jean Nouvel Unveiled Masterpiece Resort In AlUla

17 February 2021

AlUla is a spectacular natural and archaeological region. This unknown site inhabited for millennia is located 1100km from Riyadh in the North West of Saudi Arabia. The region has enjoyed prosperity since Antiquity thanks to the fertility of its oasis. AlUla was a crossroads on the caravan routes of myrrh, incenses and aromatic plants which crossed Arabia from the South. The birthplace of Arabic writing, this immense area of 23,000 km² is the witness of an extraordinary natural and human cultural heritage.

The geological formation of the valley with its lush oasis offers towering sandstone mountains and ancient civilization and architectural sites like the Nabataean from Petra. 

For nearly thirty years, Franco-Saudi archeological teams have done intense research inside thousand years old history, from the first human settlements seven thousand years ago to contemporary times.

Last Fall, French renowned architect Jean Nouvel announced his new extraordinary project in the Sharaan Nature Reserve near the Nabataean wonders of Hegra, UNESCO World Heritage Site. The first Saudi archaeological site listed on the UNESCO World Heritage in 2008. Hegra – A 52-hectare ancient city- was the principal southern city of the Nabataean Kingdom. It includes more than 100 well preserved tombs with elaborate facades cut into sandstone outcrops. Current research suggests Hegra was the most southern outpost of the Romans after conquering the Nabataeans in 106 CE. 

French Agency for the Development of AlUla (Afalula)
Concept rendering showing an aerial view of the resort built into the majestic Sharaan Nature Reserve.
Concept rendering showing an aerial view of the resort built into the majestic Sharaan Nature … [+] ROYAL COMMISSION FOR ALULA

MORE FOR YOULondon To Build Hill At Marble Arch To Lure Back TouristsLooking For The Perfect Getaway? Head To Greenwich, ConnecticutDesign Story: Behind The Scenes At Bainland Country Park

Jean Nouvel’s works offer a modern design vision on this 2,000-year-old architectural legacy since the Nabataeans carved into the region’s millions of years old sandstone rock. “The coming together of a landscape and history, the history of past civilisations in an extraordinary landscape – the only place to create such a masterpiece.” said Jean Nouvel. The architect wants to preserve this unique landscape. “AlUla is a museum. Every wadi and escarpment, every stretch of sand and rocky outline, every geological and archeological site deserves the greatest consideration. It’s vital we keep all its distinctiveness and its attractiveness which largely rests on its remote and occasionally archaic character. We have to safeguard a little mystery as well as the promise of discoveries to come.” He added. 

French Agency for the Development of AlUla (Afalula)
Concept rendering of a pool area displaying the interaction of modern designs mixed with the Nabatean way of using light, shadow and rocks. Concept rendering of a pool area displaying the interaction of modern designs mixed with the Nabatean way of using light, shadow and rocks.
Concept rendering of a pool area displaying the interaction of modern designs mixed with the … [+] ROYAL COMMISSION FOR ALULA

He is adapting old ways of life to our modern world  minimizing the impacts on natural and urban landscapes. To do this, genius Nouvel has introduced a new typology of architecture never seen before, using abstraction, sculpting within the landscape itself rather than competing with it. Inspired by the Nabateans, it plays on the old ways of living to build on the present and meet the challenges of the future. Jean Nouvel integrates the way Nabateans interacted with their environment, both with verticality and horizontality, to reconnect with the earth and build sustainable habitats, away from the heat of the summer and the cold of the winter.

These concept renderings show the resort’s luxurious embrace of AlUla’s natural colours, light, shapes, and materials.
These concept renderings show the resort’s luxurious embrace of AlUla’s natural colours, light, … [+] ROYAL COMMISSION FOR ALULA

The resort will bring emotional experiences from nature, architecture and art. Jean novel invites us to embark on a thousands of years journey where civilisations and geographical strata will be found in every detail of his designs, from the permanent feel of the rocks to the soft comfort of the armchairs, sofa, and seats. 

The sound, musicality, harshness, tactility, power and complexity of nature are everywhere, from finely chopped stones on balconies to the singular granularity of each rock wall, everything becomes an artwork in itself.

French Agency for the Development of AlUla (Afalula)
Design of one of the resort’s rooms with terrace: “Our design principles will guide us as we explore new typologies that reconcile heritage alongside the subtle transformation of the existing architecture.” Jean Nouvel
Design of one of the resort’s rooms with terrace: “Our design principles will guide us as we explore … [+] ROYAL COMMISSION FOR ALULA

Sharaan by Jean Nouvel is scheduled to open in 2023. The resort will feature 40 rooms, three villas and 14 pavilions carved into a sandstone outcrop, each suite having a balcony that looks out across the stunning surrounding AlUla scenery landscape. The hotel’s entrance will be from a circular courtyard that will be carved into the sandstone hillside. From here a series of rooms will be arranged around a central 80-metre high lift shaft.

French Agency for the Development of AlUla (Afalula)
A scenic express lift will bring guests to the heart of the resort, allowing them to travel through millions of years of geological stratas.
A scenic express lift will bring guests to the heart of the resort, allowing them to travel through … [+] ROYAL COMMISSION FOR ALULA

Sharaan by Jean Nouvel Resort is a major part of the Royal Commission of AlUla’s strategy to develop in a long term commitment AlUla as a global destination for culture, heritage, and eco-tourism. “These concepts, which showcase Jean Nouvel’s masterly innovation in architecture, underscore our commitment to developing AlUla as a global tourism destination without compromising the history, heritage, and landscape of AlUla. We are a destination built by artists. Sharaan by Jean Nouvel will build on that legacy to become a timeless landscape-architecture that will last forever – a gift to the world.” told Amr AlMadani, CEO of RCU.

To learn more about Saudi Arabia. Assouline just released a beautiful book Crafts of the Kingdom: Culture and Creativity in Saudi Arabia curated by author HRH Princess Najla bint Ahmad bin Salman bin Abdulaziz Al Saud.

French Agency for the Development of AlUla (Afalula)
CRAFTS OF THE KINGDOM Culture and creativity in Saudi Arabia published by Assouline
CRAFTS OF THE KINGDOM Culture and creativity in Saudi Arabia published by Assouline ASSOULINE

This book celebrates Saudi Arabia unique craft traditions and the master artisans who produce the Kingdom’s rich handicrafts. It highlights the abundant traditions which still exist in each of the Kingdom’s regions while revealing each craft’s historic roots and modern interpretations. A rich portrait of Saudi Arabia as a nation whose cultural heritage and diverse creativity have been proudly cherished, reverently preserved, and profoundly influential from ancient days to modern times.

Follow Cécilia Pelloux on Twitter or LinkedIn

The Impact Of Building Regulations And Energy Management Systems

The Impact Of Building Regulations And Energy Management Systems

Energy Efficiency: The Impact Of Building Regulations And Energy Management Systems are elaborated in this article.

Dr Mutasim Nour, Director of MSc Energy and MSc Renewable Energy Engineering programmes at Heriot-Watt University Dubai expresses his views on the impact of building regulations and energy management systems on maximising energy efficiency

The picture above is for illustration and is of How energy efficient are buildings in Dubai? by Energy Live News

The Impact Of Building Regulations And Energy Management Systems by 
Dr Mutasim Nour, Director of MSc Energy and MSc Renewable Energy Engineering programmes at Heriot-Watt University Dubai
Dr Mutasim Nour, Director of MSc Energy and MSc Renewable Energy Engineering programmes at Heriot-Watt University Dubai

Currently, just over half the world’s population lives in cities, but that is expected to rise to 68% by 2050. As a consequence, world energy demand is set to increase by more than 50 percent by 2050, according to predictions by the US Energy Information Administration – resulting in even higher energy consumption.

Hence, rapid urbanisation and a rapidly growing population along with climate change are key challenges that cities and countries must urgently address.

Closer to home, energy efficiency is a rising challenge in the UAE, due to a growing population, rise in economic activity, and increased energy consumption at a pace that will be difficult to provide for over the long term.

In a growing economy, energy consumption will rise despite reductions in the energy intensity of developed economies.

Although more and more cities are boosting their commitment and progress to becoming net zero carbon, they still have a long way to go. With climate change worsening, more action is required on specific fronts. Everything from factories and homes to transport systems and consumer devices need to become more energy efficient.

One such solution lies in implementing Building Energy Management Systems (BEMS), i.e.  automation systems that collect energy measurement data from the field and make it available to users through graphics, online monitoring tools, and energy quality analysers, thus enabling the management of energy resources.

The effectiveness of energy policies and regulations

Prior research indicates that buildings consume 80% of the overall energy demand in the UAE (UAE) and 40% across the globe. The UAE’s Federal Electricity & Water Authority (FEWA) estimates that around 60 to 70 percent of energy demand in the UAE currently stems from building HVAC requirements, with split air-conditioning units making up an estimated 60-70 percent of cooling systems in the market.

Therefore, the UAE as a whole, and Dubai in particular, have put in place different energy security and efficiency strategies such as UAE Vision 2021, Dubai Integrated Energy Strategy 2030 (aims to reduce Dubai’s total energy consumption by 30% by 2030), and Dubai Clean Energy Strategy 2050 (gradually increase the employment of clean energy sources to 75 per cent by 2050).

Additionally, Dubai has established the ‘Green Building Regulations and Specifications’ (GBRS) which aims to improve the performance of buildings in Dubai by reducing the consumption of energy, water and materials; improving public health, safety and general welfare; and by enhancing the planning, design, construction and operation of buildings.

Although not mandatory, GBRS acts more as a guideline for developers and contractors and offers recommendations for constructing energy efficient buildings in Dubai. It is intended to support Dubai’s Strategic Plan, create a more sustainable urban environment and extend the ability of the Emirate’s infrastructure to meet the needs of future development.

Maximising hedonic efficiency (extent to which the delivered service meets the demand) will offer a route to providing optimal service with reduced consumption. However, it is challenging to draft policy initiatives to maximise hedonic efficiency. This needs to be explored and considered by the professional and regulatory bodies.

In addition to a more persuasive regulatory framework, marketing and awareness campaigns that encourage building owners, occupants, developers, and other stakeholders to lessen their energy consumption can have a positive impact on energy conservation. DEWA’s ‘Smart Living’ initiative is one such example that allows consumers monitor their electricity (and water) consumption easily and make smarter decisions to reduce consumption.

Additionally, the adoption of innovative technologies such as EMS are needed for a more cohesive approach to achieving energy-efficiency.

BEMS to the rescue

BEMS enables real-time remote monitoring and integrated control of a broad spectrum of connected systems – allowing modes of operation, energy usage, environmental conditions and so on to be observed and allowing hours of operation, set points and more to be adapted in order to improve energy performance and occupancy comfort.

According to Mordor Intelligence, the Middle East and African market for energy management systems is projected to grow at a CAGR of 11.87% to reach USD 3.76 billion by 2021. This growth in demand comes from concerns over declining energy security, ambitious environmental goals, and the reduced cost of sensors, analytics software and data storage.

Currently, adoption levels across the GCC are lower due to a lack of codified regulation. Hence, a directive from the government to deploy energy management systems could play a critical role in helping country meet its sustainability targets.

There are two major aspects of constructing energy efficient buildings: using “green” design and building materials during the construction phase; and continuous monitoring and controlling energy consumption during the operation phase. While there has been enough emphasis on sustainable construction in some GCC states, there is very little attention on the installation of energy management systems. Focusing on energy management systems should be a key factor in the efforts towards creating a sustainable built environment in the region.

It is claimed that the magnitude of savings accomplished by BEMS can range from 10% to 25%. If used properly, BEMS should allow the optimisation of energy consumption without compromising on comfort or performance. But this requires an in-depth knowledge of how buildings are meant to perform, and how different systems within them communicate. In order to operate accurately, BEMS should be properly designed, installed and commissioned as well as have a user interface that is easy to use.

BEMS may have remote outposts that can be probed locally, or may be managed via mobile devices. However, some buildings could be susceptible to cyberattacks, especially when they are related to critical organisations. This can become an issue in the case of functions that run in the ‘cloud’, such as cloud-based analytics, and the ability to access and manage multiple sites remotely. The ability to retrieve live analytics, or receive alarm notifications from hand-held devices has enormous potential benefits, but may also bring additional risks.

BEMS taken into consideration right from the start of a new construction project can help owners and facility managers gain better control over energy use. Given the large push for sustainability, especially within the built environment, BEMS can therefore become crucial in Dubai and the UAE as more and more green projects come to fruition. 

The current generation of smart cities aiming to make buildings greener and smarter should invest more in BEMS and other technologies. Moving forward, BEMS will play a vital role in contributing towards the sustainability goals of energy-smart cities, as sensor-equipped, energy consuming devices such as HVAC, lighting, and refrigeration, become more integrated with BEMS.



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