Gulf Business‘s article that as an Explainer: Is data the new oil in the GCC? is a good snapshot of the present situation of that part of MENA countries.
We all know that ‘Big Oils’ management and petrol countries alike have underscored scientific research showing the link between burning fossil fuels and a dangerously heating planet. They’ve lobbied and funded reports to either downplay or deny the risks to the climate—and humanity—of using their products. It went on unabated until the advent of clean and accessibility to all the latest technological hard and software for a broad spectrum of commercial activities.
Explainer: Is data the new oil in the GCC?
Technology has now become a key driver of economic growth in the GCC, with data already defining the region’s future, opines Maurits Tichelman, VP – Sales, Marketing, and Communications and GM – Global Markets and Partners, EMEA at Intel
Is the term ‘data is the new oil’ still relevant? Yes, data has practically become the ‘new oil’. Data is playing a significant role as a crucial source of wealth for oil-rich nations and territories such as the GCC, which has historically been particularly dependent on oil as the main contributor to the GDP.
We are witnessing a significant shift from oil to data in the region as governments embark on strategic initiatives to diversify towards more knowledge-based and tech-driven economies. Data is already playing a key role in this transformation. A concrete example of this process could be autonomous driving. Autonomous vehicles run on data in the same way that today’s cars run on gasoline. Therefore, undoubtedly, data will be the new oil.ADVERTISING
In the GCC, oil has been crucial to economic growth. Will technology/data be able to provide the same level of economic prosperity? Countries in the region are heavily investing in diversified industries such as technology, manufacturing, education, and healthcare, among others. As the Gulf states transform and diversify, the importance and impact of technology will take on an even greater role. Data is already defining the region’s future, complemented by mega projects planned with greater focus on smart infrastructure (smart cities), advanced telecoms services, and somewhat accelerated by the rapid rise of remote learning and working due to the Covid-19 pandemic.
Furthermore, technology has now become a key driver of economic growth, from providing goods and services efficiently, to optimising advanced technologies to help businesses and governments access natural resources that can benefit people. Additionally, increased efficiency of labour has improved productivity and profitability.
While we are producing ample amounts of data in the region, are we currently maximising its benefits? We are surrounded by data and it continues to grow exponentially. According to estimates, in 2021 alone, there will be 74 zetabytes of generated data and it is expected to reach 149 zetabytes by 2024. As a result, the need to understand and optimise data has become even more significant as every business uses data to some extent. However, there is a lack of knowledge and skills in utilising the data to its full potential. With the rise of digitalisation, companies and governments across the region and worldwide are investing in digital transformation, a positive indication that more organisations are now realising the importance of data.
The Covid crisis has highlighted the importance of technology – but will it retain its relevance post-pandemic across industries? The pandemic has undeniably prompted companies to invest more in technology adoption across industries including healthcare, education, retail and real estate, among others. The use of innovation technology such as virtual medical/doctor consultation has helped people during lockdowns. The Covid crisis has forced organisations and governments to adapt and prepare better to tackle future calamities with the aid of technology.
Businesses have seen the advantages and have started deploying smart and intelligent technologies such as artificial intelligence (AI) to improve safety standards and increase productivity. Thus, it is clear that technology has become an absolute necessity rather than a mere option; its relevance has never been so crucial and without a doubt the use and benefits will play a bigger role post-pandemic across industries locally, regionally and internationally.
What are the biggest challenges hindering tech adoption/data-driven growth in the region? Although organisations are implementing advanced technologies, the vast majority still operate on outdated and traditional models, which prevent them from utilising the benefits of the latest available technologies. Secondly, reluctance and resistance from employees in adopting technology poses challenges for companies. Lastly, a lack of skilled professionals is a key factor that has restricted organisations in the region from completing their digital transformation.
Looking ahead, GCC states are seeking to become global knowledge hubs. How can that journey be accelerated? GCC governments are accelerating their digital transformation journeys with progressive strategies and initiatives. Smart Dubai, Dubai Data Strategy, Saudi Arabia’s The National Strategy for Digital Transformation and the Qatar Smart Program (TASMU) are examples of the regional commitment and ambition to explore all possibilities of technology and its impact on daily life and business. These strategies, roadmaps and ambitions are the key drivers and accelerators of their technological transformation journey.
For over a century, burning fossil fuels has helped propel our vehicles, power our businesses, keep the lights on, and warm our homes and to this day still provide many of our energy needs. We are paying the price in terms of extreme weather fluctuations and the increased intensity of natural disasters. The latter’s impact, coupled with advancements in technological knowledge and implementation on the hydrocarbons market in parallel to a specific social movement of divesting off all fossil fuel industries, could not have begun if no palliative industry can procure all that necessary energy. At this conjecture, a story of a looming oil price super cycle will likely be the last produced in the IMF blog titled ‘End of the Line‘ only manages to highlight a change in the game. Here it is.
A looming oil price super cycle will likely be the last
Rabah Arezki, chief economist at the African Development Bank and a senior fellow at Harvard University’s Kennedy School of Government.
Per Magnus Nysveen, senior partner and head of analysis at Rystad Energy.
After a pandemic and a price war sent petroleum prices tumbling in 2020, they are again on the rise. A new oil price super cycle—an extended period during which prices exceed their long-term trend—seems to be in the making, driven by pervasive supply shortages from the lack of investment that has continued since the 2014 collapse in oil prices and, more recently, reduced investment in shale oil production; and demand growth triggered by a strong recovery in countries such as China, a big stimulus package in United States, and global optimism about vaccines.
Some of these factors have persistent components and will likely more than offset any downward pressure on consumption that becomes part of a new normal post–COVID-19 environment.
Nevertheless, this could be the last super cycle for oil because major economies appear committed to replacing fossil fuels, and mass car manufacturers have responded by committing to replacing internal combustion engine vehicles with electric vehicles over the medium term. This shift will transform the oil market into one consistent with climate goals, but poses a risk of disorderly adjustment for economies dependent on oil, with far-reaching effects that in some cases could spill over their borders.
Oil investment crunch
Even with relatively lower oil prices, extraction and exploration companies have been highly profitable. At the same time, perhaps in recognition of a less buoyant future, they have reduced their investment. Production in oil fields and the number of wells are declining, and reserve depletion is rapid. The drop in both capital expenditure and replacement of oil reserves has persisted since 2014.
COVID-19 has exacerbated the investment decline. For example, shale oil output—which has a shorter production cycle and therefore is more sensitive to changes in investment—is now increasing by half a million barrels a year, compared with 2 million barrels a year before the onset of the pandemic. While the Biden administration’s announced ban on drilling on federal land in the United States will have little direct impact on shale production, it signals a shift in federal government sentiment against the oil industry.
Shale producers have adopted a noticeably more cautious investment posture. As a result, they will be operating with positive cash flows—cash flow was previously directed toward investment spending. This reduced investment will lessen the role of shale as swing production and plants the seeds of a price super cycle. On the other hand, the Organization of the Petroleum Exporting Countries will likely increase production to counter that upward pressure on price.
The debate over peak demand
Several commentators and major oil market players, including BP and Shell, argue that global demand for oil peaked in 2019 at about 100 million barrels a day and that it will never again reach that level because of pandemic-related structural changes. That view seems supported by the sharp reduction in oil consumption for transportation, including jet fuel. After travelers started cancelling flying plans in March 2020, jet fuel consumption collapsed and only began to creep up as travel restrictions started to ease.
Those who believe consumption has peaked still anticipate that gasoline consumption will rise in mid-2021, despite higher prices as a result of the inevitable lag between any demand-induced increase in crude oil production and the increase in refined products to meet demand. With vaccine developments and optimism from a proximate reopening of the global economy, it is expected that oil consumption will continue to recover, but to a level lower than what prevailed before the pandemic—effectively the peak of oil consumption.
Yet proponents of the view that oil demand has peaked overlook the structural increase in consumption that will eventually offset any downward shift from COVID-19. Rising living standards and a growing middle class in China and India will lead to increased demand for individual cars and air travel. So even if economic growth slows, the large numbers of people crossing the income threshold that enables them to afford a car will support demand for travel. In emerging markets such as China and India, any shift toward electric vehicles will likely be slower than in advanced economies given concerns over the availability of charging stations. The rate of adoption of electric vehicles will, by and large, be the major driver of future oil demand because road fuel accounts for half of global oil demand.
The structural increase in oil demand, together with a persistent reduction in production from insufficient investment, will likely precipitate—and keep alive for some time—an oil price super cycle. But will an increase in oil prices prompt more investment and lead to another price bust as has happened in the past?
Technology and its consequences
Technological innovation may make things different this time. Large investments will likely be discouraged by the new technology at the heart of carmaker plans to replace internal combustion engine vehicles with those that run on electricity. The stock market capitalization of electric carmaker Tesla points to the imminence of the transformation of the automobile market. Tesla’s capitalization dwarfs that of traditional carmakers—even though those manufacturers produce vastly more cars than Tesla. That disparity has prompted traditional car manufacturers to commit to replacing vehicles powered by internal combustion engines with those powered by electricity, which in turn has triggered massive research and development on electric vehicles by manufacturers seeking to grab shares of the new market (see table).
A frenetic ramping up of production of electric vehicles is not without risk, however. It could cause supply to exceed demand—which would lead to negative cash flows, illiquidity, and bankruptcies of car manufacturers. The automakers’ bet is driven both by the commitment of governments to achieving zero net carbon emissions and by the belief that consumers will want to adopt cleaner modes of consumption—transportation accounts for about a quarter of global energy-related carbon dioxide emissions. But it is unclear whether consumers will merely pay lip service to cleaner consumption or actually change their behavior. Will higher carbon prices become less important to consumers than concern about an inadequate charging infrastructure for automobile batteries?
That said, mass manufacturing will eventually make the price of electric cars attractive, and a spike in oil prices would hasten the conversion to electric vehicles. This last oil price super cycle will be consistent with climate goals and associated with commitments by large economies to net zero carbon emissions in the medium term. However felicitous a development that will be for the global climate, however, it poses a risk that the oil reserves so many oil-dependent economies count on will be less valuable—especially for reserves where extraction costs are high. The reserves and the investment surrounding them become, in effect, stranded assets. That could lead to severe economic woes, including bankruptcies and crises, in turn leading to mass migrations, especially from populous oil-dependent economies, many of them in Africa. Other larger oil-dependent economies in the Middle East, central Asia, and Latin America are also an important source of remittances, employment, and external demand for goods and services that benefit many neighboring countries. The end of oil, then, could not only devastate oil-dependent economies but could also overwhelm their neighbors. It is not all bad news for countries with mineral deposits important to the energy transition. Cobalt, essential for car batteries, will be in much higher demand. Uranium could be valuable as well as electricity generation moves away from fossil fuels and nuclear power becomes more attractive.
The end of oil thus makes economic transformation imperative. Oil-rich countries must diversify to become resilient to the changes in energy markets. An appropriate governance framework to manage proceeds from oil in good and bad times has always been important to fostering economic diversification. But with stranded assets a new risk, radical shifts in governance in oil-dependent economies are urgent. Dubai, for example, facing the depletion of its oil reserves, transformed itself into a global trade hub. Countries and businesses reliant on these markets must formulate policies to address this transformation, including the development of renewable energy. To jettison their hidebound economies, which have led to low productivity and waste, oil-rich economies should commit to reforms that lessen obstacles to innovation and entrepreneurship. Reforming corporate governance and legal systems, promoting markets that have no barriers to entry and exit, and ending favoritism for both state-owned enterprises and politically connected private firms will help attract investment and change attitudes toward innovation (Arezki 2020).
The UNFCC, in this article, comes after an IEA report in which a change of goals of the world’s leading energy advisor from that of the oil supplies protector to that of fossil fuels banning partisan is noticeable. Transitioning to a net-zero will mean breaking bad habits, but can we get there in time? This question is mainly addressed to those oil-exporting as well as would-be exporters countries of the MENA region.
It seems it is either adapting to Climate Impacts in the MENA Region and survive the potential effects of lack of exceptional revenues through quasi-vital know-how or going to COP26 and be pointed at as the source of all evils.
So without further ado, let us learn what is proposed.
UN Climate Change News, 21 May 2021 – Closing knowledge gaps on the effects of climate change across the North African and West Asia/Gulf Cooperation Council (GCC) subregions was the focus of a recent meeting which showcased initiatives that will form part of an action plan for closing such knowledge gaps in the region.
Understanding the effects of climate change in the local and regional context and identifying specific regional knowledge gaps are important first steps in scaling up adaptation actions – a key pillar of the Paris Agreement. The meeting held on 5 May was the third of its kind involving partners of the Lima Adaptation Knowledge Initiative (LAKI).
‘Adaptation as we know is a journey, building on knowledge and cultivating synergy with the Sustainable Development Goals (SDGs) and other global frameworks. The initiatives outlined in the action plan will go a long way towards providing concrete anchors for advancing adaptation efforts in countries in this region,’ said Paul Desanker, Manager, Adaptation Division, UNFCCC.
Defining joint adaptation actions
A collection of projects led by organizations partnering with the UNFCCC were presented at the meeting, including: Scaling up mangrove carbon sequestration studies from the United Arab Emirates to Oman to support adaptation; development of a digital system accessible through mobile phones to transfer key knowledge to farmers to shield them from climate shocks in Jordan; frameworks and systems for data collection and monitoring of climate impacts; and technological advances in drought management and smart agriculture.
Funding opportunities to support the implementation of actions
Participants at the meeting shared their views on opportunities and challenges for cross-collaboration and received guidance from climate finance experts on funding schemes to support the action plan. The coordinator for the Global Adaptation Network at the United Nations Environment Programme (UNEP) Elizabeth Bernhardt, explained that innovation is a key priority for securing funding opportunities such as the Global Ecosystem-based Adaptation Fund and the Adaptation Fund Climate Innovation Accelerator (AFCIA).
‘If there’s something that has proven benefits for communities and proven ability to be scaled up and scaled out to other locations, it would be a top priority. Is it truly innovative? Does it demonstrate how a barrier could be overcome in a way that other countries can emulate?’ she said.
This was the last of a series of three virtual meetings, as a part of the second phase of the LAKI for North Africa and GCC subregions. In the previous phase, a total of 28 priority adaptation knowledge gaps were identified across the two subregions, which included lack of data, lack of access to data, lack of actionable knowledge, and lack of methods to process knowledge into an actionable form.
Activities in the plan will now be implemented, and progress for each action will be showcased at events throughout the year, including the UN Climate Change Conference COP26 in Glasgow in November and the MENA Regional Climate Week in March 2022.
The LAKI is a joint action pledge made by the UNFCCC secretariat and UNEP through the Global Adaptation Network (GAN) under the Nairobi work programme (NWP). For the West Asia-GCC and North Africa subregions, the secretariat collaborates with the UNFCCC-WGEO Regional Collaboration Center for the Middle East, North Africa and South Asia based in Dubai (RCC Dubai), the UNEP Regional Office for West Asia, and the UN Economic and Social Commission for Western Asia (UNESCWA).
Here is a story told by Professor Paul Bierman about divestment from fossil fuel how-to get rid of this earth’s malefic resource of easiness. In short, it is about salvaging what remains of the earth’s goodness and secure an unaltered future for the coming generations.
For over a century, burning fossil fuels has helped propel our cars, power our businesses, and keep the lights on in our homes. Even today, oil, coal, and gas provide about a lot of our energy needs.
Divesting is the act of removing any financing of the fossil fuel industry, increasingly found to be an unethical industrial human activity. The fossil fuel divestment movement that started gaining attraction in 2010 could not have begun if no palliative industry can procure all that necessary energy.
In recent years, the divest movement from fossil fuels has grown to a multi-trillion dollar movement involving numerous institutions worldwide. And thanks to stricter policies to address the climate crisis, fossil fuels are gradually becoming yesterday’s energy source. They could soon be considered, were it not for the Big Oils and their lobbies, as a nasty, dirty and nuisance liable to damage the planet’s soils, air and above all, its climate. Luckily, Fossil Fuel complicity being no longer hidden, divestment is gradually brought about and sustained by the likes of the professor here.
A fossil fuel divestment ‘how-to’
As a climate scientist, I find fossil fuel divestment to be critical low-hanging fruit, even if its effects are largely symbolic. But it never ceases to amaze me how we struggle to get it done.
At the University of Vermont (UVM) where I’ve taught since 1993, the divestment movement lasted a decade and got nowhere. Then — in less than a year — it happened. A growing student movement did the work. Emboldened by Mike Mann’s visit to campus and Greta Thunberg’s youth activism, students ramped up pressure on the University administration (which initially pushed back with standard lines about fiduciary responsibility). Some savvy students even noticed — buried deep on UVM’s web site — that the Green Fund, a small piece of our endowment, yielded better growth than the rest of UVM’s investment portfolio. Even that reasoned argument fell flat until public action by students and faculty allies threatened UVM’s well-manicured image as the “Environmental University.” In our image, and in the image of Williams College, lies the power for change.
When more than 100 students arrived with signs and speakers at the UVM fall Board of Trustees public comment period (scheduled at 8:30 a.m. on Saturday, October 26, 2019), the dialogue began to change. At the winter meeting several months later, I, along with students, appealed to the board to divest and diversify (to me, these are tightly linked). Hundreds of students cheered under the watchful eyes of several armed UVM police and through rope barricades isolating the board. Still nothing changed. But TV cameras rolled.
When the same students planned to disrupt admitted students’ day visits a month later (we need to convince students to attend UVM since their tuition pays our salaries), decision makers noticed. I was Nordic skiing at dusk when my cell phone rang. It was the provost. She asked, Would I stop the student “activists” from protesting tomorrow? I said no. But I advised that she call and speak to them directly — hear their voices. The students had an audience and the log jam began to break. The board got a new chair. A committee was formed. By summer, the president celebrated “our” decision to divest because it demonstrated UVM’s true environmental mettle.
Our actions may have had a price. In December, UVM proposed to terminate the geology department — one of the big players in climate-change research on campus. Soon after, I was told by a dean that some in the administration had labeled me a “troublemaker.” A few weeks later, the emails and phone calls began. I’ve now heard from staff, faculty, a dean, and a large donor that some of UVM’s leadership team doesn’t believe climate change is real. So far, UVM has declined Freedom of Information Act requests from reporters to release relevant emails. Change does not come easily and without a cost.
What is clear to me now is that concerted student action, in the public square and supported by faculty (and alums!), is key to making change. Divestment means challenging established economic and management power structures; it’s not easy, and it carries risks. But it’s the right thing to do. In the words of the late John Lewis, “Never, ever be afraid to make some noise and get in good trouble, necessary trouble.” The climate crisis mandates we make some noise and get in some good trouble. Every one of us.
Paul Bierman ’85 is a Professor of Geology at the University of Vermont. He lives in Burlington, VT.
Gulf Times of today informs that Qatar tops the MENA region in World Economic Forum’s Energy Transition Index 2021. It could be treated at face value not as a self-indulging pat in the back but rather as a realistic assessment of the situation of the small peninsula endowed with the ginormous reserves of Gas that is opting for a Green Energy strategy. But would this ‘Green’ Energy Strategy work for Qatar? Let us see what Pratap John has to say.
Qatar tops MENA region in WEF’s Energy Transition Index 2021
Qatar also leads the global rankings on the economic development and growth component of the ETI, supported by the strong role played by domestic energy sector in the economy
Qatar has topped the Middle East and North Africa region, securing 53rd rank in WEF’s Energy Transition Index 2021.
Qatar also leads the global rankings on the economic development and growth component of the ETI, supported by the strong role played by domestic energy sector in the economy.
However, this also poses challenges that are common to all resource rich countries. As more and more countries embark on their net zero journeys, the demand for medium term demand for fossil fuels is expected to decline, which might create economic growth challenges for resource dependent countries. The dip in oil and gas demand, and resulting price volatilities, during the Covid-19 pandemic are a cogent reminder of the need to diversify the economy to limit exposure to fossil fuels.
Creating a robust enabling environment, backed by a stable long-term roadmap, strong political commitment, investments in low carbon energy value chain, and supporting reskilling of labour, will be critical in this process. Moreover, Qatar can leverage the existing resource base and legacy infrastructure to create opportunities in the new energy landscape – for example by investing in capacity to localise processing and manufacturing of higher value add products in the fossil fuel value chain, and by supporting innovation and infrastructure development for green hydrogen.
The United Arab Emirates secured itself an impressive global top ten rank in 12 indicators of the report Fostering Effective Energy Transition 2021, which was released by the World Economic Forum.
In its 10th edition, the report, published in collaboration with Accenture, believes that as countries continue their progress in transitioning to clean energy, it is critical to root the transition in economic, political and social practices to ensure progress is irreversible.
The report draws on insights from the Energy Transition Index (ETI) 2021, which benchmarks 115 countries on the current performance of their energy systems across the three dimensions of the energy triangle: economic development and growth, environmental sustainability, and energy security and access indicators – and their readiness to transition to secure, sustainable, affordable, and inclusive energy systems.
This year’s report uses a revised ETI methodology, which takes into account recent changes in the global energy landscape and the increasing urgency of climate change action.
Globally, Sweden (1) leads the ETI for the fourth consecutive year, followed by Norway (2) and Denmark (3).
Regionally, Qatar ranks first, followed by the UAE and Morocco, while Saudi Arabia remains 8th among its Arab neighbours.
Overall, scores in the Middle East and North Africa fell last year but the overall trajectory remains moderately positive. Heavy reliance on oil revenue continues to present challenges to sustainable growth. Diversification of the economy and the energy system can improve prospects. Challenges remain in access and security, with a heavy concentration in primary energy sources.
Several countries in the region have set out ambitious renewables targets for 2030.
For this region, WEF noted the coming decade presents opportunities to invest in an energy transition that can unlock significant cross-system benefits.
“As we enter into the decade of action and delivery on climate change, the focus must also encompass speed and resilience of the transition. With the energy transition moving beyond the low hanging fruit, sustained incremental progress will be more challenging due to the evolving landscape of risks to the energy transition,” said Roberto Bocca, head (Energy and Materials) at the World Economic Forum.
The results for 2021 show that 92 out of 115 countries tracked on the ETI increased their aggregate score over the past 10 years, which affirms the positive direction and steady momentum of the global energy transition.
Strong improvements were made on the Environmental Sustainability and Energy Access and Security dimensions. Eight out of the 10 largest economies have pledged net-zero goals by mid-century. The annual global investment in the energy transition surpassed $500bn for the first time in 2020, despite the pandemic.
The number of people without access to electricity has declined to less than 800mn, compared to 1.2bn people 10 years ago (2010).
Increasing renewable energy capacity has in particular helped energy importing countries achieve simultaneous gains on environmental sustainability and energy security.
However, the results also show that only 10% of the countries were able to make steady and consistent gains in their aggregate ETI score over the past decade.
“A resilient and just energy transition that delivers sustainable, timely results will require systemwide transformation, including reimagining how we live and work, power our economies and produce and consume materials,” said Muqsit Ashraf, the senior managing director who leads Accenture’s energy practice.
Originally posted on looking beyond borders: As a key player in the recent Israeli-Palestinian ceasefire and with its diplomats more active than they have been in years, Egypt is back as a major influencer in Middle Eastern affairs. From Gaza to Libya, the Eastern Mediterranean to the Horn of Africa, Cairo is now key in…
Originally posted on Eli Lester: The African Colosseum in El Djem, Tunisia
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