Interview: “The UAE is an innovator, but it’s also a supplier of energy today.”
Ali Al Janabi
Country Chairman, Shell Group of Companies Iraq and UAE
1. What have been the key policy milestones for Shell in recent years regarding the energy transition? How are these affecting your business and how are you working in line with those strategies, with regard to the UAE?
Maybe the starting point is the joint belief that both us and the UAE have. The UAE was the first country in the region to declare a net zero target. We were one of the first energy majors to declare an ambition of net zero by 2050. So we are very much joined at the hip in terms of intent and direction.
Then there is Shell’s intention to set carbon capture targets in a similar way to how the UAE has. We believe that carbon capture has to be part of the solution. The UAE is aiming to go from 0.8 million tons to 5 million tons by 2030.
We are also looking at increasing sustainable fuels in the mix. You will have seen the recent announcement about bringing sustainable aviation fuel into Dubai’s airports. It’s not just a supply agreement, it’s creating an opportunity for other like-minded companies to think the same way. It’s a collaboration between Shell and the UAE.
The first announcement of the carbon reduction initiative came in October, relating to the Habshan project, which will have a capacity of 1.5 million tons of carbon capture per year using Shell technology. We are very privileged, honoured and humbled that we are part of that, and there is an opportunity to build further on it. The aim is a collaboration to deploy technologies while bringing down the cost of abatement and the energy transition.
The hydrogen strategy has been a fantastic opportunity to provide that support to the UAE government. It is part of our support towards COP and addressing some of the key dilemmas across the different sectors.
2. You have suggested two scenarios for the energy transition, Archipelagos and Sky 2050. Can you tell us where the UAE is today on those pathways, and what are the most urgent next steps?
It difficult for me to say on behalf of the UAE where they are. I think in everybody’s mind, the ambition is Sky 2050’s target of warming of under 1.5°C by 2100. The UAE is playing a significant role in bringing diverse opinions and views to COP28. The challenge is huge. It will take time and will need strong collaboration across sectors, government, partnerships, academia and countries.
The beauty of the UAE is that decision making is fairly quick, and when the UAE says it’s going to do something, it will do it, and it will do it beautifully. The UAE is an innovator, but it’s also a supplier of energy today.
Sometimes the challenge is that newcomers into the UAE will say, “We want to do X, Y project, but give me a grant.” The first question to ask is, have you thought about the most cost-effective solution? Because if you are going to be depending on grants from elsewhere, innovation is not going to happen. Innovation will come out of a necessity to do something differently and drive the cost down. Energy transition has to cut costs. Goldman Sachs said 3.5 trillion dollars per year in a recent report I think. That’s an interesting number. The UAE asks Shell and others to come on that carbon capture journey, but expects you to drive the cost down. What kind of collaboration can help you drive down the cost?
I think the UAE will continue to be innovators, and will continue to adapt to where the need for support is. I suspect there will be some announcements coming up. There’s been a long discussion about what kind of support the government provides. But they’re very clearly conscious that there’s no point in supporting an industry that will struggle to stand on its own feet in the future. There are many projects that have a flawed business model because you can’t replicate them unless you keep getting government support.
“Innovation is really at the heart of everything. Our strategy involves providing more and cleaner energy to the world, and I think that’s what the UAE is trying to do too.”
3. Even if there were no more hydrocarbons tomorrow, your capacity as an organisation that can innovate and manage grand-scale projects is extremely useful. When you are working on innovations with the future in mind, what are the KPIs or main drivers?
We’re probably one of the largest spenders on R&D. The first question is, what should I be doing to my existing assets to provide the cleanest and lowest-cost molecules? The second is what technologies, innovation and R&D do I need to invest in to support my investments? Gas is a transition fuel, how can you make it cleaner? What can you do with regards to carbon capture around it? We look at projects not only in terms of return on capital, but also carbon intensity associated with the investment.
So I think we’ve set out a pathway on carbon capture. It is easier to do it with the decarbonised products of today, but ultimately it’s all about making sure that they are actually green. We’ve made that investment, we’ve purchased a company in Denmark which looks at renewable gas, and we are looking at renewable LNG and renewable gas opportunities.
The question is, what can you to do today to build on existing infrastructure? It has to be a step-by-step process. Whether it’s nuclear energy, solar or wind, how do I turn this into liquid fuels? I think we have the technologies. Next door, in Qatar, we have the largest gas-to-liquids project in the world. Now the question becomes, can we make those molecules synthetic? What technologies do we need as part of that transition? What projects and technologies do we believe are going to have a quicker path to deployment? It is very difficult to predict because some of it is longer term.
“The most competitive carbon capture technology in the world is with Shell.”
It has gone through multiple iterations. We’ve deployed it on our own assets and seen where we can learn. We’ve done multiple things to increase throughput. But we are still asking how we can do more with existing facilities rather than building new ones, how we can improve efficiency.
4. What are your expectations for the next few years regarding the energy transition for Shell, the UAE, and for Shell in the UAE?
Absolutely the focus will be on carbon intensity from existing production. Also where we invest, which is not just about what our return is but also the emissions. That is part of our framework. What kind of emissions do we produce? What are the abatements? What can you do differently and how can you get cleaner molecules?
Rather than just being a provider of a service, for example, there is what we’re trying to do with Northern Lights in Norway. We’re trying to do the same in the Netherlands, in the UK, and we have collaborations in Asia.
What kind of business model would enable us to sequestrate the carbon we capture from our facilities and offer it as a service to others? You’ll see that us tackling that. We’ve also made strong commitments to hydrogen, that’s going to continue.
It is important that we also take stock and say, we’ve made this investment, how does it work? Because these investments are bets on being able to make the business model work. Not many companies make this commitment. Sometimes people forget that to invest a couple of billion dollars is to take a risk, and that is the risk we have undertaken.
Looking at our existing business from a carbon intensity perspective, there’s a very large catalysts, licensing and technologies team here. We are providing support to not only Shell projects, but also to regional governments and regional entities. Carbon capture is going to be the name of the game.
We are very proud of these collaborations that we’ve carried out with the UAE. There is a role to play in connecting the dots between the electrons in the markets, and we shall probably see Shell playing a role in that too.