UAE companies have mixed success in cutting emissions

Alamy via Reuters

• Many companies record increases
• Corporations under pressure
• Pledge of 47% cut by 2035

While many of the UAE’s major corporations are making limited progress in cutting greenhouse gas emissions, analysis by AGBI reveals that Emsteel (formerly known as Emirates Steel Arkan) is the standout performer.

The UAE, the second-largest Arab economy, is seeking to quantify and reduce its impact on the climate, and in November pledged to slash its scope 1 and 2 emissions.

In December the country brought in a law requiring major companies to monitor, report and verify their emissions.

“The first step is quantifying what you’re trying to eliminate,” says Jim Krane, a fellow in Middle East energy studies at Rice University’s Baker Institute for Public Policy in Houston, Texas.

“It’s good to see one of the world’s major oil exporters working to quantify and then reduce its carbon footprint, especially when many other oil-producing countries are pushing back against the energy transition.”

Emissions are classified as scope 1, 2 or 3. Scope 1 refers to emissions an organisation creates directly, such as fossil fuels consumed by its transport fleet or on its premises during manufacturing or other processes. That could be coal burning to make steel.

Scope 2 emissions come from the generation of purchased electricity, steam, heating or cooling that an organisation consumes. Electricity from the grid is usually the biggest source.

Scope 3 includes indirect emissions from an organisation’s value chain, such as from suppliers and waste disposal, plus the lifetime use of its products.

AGBI compiled data on 25 UAE companies from their most recent sustainability and annual reports. Of these, Abu Dhabi National Energy Co (Taqa) had the largest scope 1 and 2 emissions in 2023, at 49.2 million metric tonnes of carbon dioxide equivalent (MtCO2e), down 10 percent on 2022.

Emissions cover CO2 and seven other greenhouse gases including methane, nitrous oxide and hydrofluorocarbons.

In 2023, the biggest scope 1 and 2 emitters in the UAE were in energy, transport, utilities and industry. These include Emirates airline (33.1 million MtCO2e), Dubai Electricity and Water Co (Dewa, 25.8 million MtCO2e), Abu Dhabi National Oil Co (Adnoc, 24.0 million MtCO2e) and Emirates Global Aluminium (21.4 million MtCO2e).

Primary energy producers such as Dewa and Taqa generate almost all their emissions in scope 1, while for property developers and telecom operators most emissions are scope 2.

Industrial companies that rely mainly on electricity, which means that most of their emissions are scope 2, should benefit from UAE utilities increasing their use of renewable and non-fossil fuel sources such as solar and nuclear, says Steve Griffiths, professor and vice-chancellor for research at the American University of Sharjah, and an energy expert.

In year-on-year change in total scope 1 and 2 emissions in 2023, Emirates NBD’s 19 percent reduction was the biggest among the 25 companies analysed, although financial institutions’ environmental footprints are generally insignificant.

Among major emitters Emsteel stood out, cutting its emissions by 13 percent. Taqa was the only other company to achieve a double-digit percentage reduction.

Conversely, Abu Dhabi Ports Co’s emissions rose five-fold to 1.2 million MtCO2e, while other companies reporting sizable increases include Air Arabia (up 31 percent), Aldar Properties (up 24 percent) and Etihad Airways (up 21 percent).

Pexels/Aleksander Apasaric

Companies now have a greater imperative to reduce emissions after the introduction of new rules in December. Under those, 16 of the 25 companies analysed would be classified as “entities of huge carbon emissions”.

The UAE has pledged to cut combined annual scope 1 and 2 emissions by 47 percent by 2035 versus a 2019 baseline.

“The UAE will try to achieve part of this through a cap-and-trade system for greenhouse gas emissions – first CO2 and methane,” says Griffiths. Aviation will probably be exempt, he says.

“Companies must report their emissions accurately in order to be part of the cap-and-trade system and for the UAE to measure its emissions, so most of the major emitters are taking this very seriously.”

The UAE’s main sources of scope 1 greenhouse gas emissions, namely power and desalination plants and industrial zones, are located close to each other, generally outside the country’s main urban areas, which makes decarbonisation simpler and cheaper, Krane says.

“They’re clustered together and built atop of rock where CO2 could be sequestered, so you wouldn’t need to build a large carbon pipeline network to do this,” he says.

Engineering skills

The UAE has the necessary engineering skills, including the geological, fluid systems and pipeline expertise, to build carbon-capture and storage facilities on a large scale, Krane says. 

“Unlike in much of the world, where short-term political cycles make long-term planning difficult, the UAE government can make multi-decade investments,” he says. “The UAE also has the money to do it.”

Krane says he is “optimistic” the UAE can achieve its decarbonisation and emissions targets, although “we’ll need to see it in the data, and that’s always the tricky part.”

Data for 2024 will be available by June.