Oman Pledges Net Zero

Back in June 2022, I had predicted that Oman would pledge to achieve net zero by 2050. What I had not predicted was how soon this pledge would come. As you have probably heard by now, Oman has, in the lead-up to COP 27, pledged to achieve net zero by 2050.

This is fantastic news—it demonstrates Oman’s commitments to the objectives of the Paris Agreement and will most certainly galvanise its government and the private sector towards achieving this goal. However, it is also a daunting task that requires a fundamental rethink on how we use energy. Oman will have to take many unprecedented steps to fulfil this laudable goal, so how does it go on about it?

Energy efficiency and electrification

Vaclav Smil said it best—the best thing we can do is to “keep the heat in (or out) with better insulation.” While a lot of attention in this space goes to the more glamorous tech-driven solutions, such as renewables and more recently green hydrogen, the most cost-effective way of addressing this monumental challenge is to simply reduce the demand for energy in the first place. This can be done by improving window-insulation and replacing old home appliances with newer and more energy-efficient appliances, such as new air conditioners.

As for electrification, we are starting to witness this first-hand with the advent of Battery Electric Vehicles (or BEVs) worldwide, such as the likes of Tesla and others. I’m sure you have seen a Tesla or two zooming through the highway during your daily commutes.

BEVs will become more ubiquitous in Oman during the next decade, and with the appropriate government mandates and incentives, BEVs will become the norm. This is very much the case in other countries, such as Norway, in which 75% of all the new cars sold in 2021 were BEVs. Where possible and economically feasible, other sectors should also be electrified, since electrons will always be more efficient than molecules.

Residential solar

Oman is blessed with an abundance of solar irradiation (that’s jargon for sunshine we can use for electricity), which can be utilised to reduce your electricity bills at the end of the month. A framework is in place to permit the installation of solar panels on residences, but the process is unfortunately bureaucratic, time-consuming, and on the pricier end (even though the back-of-the-envelope calculations show that the investment would pay for itself in ~7 years with today’s subsidised electricity prices and ~4 years once electricity is unsubsidised). It also does not address the fact that for rented properties, landlords have no incentive to install solar panels as it is the tenant that foots the electricity bill at the end of the month. So how do we resolve this?

The investment would pay for itself in ~7 years with today’s subsidised electricity prices and ~4 years once electricity is unsubsidied.

Process-wise, streamlining approvals and simplifying where possible would help. As for uptake, introducing incentives can go a long way. For citizens and residents that are barely able to cover their monthly costs, the notion of paying 6,000 or 7,000 OMR for solar panels is simply too expensive. The introduction of government-driven low-interest loans to address this issue would certainly help. Another incentive geared towards landlords could be in the form of tax/fee deductions that incentivises them to install solar panels on their properties. Perhaps in the future, the government can even mandate that all new buildings have solar panels installed.

The government can also offset the costs of such low-interest loans by taking ownership of the environmental attributes resulting from these installations, such as renewable energy certificates, in return, and selling them to buyers keen to offset their own emissions. 

Reliable low-carbon electricity generation

Renewables can only get us so far—when it’s dark and still, there is simply no way to harness the power of renewables. Batteries and other storage solutions, at least with today’s technology, are too expensive to deploy at scale. Oman will need to consider other technologies that can be deployed in Oman that are safe, readily available, and cost-effective.

Nuclear comes to mind as the most appropriate solution here and it appears our neighbours in the UAE have arrived at very much the same conclusion over a decade ago with the Barakah nuclear power plant. For all those concerned about the safety issues with nuclear, I suggest looking at the statistics—when looking at death per unit of electricity, nuclear energy is one of the safest forms of energy by far. Radiation is also an overblown concern. Did you know that your one-way flight from Muscat to London last summer exposed you to more radiation (24 μSv) than if you had been living next to a nuclear plant all-year-long (0.09 μSv)?

Some might gloss over the data and point right towards the Fukushima Dai-ichi disaster. As someone who has lived in Japan and spoken to multiple professors and specialists in this regard, I can write an entire thesis on what exactly went wrong, but the key point to highlight here is that newer plant designs have resolved the underlying issue of the Dai-ichi plant decades ago.

The Dai-ichi plant design was extremely outdated, having been designed in the 1950s at a time with no computers. In other words, this plant was designed back at a time when all they had were papers and pencils! We now have supercomputers with simulations so powerful that developers can pre-empt and resolve all of these issues before they even begin construction.

If Oman wants to emerge as a winner on the other end of the energy transition, it will need a reliable, cost-effective, and low-carbon solution. Nuclear can very much be the solution we need.

Hydrogen hubs

I tend to pour cold water over all the hydrogen hype. The notion that our world will run entirely on hydrogen, from our cars to our planes and all the way to our power plants, is simply unrealistic in my view. But don’t take it from me—Professor Sir David MacKay, Regius Professor of Engineering at the University of Cambridge and Chief Scientific Advisor to the UK government, wrote this in his book, Sustainable Energy: Without the Hot Air:

I think hydrogen is a hyped-up bandwagon. Hydrogen is not a miraculous source of energy; it’s just an energy carrier, like a rechargeable battery, and it is a rather inefficient energy carrier, with a whole bunch of practical defects.

Professor Sir David MacKay

Nevertheless, ‘green’ hydrogen has a critical role to play in decarbonising ‘grey’ hydrogen, especially as demand grows for hydrogen in the future. To ensure that the Sultanate can play a leading role in supplying this demand, it should focus on utilising its industry hubs to act as hydrogen hubs as well. Sohar and Duqm come to mind as suitable hubs for this purpose. This will ensure that hydrogen is produced and handled in a carefully controlled environment that reduces its likelihood of leaking into the atmosphere (which is quite problematic—if you recall from my previous post, hydrogen leakage has a devastating impact on global warming that is, ton-for-ton, 33 times worse than CO2).

I believe the hype over hydrogen will dissipate once consumers are shown the eyewatering prices that they will have to pay for hydrogen. Case in point—there are now 32 independent studies showing why using hydrogen for heating in the UK is a bad idea, especially since heat pumps are inherently safer and much cheaper over the long-run. I expect that we will arrive at the same conclusion for other proposed uses of hydrogen.

Carbon capture

One gas that I believe we should be obsessing over instead is CO2—it, unfortunately, cannot dissipate from the atmosphere fast enough and will need to be hoovered in by carbon capture solutions.

Oman should be obsessing over carbon capture, not to offset its domestic emissions, but rather to offset the emissions of other countries and industries. This is a sure-fire way of bringing in monetary benefits into the Sultanate in a manner similar to exporting goods, except Oman would store the captured carbon on behalf of these other countries.

In this regard, Oman is blessed with an abundance of a rock that is almost non-existent elsewhere, called ‘peridotite’. This rock can permanently store CO2 and preliminary estimates find that Oman has enough of this rock to store all CO2 emitted by humans since the beginning of the industrial revolution (yes, since the very beginning).

This can, in theory, enable Oman to supply fossil fuels to countries that need it the most (i.e. ones that are unable to switch to low-carbon technologies fast enough) and, in turn, supply them with the carbon credits needed for them to offset the resulting emissions from combusting these fossil fuels.

It is still early days, but I believe that carbon capture, as an industry, is here to stay and Oman can benefit considerably from it.

Legal considerations

Moving forward, you will need to ensure that your business carefully accounts for its GHG emissions to understand which segments of the business are at most risk of being impacted by Oman’s net zero pledge. The GHG Protocol is a good place to start if you are looking for an international standard to follow. A shadow carbon pricing can also help in understanding which business segments are at the highest risk of being impacted should Oman adopt a carbon tax in the future.

Further, you can expect dedicated climate impact assessments as a prerequisite for future projects to assess the impact such projects would have on the climate should they be deployed.

For businesses involved in carbon trading with buyers abroad, I would advise paying close attention to the accounting mechanism established by Article 6 of the Paris Agreement, which is known as the “corresponding adjustment”. This mechanism is designed to address the issue of double-counting by requiring the country selling the carbon credits to deduct the sold credits from its own national inventory.

The relevant government entity in this regard, being the Environment Authority after this competence was transferred to it from the Civil Aviation Authority by way of Royal Decree 60/2022, may not be keen to permit such sales. 

I should note, however, that corresponding adjustment only applies to credits authorised for transfer under Article 6 of the Paris Agreement and not to carbon credits sold under the unregulated voluntary carbon market. That being said, I would not be surprised if the main players in the voluntary carbon market (such as Gold Standard and Verra) impose this requirement onto their respective credits moving forward.

Finally, for businesses seeking to offset their emissions in the short-term, I would advise looking into purchasing high-quality carbon credits and renewable energy certificates that are compatible with the GHG Protocol and your respective industry’s climate-related codes. These will help reduce your emissions in the short-term and buy your businesses some time while you explore other solutions that can definitively help reduce your carbon footprint.