Qatar looks to renewables to power sustainability transition

It is ten years since Qatar’s capital Doha hosted the UN Climate Change Conference. Over the last decade, the sustainability agenda has accelerated dramatically, both across the world and within Qatar.

At the root of Qatar’s own sustainability challenge are two vital commodities that have shaped its economy — hydrocarbons and water. With an area of just 4,470 square miles, the entire Qatari peninsula is slightly smaller than the US state of Connecticut.

Fossil fuels — particularly natural gas — are plentiful. However, water is extremely scarce. Qatar has one of the lowest annual rainfalls in the world alongside Libya, Egypt, and neighbouring Saudi Arabia. It also has scarce groundwater sources, which are currently being extracted faster than they are being replenished.

To tackle this water shortage, the country recycles about a quarter of its water for use in industry and agriculture — a higher rate than other Gulf Cooperation Council countries. Meanwhile, about half of all Qatar’s water is obtained by desalination of seawater.

Water production through desalination has quadrupled since 2000 and the capacity of Qatar’s utility infrastructure to produce water is being tested by preparations for the FIFA World Cup, which takes place in Qatar from late November.

Despite it being one of the most water-scarce countries in the world, international teams will play the tournament at eight stadiums with lush grass pitches.

Desalination is an energy-intensive process and so is ultimately responsible for large quantities of greenhouse gases. New desalination technologies that reduce the requirement for energy are emerging and being implemented in Qatar, but the fact remains that obtaining one vital commodity, water, adds to the challenge of reducing the use of another, oil and gas.

The vast majority of Qatar’s water is obtained by power-intensive desalination, and the vast majority of Qatar’s electricity is derived from gas-powered generation. Therefore, two of the most vital sustainability challenges — carbon reduction and water security — are intimately intertwined. It is no coincidence that Qatar’s major utility is the Qatar General Electricity & Water Corporation.

Qatar’s National Environmental and Climate Change Strategy is aimed at tackling the triple challenge the country faces of securing water, reducing greenhouse gas emissions, and doing so from a small land area.

The government has targeted a 25% reduction in greenhouse gas emissions (versus a business-as-usual scenario) by 2030. It is also aiming for a 60% reduction in groundwater extraction as well as wider recycling and water efficiency measures.

The strategy forms part of the Qatar National Vision 2030, which aims to preserve and modernise national traditions, create inter-generational justice, to manage growth and expansion, build capacity in the workforce, and economic, social, and environmental growth and development.

The Qatari Stock Exchange, which has a total market capitalisation of $200 billion, is signed up the United Nations Sustainable Stock Exchanges Initiative. It has issued guidance to all listed firms on appropriate environmental, social and governance (ESG) reporting, which is expected to become mandatory in the near future.

Meanwhile, Qatari banks have already adopted core ESG reporting standards. Sheikh Fahad Bin Mohammad Bin Jabor Al Thani, chairman, Doha Bank, says the bank has cut is carbon dioxide equivalent emissions by 38% over the last five years and is fully signed up the target of net zero by 2050. The bank’s assessments cover Scopes 1 and 2 of the international Greenhouse Gas Protocol.

Scope 1 covers direct emissions by the bank and Scope 2 covers secondary emissions from energy purchases.

Al Thani said the bank plans to extend its emissions reporting to Scope 3, those created upstream and downstream in a company’s value chain, for example by suppliers and investments. Importantly, Doha Bank is not alone its efforts here.

“Sustainability is a strategic imperative for QNB,” says Abdulla Mubarak Al-Khalifa, group chief executive officer, QNB Group, adding that there has been a hard focus by the bank on enhancing its sustainable financing activities and its sustainability across its operations.

This has involved strengthening its environmental and social risk management standards to mitigate its exposure to environmentally damaging activities, as well as launching a group-wide initiative to reduce its environmental impact and emissions.

Similarly, Dukhan Bank has embedded a corporate social responsibility and sustainability strategy within its activities and operations, which has led to the launch of emission-reducing green products such as electric vehicle finance and green Sukuk, as well as implementing sustainable targets in its day-to-day operations and initiatives.

While the Qatari banking sector supports the nation’s sustainability drive, Qatar cannot reasonably expect to significantly reduce its use of natural gas. As Al Thani points out: “The Vision further calls to keep exploiting natural gas as a ‘major source of clean energy for Qatar and the world’. Energy efficiency is also promoted. The Vision also seeks a reduction in the associated gaseous emissions of fuel consumption used for water desalination, including through the usage of renewable energy.”

‘Clean energy’ is, of course, a relative term. Gas is an imperfect source of energy, but it does create far lower emissions than coal and is widely regarded as a ‘transition fuel’. Its use not just in Qatar, but in other developed economies, is likely to persist for many years.

But while fossil fuels will be a major component in the Qatari economy for the foreseeable future, and a vital source of overseas income and GDP, the country is looking to renewables.

The climate of Qatar lends itself to solar energy generation, although as a geographically small state it lacks the vast expanse of desert available for solar farms in neighbouring states. Nevertheless, Qatar has rapidly developed a solar industry in the last few years and in a relatively short space of time it has staked a significant claim in the solar energy economy, both in its own region and beyond.

Vision 2030 sets a target of sourcing 20% of its energy from non-gas generation by the end of the decade. The state-owned group, Qatar Solar Energy, is a leading manufacturer of solar power components and last year opened the largest integrated production facility for solar energy systems in the Middle East and North Africa region. Even more recently, Qatar’s Solar Technologies, took a 49% stake in German-based SolarWorld.

That investment came after a troubled period for the German group and is seen in the industry as having returned the German business to a sound financial footing.

Bassel Gamal, group chief executive of Qatar Islamic Bank, says: “Qatar is moving strongly towards environment-friendly solutions, such as diversifying energy sources, investing in solar energy, moving towards an electric public transport system, shifting to green buildings, and expanding natural solutions as it prepares to host the first carbon-free World Cup in 2022.”

The ‘carbon-free’ status of the Qatar hosted World Cup has been contested by some climate monitoring groups, but, whatever the accuracy of that claim, there is little doubt that Qatar has taken major steps forward in its sustainable energy plans. The country’s first large scale solar power plant is expected to become operational imminently.

The Al Kharsaah project alone will, at full capacity, be able to produce 10% of Qatar’s peak energy demand. While the World Cup development has involved construction of eight football stadiums, Al Kharsaah covers the equivalent of 1,400 football pitches.

Over its lifetime, Al Kharsaah will produce energy without greenhouse gas emissions, reducing CO2 output in Qatar by 26mn tonnes. Al Kharsaah, located approximately 80km from Doha, is also an example of international investment in Qatar’s renewable future. The project is 60% owned by Qatari group, Siraj Energy, and 40% by France’s TotalEnergies and Japan’s Marubeni Corporation.

Qatar’s economy will be entwined with fossil fuels for many years to come. Its gas fields are simply too large to remain unexploited and, whatever the long term climate targets of the world’s leading economies, they will be eager consumers of its gas due to the twin goals of energy security and the energy transition.

A rebalancing is underway in Qatar. The country has invested billions in developing new sectors of its economy and is now driving hard towards renewable energy sources. While the vital importance of water security and the country’s relatively small geographical area pose challenges, the nation’s wealth and its recent history of attracting international investment suggest it could yet become a regional leader in renewable energy.