Why energy firms are going all-in on the green transition

Solar cells at the Noor Solar Technology plant in Dubai Investment Park. Without chemical elements such as the silicon and perovskites used in such cells, the energy transition would flounder. Pawan SShow more

From the silicon and perovskites used in solar cells to the adhesives, composites and coatings for wind turbines, chemicals are an indispensable – if somewhat overlooked – part of the journey to a cleaner, greener future. The relative lack of attention is surprising because without chemical elements such as lithium, cobalt and nickel – all used in the batteries that power electric vehicles – the energy transition would flounder.

Chemicals’ centrality to new forms of power was highlighted on Wednesday when Abu Dhabi-based energy major Adnoc launched XRG, an international lower-carbon energy and chemicals investment company, with an enterprise value exceeding $80 billion. Adnoc wants XRG’s chemicals platform to become a top-five global player, producing and delivering chemical and speciality products to meet a projected 70 per cent increase in global demand by 2050. XRG will start operations in the first quarter of 2025 and will host a global strategy event next year.

This is a significant development that underlines the powerful role major companies are playing when it comes to not only driving the energy transition but making it profitable, too. Adnoc is not alone in this; but it is leading the way. Energy companies have the resources and motivation to come up with ways to make the energy transition work. It is in their interests to do so; developing more sustainable forms of energy is how such businesses will evolve and survive.

In contrast, the struggle to reach consensus seen recently at the Cop29 climate summit in Baku highlights the difficulty in trying to get dozens of governments on the same page. Although delegates eventually made important progress on climate finance and carbon markets, the fact that the talks ran 35 hours beyond their planned finish shows how labour-intensive reaching such agreements can be. As The National argued at the start of Cop29, a multitude of parties are needed to inform the conversation on climate innovations because energy firms understand that they are working with a finite resource.

With Adnoc’s XRG platform, the company is showing that it is going all-in on the transition to a sustainable future. And while technical expertise and financial investment are key parts of this strategy, people are, too. At Adnoc’s annual board meeting on Wednesday presided over by UAE President Sheikh Mohamed, the company’s target of directing Dh200 billion ($54.5 billion) into the UAE economy over the next five years through its In-Country Value programme was endorsed. This programme has also created 5,500 jobs for Emiratis in the private sector this year, adding to the 17,000 employed in the private sector since the programme was launched in 2018.

Such circular economics prove that partnership between the private sector, national governments and wider society is important, beneficial and achievable.