The UAE’s selection as host of COP28 in 2023 crystallized a paradox that sits at the center of the country’s global positioning. Here was the world’s seventh-largest oil producer hosting the premier international climate summit, with the chief executive of its national oil company serving as the conference president. Critics saw hypocrisy. Defenders saw pragmatism. The reality is more nuanced than either framing allows.
The Production Reality
The UAE’s hydrocarbon sector is not contracting. ADNOC has invested heavily in expanding production capacity, targeting five million barrels per day by 2027 from approximately four million previously. Upstream investment has accelerated, not decelerated. Natural gas development, including the massive Hail and Ghasha sour gas project, represents multi-decade capital commitments to fossil fuel extraction.
This expansion is not irrational. The UAE’s crude oil has among the lowest production costs and lowest carbon intensity per barrel globally. In a world where oil demand will persist for decades even under aggressive decarbonization scenarios, ADNOC’s strategy is to ensure UAE barrels are among the last produced, not the first displaced. The argument that low-cost, lower-carbon producers should expand while higher-cost, higher-emission producers contract has economic logic, even if it sits uncomfortably alongside climate commitments.
The Investment Portfolio
Simultaneously, the UAE has built one of the world’s most significant renewable energy investment portfolios. Masdar, Abu Dhabi’s clean energy company, has developed solar, wind, and waste-to-energy projects across dozens of countries with a total portfolio capacity that places it among the largest renewable energy companies globally. The Mohammed bin Rashid Al Maktoum Solar Park in Dubai is one of the world’s largest single-site solar facilities. Abu Dhabi hosts the International Renewable Energy Agency headquarters.
These investments are real, substantial, and growing. They are also, in absolute terms, modest relative to hydrocarbon revenues. Masdar’s total investment portfolio, while impressive, represents a fraction of ADNOC’s annual capital expenditure. The renewable energy investments are strategically significant but do not yet constitute a business of comparable economic weight to the oil and gas sector.
The Transition Logic
The UAE’s climate strategy is best understood not as paradox but as portfolio management. The country is simultaneously maximizing returns from its existing hydrocarbon assets, which have finite but extended productive life, while building positions in the energy technologies that will grow in importance as the global energy mix evolves. This is not unlike an oil major investing in renewables while continuing to pump crude, a strategy pursued by every major integrated energy company.
The difference is that for the UAE, the hydrocarbon revenues fund the sovereign wealth that enables renewable investment. Premature contraction of oil production would reduce the capital available for transition investments. The UAE’s position is that a managed, gradual transition serves both economic and climate interests better than abrupt disruption that would destabilize the global energy system and developing economies dependent on affordable hydrocarbons.
COP28 and the Credibility Test
COP28’s outcome provided a partial test of this logic. The conference produced the first explicit reference to transitioning away from fossil fuels in a COP decision text, a milestone that the UAE presidency championed despite its status as a producer state. The UAE’s argument that only a producer country could deliver such language from a position of understanding both sides of the equation had some validity, though the counterargument that producer-state presidency diluted ambition also has force.
The more significant credibility test is long-term. If the UAE meets its 2050 net zero commitment through genuine emissions reduction rather than accounting mechanisms and offsets, the paradox resolves into legitimate transition. If the commitment serves primarily as diplomatic cover for continued production expansion, the paradox deepens into something more problematic.
Domestic Energy Transition
Within its borders, the UAE has made measurable progress. The Barakah nuclear power plant, the first in the Arab world, provides low-carbon baseload electricity. Solar capacity has expanded dramatically. Energy efficiency standards for buildings and vehicles have tightened. Domestic carbon capture and storage projects at industrial facilities are operational.
Yet domestic energy consumption patterns remain carbon-intensive. Desalination, which provides the vast majority of the country’s water supply, is energy-intensive. Per capita electricity consumption and carbon emissions remain among the world’s highest, driven by air conditioning demand in extreme heat, desalination energy requirements, and the energy-intensive industrial base.
The Analytical Framework
Responsible analysis of the UAE’s climate position requires holding multiple truths simultaneously. The UAE is genuinely investing in renewable energy and clean technology at significant scale. It is simultaneously expanding hydrocarbon production. Its per capita emissions are among the world’s highest while its per-barrel production emissions are among the lowest. It hosted a climate summit that achieved diplomatic progress while its national oil company plans the largest production expansion in its history.
These are not contradictions to be resolved but tensions to be managed. The UAE’s bet is that the world needs both continued hydrocarbon supply and accelerated clean energy investment during a transition period that will last decades. Whether this bet proves right depends on the pace and trajectory of global decarbonization, which remains among the most uncertain variables in economic forecasting. The UAE has positioned itself to profit under most scenarios. Whether it has positioned itself to lead on the climate crisis is a separate and more demanding question.