Large-scale sustainable energy projects are more likely to be successful at cutting carbon emissions in the Gulf States than initiatives aimed at consumers and businesses according to a new report published by the London School of Economics today.
The report's authors, Steffen Hertog(1) and Giacomo Luciani(2), point out that, although the residential sector is responsible for the bulk of electricity consumption and there is a high domestic consumption of fuels such as petrol and diesel, it will be too difficult politically to tackle this through, for example, increasing prices or regulation.
Professor Steffen Hertog said: 'Low prices are seen part of the bargain between the ruling elites and the people. Attempts to increase them have been repeatedly resisted. So, at a time when many people are struggling to adapt to the rising cost of imported goods, significant increases in prices seem unlikely.'
Instead, the report argues that sustainable energy policies should be pursued through 'insulated' projects which are under the direct patronage of the ruling elite and thus shielded from bureaucratic and political interference.
Since the 1970s oil boom, this model has been used for successful state enterprises such as Emirates Airlines, SABIC – one of top five chemical companies in the world – and the state-owned national oil company of Saudi Arabia, Saudi Aramco.
The current large fiscal surpluses from high oil prices have given the ruling elites large-scale autonomy for institutional and technological experiments such as in sustainable energy.
The Gulf States are aggressively exploring the potential of renewable sources of energy such as solar and wind. The region enjoys 40 per cent more sun than Spain and vast expanses of uninhabited land offer huge potential for harnessing this.
According to the report nuclear power is also a good investment opportunity for the Gulf States. The authors point out that although the Gulf countries' interest in nuclear energy is frequently interpreted as a cover for a military capability, there are strong economic reasons for them to pursue it.
Gulf oil producers are in a good position to develop carbon capture and storage. This is because of the high concentration of carbon emissions in the region from power plants, oil refineries, petrochemical, steel and cement plants along with the potential for sequestration in oil and gas fields using CO2 injection to enhance oil recovery.
Giacomo Luciani said: 'There is considerable potential for the Gulf States to cut their carbon footprint while continuing to develop rapidly.
'As signatories of the Kyoto Protocol they need to reduce their reliance on fossil fuels while, at the same time, meeting a rapidly growing demand for electricity.'
The Gulf States are also keen to be seen internationally as technological and industrial leaders rather than as just a source of energy and overseas capital.
Notes to Editors
(1) Steffen Hertog is Kuwait Professor at Science Po in Paris and lecturer in political economy at the University of Durham
(2) Giacomo Luciani is Director of the Gulf Research Center Foundation in Geneva.
Energy and Sustainability Policies in the GCC
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25 November 2009