Barriers, Risks and Policies for Renewables in the Gulf States

Abstract

Abstract:The countries of the Gulf Cooperation Council (GCC) have both large fossil fuel resources and vast renewable energy potentials. Here, we investigate in a literature meta-analysis and a survey, whether there is a need for renewables in the GCC, what barriers and risks presently deter investments, and what possible policy-solutions could be. We find that there is a long-term need for renewables, to diversify the economy and prepare for a post-fossil fuel era. In the short term, two main obstacles deter investments: inefficient bureaucracy, and the combination of fossil fuel/electricity subsidies and the absence of renewable energy support. Removing fossil fuel and consumption subsidies or introducing a support scheme could make investments in renewables profitable. Eliminating energy subsidies appears particularly beneficial to the economic outlook but this seems particularly difficult to implement, due to the political economy of rentier states. Increased bureaucratic transparency and efficiency is needed, so that potentially attractive investments can rapidly and predictably obtain the necessary permissions. Hence, the administrative and economic environment for renewable energy investments in the GCC is not right today, and no breakthrough is on the horizon, but there is a range of policy solutions to enable investments in the future.

Assessing strengths and weaknesses of renewable energy initiatives in Oman: an analysis with strategic niche management

“…Over the last 3 decades, some valuable research has been conducted to understand the challenges and opportunities for RE deployment in the Arab States of the Gulf. A great deal of coverage in the academic and practitioner literature has been extended to technological, economic, and institutional (such as policy, regulatory, and legal frameworks for renewables) aspects of barriers for RE deployment in the Gulf; see, for example, [7][8][9][11][12][13][14][15]. However, the current literature lacks research that applies empirical methodologies to examine the strengths and weaknesses of emerging RE initiatives, providing us with a little insight into the role which these initiatives could play in facilitating a transformation into sustainable energy systems in the context of oil-rich countries.…”

Advancing Renewable Energy in Resource-Rich Economies of the MENA

“…The GCC countries lie in the 'global sunbelt' 5 with 59 per cent of their surface area estimated to have significant potential for solar deployment, and 56 per cent for wind deployment. The potential for concentrating solar power in the GCC has been estimated at 150,000 Terawatt-hours (TWh)/year, compared with GCC countries' combined electricity consumption of 470 TWh/year and their combined total primary energy demand of 4,400 TWh/year, suggesting that a large-scale expansion of renewable energy could supply the energy needs of the GCC as well as enable longer-term exports to the MENA and Europe via interconnections (Lilliestam and Patt, 2015). Other world regions identified as having comparable solar energy resources include the African continent, Indian sub-continent, South America, Central America, south-western USA, and Australia.…”

“…Oman, Bahrain and Qatar all announced fuel price hikes in a flurry (MEES, 2016d). Iran carried out extensive fuel subsidy reform much earlier, in 2010, but underestimated the costs of the reform and the impact on consumer price inflation (Lilliestam and Patt, 2015). The price hikes were carried out in a very short period of time leading to increases of up to 150 per cent in some countries, generating some backlash from consumers.…”

“…Among these are rapidly growing domestic energy demand, growing uncertainty over long-term demand for hydrocarbon resources, the ensuing need for economic diversification, the importance of maintaining fiscal stability and tightening constraints from global environmental policies. Rising electricity demand driven by economic growth, high rates of urbanisation, expanding populations, and low electricity prices have meant that increasing amounts of liquid fuels (crude oil, fuel oil and even diesel) and natural gas (imported in a number of countries) are diverted to the power sector, often at prices below international levels (Lilliestam and Patt, 2015).…”

Energy Policy and Climate Change: A Multidisciplinary Approach to a Global Problem

“…The literature meta-analysis carried out by Lilliestam and Patt [20] shows that the development of renewable energy sources would be beneficial to pave the way for a post-fossil fuel era in the Gulf States, but are hampered by inefficient bureaucracy and high fossil fuel subsidies. While overcoming these hurdles might be difficult in the short term due to inevitable conflicts with vested interests, policy solutions for future investments are considered possible.…”