A Green Gulf?
The prospects of the Gulf's clean energy projects
A Green Gulf
On the surface, the movement to reduce Co2 emissions is anathema for big oil exporters like Saudi Arabia, the United Arab Emirates (UAE), Kuwait and Qatar. These rack up some of the biggest per capita carbon, water and waste footprints in the world and their economies hinge on export markets thirsty for fossil fuels.
But domestic concerns have been converging with the climate agenda. These turn on three pressing issues: how to ensure that such precious commodities as oil and gas are not squandered at home; how to use oil windfalls to foster long term economic growth and create jobs, and how to seize new opportunities arising from a carbon-constrained world. With global investment in power capacity from renewable sources now exceeding that in fossil-fuel generation, the Gulf’s private sector is keen not to be left behind.
The strains of excessive, underpriced resource use are telling. Both Saudi Arabia and the UAE set about replacing inefficient oil-fired electricity generation with gas in the 1990s. They also promoted diversification into petrochemicals, which relies on gas feedstock. But power supply could not keep pace with growing populations and urban mega-projects during the 2005-2008 oil price boom. The desalination of seawater, now accounting for 70-98 percent of supply, adds to the fuel burden. In spite of being the world’s fourth and seventh largest natural gas reserve holders, as electricity demand surged, both countries suffered gas shortages and were forced to substitute fuel oil for gas or deny supplies to industry.
This is leading to some counter-intuitive choices. The Emirate of Ajman commissioned a Malaysian company to build a coal-fired power station in 2008. In spite of dependence on coal imports and increased Co2 emissions, Ras Al-Khaimah and Oman look set to follow. According to Saudi Arabia’s electricity regulator, the country burned over one-tenth of its oil production for domestic electricity at highly subsidized prices in 2009. In the last year, Kuwait has been importing liquefied natural gas (LNG) from Russia. International lobbying has championed nuclear power in the region—a course at odds with both economic sense and natural advantage.
At the same time, Gulf leaders compete in the sustainable legacy stakes. The late ruler of Abu Dhabi, Sheikh Zayed, was first to champion environmental sustainability. After his death, sovereign wealth established the Masdar Abu Dhabi Future Energy Company in 2006 to champion clean fossil fuels and renewable energy. It commissioned the futuristic “carbon-neutral, zero-waste” Masdar City. In 2008, UAE ruler, Sheikh Mohammed, launched the Sheikh Zayed Future Energy Prize, which incentivizes achievements in energy sustainability with cash prizes. The following year, the International Renewable Energy Agency (IRENA) chose Masdar as its headquarters—a significant move given the scant contribution to date in either carbon emissions reduction or renewable technology innovation. But money and vision talk, a fact not lost on the UAE’s bigger and more powerful neighbor.
Soon after, Saudi oil minister Ali Al-Naimi told Reuters, “Saudi Arabia aspires to export as much solar energy in the future as it exports oil now.” In fact, Saudi Arabia pioneered an impressive solar village back in the 80s, but this was abandoned when enthusiasm waned and little happened in the interim. Then, in early 2010, work began on a solar desalination plant outside Jeddah. King Abdullah announced that a city for atomic and renewable energy would be built in Riyadh, and in August, a private sector conglomerate established the kingdom’s first solar panel manufacturing company. The kingdom may even be ahead in terms of “laboratories” for innovation. The King Abdullah University for Science and Technology (KAUST)—set up by national oil company Saudi Aramco—is a living model of sustainable construction while Masdar City is still being built.
“Who will choose to live in Masdar?” asked one disgruntled businessman. “The buildings ignore local culture and a pedestrian city doesn’t work in 50ºC of heat! …people are asking why did they get Norman Foster to design this, why not an Arab architect like Ahmed Abdeen?” Sour grapes or not this raises an important question: How will these grand visions actually roll out to include the rest of society? What will stop them from becoming mere “islands of efficiency,” elitist compounds in a sea of profligacy? There are three interrelated challenges: price, regulation and local buy-in.
Almost unlimited utilities form part of the social contract in the Gulf petro-state. Cheap energy is a way to distribute the riches of the nation and is considered a citizenship right. This gives no incentive for either conservation, investment in efficiency or alternatives. And well before renewable and nuclear options are ready to replace fossil fuels, consumption must be reduced. Yet the vast majority of Gulf citizens—and most importantly the rich—are dismissive of sustainability issues. According to a recent survey by Accenture, 90 percent wanted to reduce national reliance on oil- and gas-fired power generation, but most considered it up to the government, not citizens, to sort this out.
Gulf governments know they must find ways to regulate energy demand—which may include raising the price of fuel and electricity and enforcing efficiency standards. To be effective, this would entail a careful trade off of benefits in order to neither hurt the poor nor harm political stability. In the meantime, prestige-earning hi-tech utopias look set to win out over cheaper, more practical solutions such as public education campaigns, good public transport, and adaptation of buildings to local climate.
The energy challenges facing the Gulf states are not unlike the carbon ones we face in the West. Ultimately, the urgency to do something is outweighed by the fear that doing it will upset vested interests and derail progress. In spite of all the rhetoric, the facts on the ground reveal a hodgepodge and wildly contradictory approach. Nevertheless, it is likely that these unique multi-billion dollar clean energy projects and innovation centers will reap global benefits in showing what is possible.
Glada Lahn – Research Fellow specializing in energy and development at Chatham House (The Royal Institute of International Affairs) in London.
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