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GCC's Path to Energy Diversification

GCC's Path to Energy Diversification

2018-01-10 
| by Editor | Posted in Comment

The Gulf Cooperation Council (GCC) region is making a progressive shift toward a diversified energy future that includes alternative energy and renewables. This new path toward a varied energy supply will allow the fossil fuel–rich countries to become less reliant on oil and less vulnerable to changing global commodity markets.

"Across the Gulf, governments and businesses are turning towards renewable energy — with potentially transformative effects,” said Adnan Z. Amin, International Renewable Energy Agency (IRENA) Director-General in a press release. “The vision shown by Qatar, the UAE, Saudi Arabia and other GCC countries sends a powerful message: investing in renewable energy makes clear economic sense today, and has enormous potential for the future.”

Historically, the Middle East’s economy and industry have been built on a foundation of oil and gas reserves, production and exports — and for good reason. The GCC region is made up of several of the world’s largest oil- and gas-producing countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). Together, this region comprises almost one-third of the proven global crude oil reserves and approximately one-fifth of the world's gas reserves.

“GCC countries are uniquely located to benefit from solar energy, which has been a large focus of the region's renewable energy focus and investment to date. The countries lie in the Global Sunbelt, which means they receive more sunlight each day on average than other countries in the world.”

The development of these extensive fossil fuel resources has underpinned economic growth in the region, which, in turn, has caused an increased demand for domestic energy and electricity consumption. And, consumer demands are expected to continue to climb. According to the 2017 BP Energy Outlook, energy consumption in the Middle East will increase by almost 50 percent by 2035. This is faster than the national rate in China, India and Brazil in recent years.

These trends have inspired GCC countries to take a new look at ways to conserve and better use their natural resources, improve overall energy efficiency and develop the alternative and renewable energy industry. Energy diversification within the GCC region also presents ample development and investment opportunities and a variety of financial and socioeconomic benefits.

“The GCC region can cut its annual water use by 16 percent, save 400 million barrels of oil, create close to 210,000 jobs and reduce its per capita carbon footprint by 8 percent in 2030 — all by achieving the renewable energy targets that national and sub-national governments have already put in place,” notes an International Renewable Energy Agency (IRENA) study titled "Renewable Energy Market Analysis: The GCC Region."

These benefits have led to a variety of commitments to a diversified energy future. At the Paris Agreements in 2015, Lebanon and Oman committed to the unconditional emissions reduction of 15 percent and 2 percent respectively.

Other GCC countries have not set specific emission reduction targets, but have pledged to develop their renewable energy sectors. The UAE, for example, aims to produce 7 percent of electricity from renewable sources by 2020. And, Qatar said it would produce 20 percent of electricity from renewable sources by 2030.

GCC countries are uniquely located to benefit from solar energy, which has been a large focus of the region's renewable energy focus and investment to date. The countries lie in the Global Sunbelt, which means they receive more sunlight each day on average than other countries in the world. According to IRENA's 2016 World Energy Market Analysis, nearly 60 percent of the GCC’s surface area is suitable for solar energy collection — and the development of only 1 percent of this area could produce up to 470 GW of solar photovoltaic capacity. Due to this resource abundance, the region has embraced the solar option as it looks to diversify the energy industry.

Two large-scale solar projects are already underway. Dubai is building the world’s largest concentrated solar power project, which is expected to generate 1,000 MW of power when completed. The Shams 1 solar project in Abu Dhabi is another planned concentrating solar power station. This facility could add 2,000 MW of power and is expected to displace approximately 175,000 tonnes of carbon dioxide each year.

 “According to the 2017 BP Energy Outlook, energy consumption in the Middle East will increase by almost 50 percent by 2035. This is faster than the national rate in China, India and Brazil in recent years.”

The GCC countries are also investigating other options, such as hydrogen power, geothermal and nuclear energy.

“The United Arab Emirates' interest in developing nuclear energy is motivated by the need to develop additional sources of electricity to meet future demand projections and to ensure the continued rapid development of its economy,” said the UAE Foreign Minister, His Highness Sheikh Abdullah bin Zayed Al Nahyan, at a 2010 address in Paris before the International Conference on Access to Civil Energy. “In evaluating different options to meet this demand, nuclear energy emerged as a proven, environmentally promising and commercially competitive option which could make a significant contribution to the UAE's economy and future energy security.”

The GCC is confidently taking steps toward a diversified energy future by pursuing a broader energy mix of fossil fuels, alternative energy sources and renewables. This evolution will allow GCC countries to remain an active leader in the energy industry.

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