GCC faces challenges in curbing energy consumption

Gulf oil producers are facing challenges in curbing soaring energy consumption to protect their environment although they are in a better position than other regional countries to achieve that goal, according to an Arab energy analyst.

All Gulf Cooperation Council (GCC) countries have clean energy plans or targets to achieve clean energy and several impressive steps have been taken toward conservation in the UAE, Saudi Arabia, Oman and Qatar, said Waleed Khaddouri , a former information director at the Kuwaiti-based Organization of Arab Petroleum Exporting Countries (Oapec).

But in many GCC countries the effectiveness of plans hangs in the balance, chiefly owing to governance challenges, lack of market incentives and unpredictable political support, Khaddouri wrote in an article published by the Abu Dhabi-based Emirates Centre for Strategic Studies and Research.

“The GCC countries as a whole have an advantage over many other countries in that they have the potential to finance measures that enhance efficiency, and introduce new forms of renewable energy and related infrastructure. However, the problem lies in the government’s role in this new sector. The biggest challenge for countries of the region is climate and promoting economic culture of consumption,” he said.

“In fact, it is not easy for GCC countries to invest in sustainable energy options, while vast hydrocarbon reserves remain available to them…. it is also difficult for the GCC and other countries to suddenly economize on consumption and demand their citizens to change their consumption habits to bring down the rate. This process would take a long time and entail a pricing system to encourage consumption reduction.”

Citing Oapec figures, Khaddouri said energy demand in the Arab World grew by around 5.2 per cent to 13.5 million barrels per day in 2012 from 11.6 million bpd in 2009, one of the highest growth rates in the world.

The consumption of natural gas in 2012 reached 6.75 million barrels of oil equivalent per day, compared to 6.58 million barrels of oil equivalent in 2011, he said.

“The news of rise in energy consumption in Arab countries has created a lot of interest in the Arab World and beyond,” he said.

At the regional level, higher consumption rate has raised prospects of some Arab countries making changes to their energy mix, notably in power generation to procure higher revenues for their budgets, he added.

“For instance, they are considering the possibility of using natural gas in larger quantities in their power stations instead of fuel oil or crude oil, which can be exported for more revenue instead of being used for local consumption.”

Khaddouri said that at the global level, there is interest in looking into the export capacity of Arab countries in the future.

“If the rate of internal consumption continues to grow in the years ahead, it would affect oil exporting capacity of Arab countries in the future. In this situation, can Arab countries play the important role of balancing supply and demand in global markets,” he added.

In this respect, he cited a recent international report which sheds light on concerns over the alarming levels of consumption of energy in Arab countries.

He said that the first paragraph explains that the wastage of natural resources in the Gulf is exposing its economic resilience to shocks and increased security risks.

The report added that the six GCC countries now consume more energy than the whole of Africa yet they have just a fifth of that continent’s population.

“The energy is almost entirely produced from oil and gas and leaves a CO2 footprint. The report concludes that if the region’s demand for fuel continues to rise, the rate at which it has risen over the last decade, it would double by 2024,” Khaddouri said.

According to the report, all GCC countries realize the risk of sustained high levels of consumption so they are trying to limit it by resorting to sustainable energy options and compensate for the overuse of oil and gas and to make sure that they generate sufficient energy to serve their high standards of living.

“Remarkable progress is evident in clean energy segments and efficiency strategies have sprung up across the GCC countries since 2009.”
 

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