Environment Discounted: Energy and Economic Diversification Plans in the Gulf Middle East Centre

Oil price volatility and accelerated energy transitions away from hydrocarbons to meet climate change mitigation measures have presented existential threats to the economies of hydrocarbon-dependent welfare states of the Gulf Cooperation Council (GCC). These state rely on oil and gas not only in their exports to fund welfare distributive measures, but also domestically for highly-subsidized energy and water consumption. In response, each GCC state announced economic development plans presented as avant-garde “Visions”—one tailored to each of the six GCC states— reflecting a future target of transformation away from oil and gas through energy and economic diversification and reform. In a fundamental policy shift, GCC states implemented energy subsidy reform following the 2014 oil price declines, with varying degrees of success. In another fundamental policy shift in October 2020, in preparation for COP26 in Glasgow, the UAE, Saudi Arabia, and Bahrain pledged to reach net-zero emissions by 2050 or 2060. Beyond the economic pressures, GCC states also face environmental challenges owing to their highly subsidized energy and water consumption and emissions in an already-constrained environment owing to climate change. This talk summarizes the state of the environment in the Gulf states and examines the role of the environment in the economic and energy diversification plans of their Visions. It argues that the environment has had a limited role in the Visions, despite the state of the environment in the region, offering a striking difference with other regions. The talk concludes with implications on the region’s long-term sustainability and success of proposed reforms.

MEC Friday Webinar. This is a recording of a live webinar held on 5th November 2021 for the MEC Friday Seminar Michaelmas Term 2021 series on the overall theme of The Environment and The Middle East. Dr Manal Shehabi (Academic Visitor, St. Antony's College, University of Oxford; and Senior Research Fellow, Oxford Institute for Energy Studies) presents “Environment Discounted: Energy and Economic Diversification Plans in the Gulf”.

Professor Walter Armbrust (St Antony’s College, Oxford) chairs this webinar, and Dr Michael Willis is the Q&A Moderator.

The combination of oil price volatility and the accelerated energy transitions away from hydrocarbons to meet climate change mitigation measures have presented existential threats to the economies of hydrocarbon-dependent welfare states of the Gulf Cooperation Council (GCC). These state rely on oil and gas not only in their exports to fund welfare distributive measures, but also domestically for highly-subsidized energy and water consumption. In response, each GCC state announced economic development plans presented as avant-garde “Visions”—one tailored to each of the six GCC states— reflecting a future target of transformation away from oil and gas through energy and economic diversification and reform. In a fundamental policy shift, GCC states implemented energy subsidy reform following the 2014 oil price declines, with varying degrees of success. In another fundamental policy shift in October 2020, in preparation for COP26 in Glasgow, the UAE, Saudi Arabia, and Bahrain pledged to reach net-zero emissions by 2050 or 2060. Beyond the economic pressures, GCC states also face environmental challenges owing to their highly subsidized energy and water consumption and emissions in an already-constrained environment owing to climate change. This talk summarizes the state of the environment in the Gulf states and examines the role of the environment in the economic and energy diversification plans of their Visions. It argues that the environment has had a limited role in the Visions, despite the state of the environment in the region, offering a striking difference with other regions. The talk concludes with implications on the region’s long-term sustainability and success of prop