Gulf states to add renewable energy into their energy mix

Gulf oil exporters find themselves compelled to develop alternative sources of energy to reduce their domestic reliance on fossil fuels and ensure they have enough oil to export. Earlier this year, energy executives and experts from around the world gathered in Abu Dhabi to congratulate countries like Saudi Arabia and Kuwait for their ambitious new plans to spend hundreds of billions of dollars on the development of renewable energy.
“Many countries in the region have to look at oil alternatives,” said Fatih Birol, chief economist at the International Energy Agency (IEA). “If they don’t, their oil exports will suffer.”
 
Last year, oil production from the Gulf members of the Organization of the Petroleum Exporting Countries (OPEC) — Kuwait, Qatar, Saudi Arabia and the United Arab Emirates (UAE) — totaled nearly 16 million barrels a day or 18% of global oil demand. According to official data, 80% of the total production was exported.
 
“The initiative of adding renewable energy and nuclear power into the energy mix of Saudi Arabia was borne out of sheer necessity,” said Khalid Sulaiman, vice president for renewable energy at the King Abdullah City for Atomic and Renewable Energy, which is developing Saudi Arabia’s alternative energy program. Saudi Arabia plans to generate 54 gigawatts of renewable energy by 2032. Sulaiman described the task as challenging and daunting. According to the U.S. Energy Information Administration In 2010, the kingdom’s total electricity-generating capacity was 49 gigawatts (GW), all of it powered by fossil fuels.
 
By the end of the decade, Saudi Arabia wants to generate 10-15% of its electricity from renewable sources. The UAE’s richest emirate, Abu Dhabi, is aiming for 7% and Kuwait is targeting around 10%. However, despite the economic necessity for this shift, many Gulf States heavily subsidize the price of fossil fuels, which are consumed domestically.
A gallon of premium gasoline costs about US$0.61 in Saudi Arabia, according to gas stations and residents, whereas the average price in the U.S. is US$3.66 a gallon. Since unrest began to spread in the Middle East and North Africa in 2011, these subsidies have become vital for many autocratic regimes’ social programs. But such subsidies are likely to hinder the growth of renewable energy, which would not be able to compete with the artificially low prices of oil and gas, Birol said. These subsidies are also “public enemy No. 1 in the fight against climate change” because they stimulate greater emissions of carbon dioxide.”
“A reduction in subsidies is only a matter of time and many [regional governments] have been engaged in serious discussions about which consumer segment they should start with,” said Nimer AbuAli, head of clean technology for the Middle East and North Africa at Ernst & Young. (January 29, 2013)