Oil, gas and sunlight are perhaps the three defining characteristics of the Gulf states and the wider Middle East. The first two of these are finite in supply but – for better or worse – have powered the global economy and made the lands in which they are found, for the most part, fabulously rich. Until recently, the third – sunlight – clean and infinitely abundant, has been spared barely a moment’s thought.
Eleven nations in the region are operating or developing renewable schemes of one kind or another. According to the International Renewable Energy Agency (IRENA), solar is now ‘the most competitive form of power generation in the Gulf’. Yet, even though the region enjoys on average at least 300 sunny days a year, it remains to be seen whether the balance will soon tilt in favour of renewables.
Several powerful drivers, not all of them altruistic, are slowly shifting the energy mix of the region. These pressures include rising populations, climate change and economic diversification.
Whether they like it or not, the Gulf states will soon start facing environmental constraints imposed by international jurisdictions. As Glada Lahn, Senior Research Fellow, Energy, Environment and Resources at Chatham House, points out, ‘meeting the long-term goal of the Paris Agreement – limiting the increase in the global average temperature to well below 2°C above pre-industrial levels will have profound implications for fossil fuel markets.’ Lahn forecasts oil demand to slow from the mid- to late-2020s, and natural gas to decline from the mid-2040s.
In addition, climate change, so intimately linked to the fossil fuels these states produce, is now being felt palpably in the region itself. ‘Oil has been a tremendous vector of development in the Gulf Cooperation Council (GCC) region,’ says Julien Jreissati, campaigner for Greenpeace Middle East and North Africa, ‘but it has come at an increasingly unbearable cost to the environment and public health.’
A recent report by Greenpeace on NOx pollution showed that several Gulf cities ranked among the top 50 most polluted during the summer of 2018 with Dubai toping that list. ‘Cities such as Dubai and Riyadh suffer from chronic air pollution problems due to their addiction to fossil fuel on the production and consumption side,’ says Jreissati.
‘These nations face a perfect storm,’ says Dr Jim Krane, specialist on energy in the Middle East at Rice University’s Baker Institute, Houston. ‘They have lots of fossil fuels, they’re subsidised domestically so everyone uses them, they are high-income states and there’s high demand.’
Renewables, by contrast, are a relatively recent arrival to this energy landscape. According to IRENA, which coincidentally happens to have its headquarters in Abu Dhabi, their localised benefits include lowered environmental pollution, rising quality of life, the conservation of scarce water supplies, job creation and clean rural electricity supplies.
A more cynical – perhaps realistic – driver is a desire on behalf of these states to safeguard hydrocarbon reserves for export. As IRENA notes, not only will greater domestic use of renewables negate rising import costs but also free valuable crude oil resources for export. ‘Renewables will help them maintain exports and keep up with demand for domestic use,’ says Krane.
Jreissati agrees with this view, noting that ‘in my opinion this is the main driver of renewable energy in the Gulf region taking precedent over climate change and air pollution. There is a common understanding that a transition to renewable energy would be very beneficial economically for the local economies as it will free up more oil and gas for export.’
This approach need not be entirely negative if it means the region itself becomes cleaner. ‘This may contribute to building more stable and diversified economic and energy systems,’ adds Jreissati. In particular, it would mean the region relying less on oil for power generation. ‘Generating electricity with oil is very inefficient,’ says David Renne, president of the International Solar Energy Society (ISES). ‘Exporting it for use in transport is more efficient. But it’s certainly the case they see it being more valuable to export oil rather than burning it themselves.’
A NUMBERS GAME
Regional targets for renewable use and corresponding reductions in fossil fuels are, on the surface, impressive. Almost 7GW of new power generation from renewable sources has now been pencilled in for the early 2020s. If the region achieves its renewable energy deployment and hydrocarbon reduction targets, says IRENA, by 2030 it will cut 354 million barrels of oil equivalent in fossil fuel consumption from the power sector (a 23 per cent decrease); reduce its emissions by 136 million tonnes of carbon dioxide; create more than 220,500 direct jobs; and reduce water withdrawal for power production and associated fuel extraction by 11.5 trillion litres (a 17 per cent decrease).
All this seems dauntingly ambitious. Renewables’ installed power has grown by 400 per cent in the region over the past four years but this has come from an extremely low base. At the end of 2017, the region had some 146GW of installed power capacity, of which renewable energy accounted for less than 1 per cent. ‘In no country in the Gulf region do renewables account for more than 1 per cent of electricity generation or consumption,’ says Krane.
In great contrast, the Gulf states as a region collectively produce more carbon emissions than Japan. Energy consumption collectively is 849 million tonnes of oil equivalent (Mtoe) in 2018, almost double that of Japan and higher than that of Russia or India.
IMPACT OF CLIMATE CHANGE ON THE REGION
Fossil fuels may have brought great wealth to the Gulf but this had come with its own more intangible price tag – the cost of exposing the region to related pollution and some of the worst extremes of climate change. According to Iran’s Meteorological Organization, the country’s greenhouse gas emissions have increased by three per cent in the past decade while the average temperature has risen by 1.8ºC since 1750, considerably higher than the global average of 1.1°C.
‘Many countries are directly exposed to the negative effects of heightened air pollution and water contamination,’ says Oxford Energy’s Shehabi. ‘They will also be exposed to the effects of climate change – such as rising median temperatures, lower precipitation, and sea level rise – that fossil fuel-based emissions are believed to accelerate.’ The fishery industry, historically important across the Gulf and North Africa, is particularly vulnerable to climatic change.
‘Gulf countries are the among the most vulnerable to climate change notably due to the scarcity in water,’ says Jreissati. ‘With increasing population, temperature and heat wave intensity, water resources will take a heavy toll and more desalination plants will need to be built. Climate mitigation is not only a necessity in the Middle East to combat global climate change, it is also an amazing opportunity. It will bring economic, social and environmental benefits that are more than needed in our part of the world.’
Saudi Arabia, with current reserves of 266 billion barrels of crude oil, could produce at current rates for at least another 60 years. The Saudi kingdom also holds the world’s sixth-largest natural gas reserves, the second-largest in the region behind Qatar, which in turn has estimated proven gas reserves of about 24.9 billion cubic metres (bcm). Across the Strait of Hormuz, meanwhile, Iran has the world’s fourth largest proven oil reserves and the world’s second largest proven reserves of natural gas.
When it comes to energy consumption, the region also punches above its size. Such has been demand that two hydrocarbon-rich states, Kuwait and UAE have been net importers of gas since 2008. Oxford Energy data shows that Saudi Arabia has risen to be the world’s sixth largest consumer of oil and natural gas while Iran is the world’s third largest natural gas market after the USA and Russia. Iran is in the surreal position of simultaneously holding the world’s largest gas reserves while being a net importer of natural gas to compensate for domestic production shortfalls.
This alarming picture of rapidly escalating demand and production has emerged in just a few decades; the region has historically been a peripheral demand market for energy, the consequence of its initially low levels of industrialisation (up to as late as the 1960s) and its relatively small population in comparison with North America, Europe, and South and East Asia.
Across the water from the Gulf states, Iran appears to have stolen a march on environmental action. Shehabi identifies Iran’s huge potential for wind and solar power in the country’s eastern Khaf region.
In 2016, the nation’s parliament ratified a 15-year plan to reduce its greenhouse gas emissions. These include measures to ensure food security, make efficient use of water and allow groundwater reserves to replenish. Plans have also been floated to export renewable electricity to Iraq, Oman, Afghanistan, Turkey, Armenia, and Tajikistan.
In 2018, Iran began operations at a 61MW wind farm (pictured above), bringing the nation’s installed wind power up to 141MW. In a move aimed at giving renewables long-term certainty, the energy ministry has guaranteed to purchase the output of renewable energy plants for 20 years and provided tax incentives for other renewable energy projects. Meanwhile, Norway’s Saga Energy signed a €2.5bn deal to build a solar power plant with generating capacity of up to 2GW over the next five years.
In the face of this juggernaut, renewable energy seems to represent little more than a lightweight counterpunch. ‘Renewable energy in the Gulf is burgeoning and there are great prospects,’ says Jreissati. ‘But Gulf states are at various levels of advancement and commitments.’ Kuwait’s solar PV output is just 2 GWh; the UAE produced 95GWh of solar in 2016, and 261 GWh of solar thermal; Saudi Produced 1Gwh of solar in 2016. As of 2016, the International Energy Agency reported that Iraq had no measurable solar nor wind generation and that it also had no data for renewables in Qatar, though the latter nation hosts almost all of the region's commercial-range waste-to-energy power generation capacity. Most of the limited deployment of wind power is located in Kuwait.
Key areas in the region offer huge potential for solar, says Dr Manal Shehabi, research fellow at the Oxford Institute for Energy Studies, particularly where the Global Horizontal Irradiance is high (this is the total amount of shortwave radiation received from above by a surface horizontal to the ground and is of use for photovoltaic installations). These include in the northwest and centre of Saudi Arabia, the southwest of Oman, Bahrain and Qatar as well as the Khaif region of Iran. Wind in some areas regularly reaches 100m/second and could provide energy in large parts of Saudi Arabia, the south of Oman and the western parts of Kuwait.
‘Solar is growing in the region and interest is very strong,’ says Renne. ‘It has lagged behind other regions because the incentives [in terms of subsidies] have not been there.’
Solar currently accounts for 94 per cent of installed capacity and 91 per cent of future projects. This comprises both Solar PV and Concentrated Solar Power (CSP), which generates solar power by using mirrors or lenses to concentrate a large amount of sunlight onto a small area. CSP, most of which is located in the UAE, Kuwait and Saudi Arabia, can be stored, which makes it more attractive for large-scale projects where sun is abundant.
Perhaps unsurprisingly in a region known for ostentatious statements of wealth, some of the plans for renewables are eye-catching. When fully completed in 2030, the Mohammed bin Rashid Al-Maktoum Solar Park in Dubai will boast 2.3 million solar panels across 4.5 square kilometres of desert and power 50,000 homes.
Eyeballing Al-Maktoum (if from a distance) across the desert is the Noor Abu Dhabi solar power plant, which began operations in July this year. With 3.2m solar panels spaced across eight square kilometres, the $870m plant produces 1.2GW of electricity to supply 90,000 people. Both Al-Maktoum and Noor Abu Dhabi vie for the accolade of the planet’s largest solar plant.
Then there is Masdar City, located ten miles southeast of Abu Dhabi. Construction began in 2008 on what was proclaimed to be a hub for clean tech companies that would lead by example when it came to environmental urban planning. Designed by Foster and Partners, planners took heed from the design of cities such as Cairo and Muscat, where narrow streets catch and create winds. Temperatures in Masdar’s streets are generally 15 to 20°C cooler than the surrounding desert. The city was also planned to have no light switches or water taps within it; with motion sensors instead helping meet targeted cuts in electricity and water consumption by 51 per cent and 55 per cent respectively.
Research in the region is also imroving the use of renewables. These include the Masdar Institute, part of Khalifa University, where a special blend of concrete to store thermal energy has been trialled, which would enable storage of thermal energy in the form of molten salts.
‘All this is definitely positive,’ says Jreissati. ‘These cities – like Dubai – have always been a centre of innovation for the wider region. These countries need to reinvent themselves to keep thriving in a renewable future, and green technologies could become an important source of income.’
Momentum for renewables, though, has been difficult to maintain. By 2016, Abu Dhabi authorities had admitted that Masdar City would not attain its goal of net-zero carbon levels; even its completion date has been pushed back from 2015 to at least 2030.
Renewable targets also vary hugely in scale and ambition across the region. With the headline-grabbing assertions that are associated with the UAE, Dubai has announced its Clean Energy Strategy 2050, aiming, as a first step, to source 25 per cent of its energy from solar power by 2030. By the same year, Bahrain aims for a 30 per cent reduction in energy consumption; the UAE wants a 40 per cent cut in electricity consumption by 2050; Saudi Arabia plans for an eight per cent reduction in electricity use by 2021; Qatar an eight per cent per-capita cut in electricity use by 2022. Yet Oman aims for just a two per cent reduction in emissions by 2030; and Bahrain to reduce electricity consumption by six per cent 2025.
‘Some Gulf countries have been making impressive announcements with little to show for it,’ says Jreissati. ‘It is fair to say that Masdar City did not deliver on the initial vision but the massive solar power plants such as the Al Maktoum park and the Noor Abu Dhabi plants are being delivered and are locking in considerable renewable energy capacity.’
FOSSIL FUEL HUNGRY
Fossil fuels supply 98 per cent of the Middle East’s region’s primary energy mix. Iran is the world’s tenth most energy-hungry nation, using 285Mtoe in 2018, according to the BP Statistical Review, with the energy sector responsible for more than 90 per cent of Iran’s greenhouse gas emissions. Saudi Arabia was not far behind, guzzling 259Mtoe. Lower down the scale, but still high on a per capita consumption, were UAE (112Mtoe); Qatar (48Mtoe); Kuwait (39Mtoe); Oman (30Mtoe). By comparison the figure for the United States was 2,300 Mtoe.
On a per capita basis, energy consumption is calculated by the BP Statistical review in gigajoules (GJ). Qatar’s consumption in 2018 was 750GJ, followed by the UAE (492GJ), Kuwait (389GJ) and Saudi Arabia (323GJ), although growth in consumption has slowed significantly over the past decade. Comparative figures for the UK were 121GJ, United States (295GJ) and China (97GJ).
Yet since the 1970s, energy consumption has historically grown faster than most other regions. Oxford Energy forecasts that the region, alongside Asia, will account for the majority of the world’s energy demand growth well into the 2030s. The OECD puts the growth in energy demand in the Middle East at three per cent per year, every year, well into the 2030s, with electricity demand growing at a rate of six per cent per year over the same period.
Population growth is behind much of this increase. Between 1990 and 2016, the Saudi population doubled from 16.3m to 32.3m; the UAE expanded from 1.26m to 9.27m; Qatar from 487,000 to 2.57m; Kuwait from 2.10m to 4m; Iran from 56.2m to 80.2m; and Iraq from 17.4m to 37m.
In 2018, Saudi Arabia, with a total of 12.3m barrels a day, was by far the largest producer of crude oil in the region, followed by Iran (4.7m b/d), Iraq (4.6M B/D), the UAE (3.9m b/d), Kuwait (3m b/d) and Qatar (1.9m b/d).
When it comes to natural gas, Iran produced 239 billion cubic metres (bcm) in 2018; Qatar 175bcm, Saudi Arabia 112bcm, the UAE 35.4bcm.
LAST MAN STANDING
Given the abundance of renewable energy to hand it can seem puzzling why technology has not been more enthusiastically embraced. Krane points out that simple economics act as a brake. The problem, he says, is that oil and gas are the only business where a company or government can consistently earn extraordinary levels of profit. ‘Their cost base is so low. Profits for renewables are a tiny fraction of that,’ he says. ‘If you are an autocratic state whose government is dependent on buying the support of your public then nobody in their right mind is going to move away from such huge profits to a marginally profitable business. From a political and economic perspective, the business case for renewables in the Middle East simply is not there.’
As well as economic obstacles in the form of subsidies for oil and gas, solar companies looking to break into the region are also confronted with natural obstacles in the form of local climate. ‘Coastal cities in the region have two peaks in demand,’ says Krane. ‘The afternoon heat, where solar does have the potential to meet the peak. But the other peak is at night when humidity creeps in from the coast and everyone jacks the air con up. The sun has set, so solar is not used. Companies aren’t really willing to meet the capital investment cost when you still need cheap fossil fuels in the evening.’
Sandstorms can also confound plans, requiring cleaning operations that require great amounts of water, a rare resource in the region. ‘Dust storms can last for three days,’ says Renne. ‘You just have to ride them out.’
Equally dispiriting is the reality that, whatever is driving renewables in the Gulf, one as being finite isn’t that helpful,’ says Krane. ‘We have more fossil fuels not just in the world but in the Middle East than we can ever burn. The world will burn up before they are used up. It’s not a depletion problem.
‘They would like to remain the last oil producers standing. When climate constrains start to bite and others change, they don’t want to give that business up. They are really just looking to make as much money as they can from fossil fuels no matter what that does to the planet’s environment and their own environment.’
The social contract that exists between most states in the region and their citizens appears to be key to how quickly renewables enter the market. Managing the need for renewables with the short-term expectations of citizens who are heavily dependent on the state for jobs and income will represent something of a tightrope walk, according to Shehabi.
‘The regimes have an incentive to diversify economically but it is a fine balance,’ he says. ‘A lot of people have guaranteed jobs in the public sector and that comes at great fiscal cost. But if we know in the long-term the world is moving towards a non-oil scenario then they will have to find another system for supporting them. Renewables won’t generate enough revenue for that. The economic structures would have to change at that point and that would require a change in the political structures too. When you get a reduction in export revenues you get a crunch.’
Renne has some sympathy with this picture as it is one he recognises elsewhere as he pushed the case for solar. ‘The shift is occurring but what puts the brake on it is a desire to make sure everything happens sustainably, the states feel a responsibility to ensure there is no major disruption.’
And the required shift in mentality may be happening already, says Jresissati. ‘The main obstacle resides in the oil market which has tended to listen to blind decision makers in the past. Many diversification efforts and renewable energy plans have been dropped in the past due to a global increase in the oil prices. This lack of long-term vision could be the main obstacle [to progress] although it seems like things have changed on that front.
‘The Gulf countries are now aware that if they want to continue thriving in the future they would need to significantly decrease their reliance on fossil fuel and transition to renewable energy. This is providing great incentives for renewables.’
Given the small populations of the Gulf states (though not that of Iran), the potential for job creation is far from insignificant and may allay some of the concerns about maintaining the social contract between states and citizens. ‘This is the youngest region in the world,’ says Shehabi.
Solar technologies could, under IRENA projections, account for 89 per cent of renewable energy jobs in the region by 2030. The deployment of around 40 GW of utility-scale solar PV could account for 124,000 jobs, while small-scale rooftop solar, which tends to be more job-intensive, could employ 23,000 people, mostly in the UAE and Oman. Construction, operation and maintenance, and manufacturing inputs for concentrated solar power projects could account for 50,000 jobs. Wind energy also has the potential to be a key employer, especially in Saudi Arabia, Oman and Kuwait.
COAL IN THE DESERT
Hypocrisy is a charge often levelled at Gulf nations that continue to push fossil fuels while highlighting their newly found renewable credentials. One such example is Dubai’s decision to commission the Hassyan coal-fired power plant at Saih Shuaib. Four units will be fully operational by 2023 and will produce 2,400MW of electricity for domestic use. The coal will be imported from Indonesia. Substantial investment in the project has come from China. UAE says it will be using ‘clean coal’ and even promotes the $3.4bn project as an example of a UAE-China ‘green partnership’. The plant will, it says, deploy carbon-capture mechanisms and boast improved efficiency and fewer stack emissions. Flue gas emissions will meet the standard of an EU directive on these levels.
To a large extent, the project is driven by a desire to diversify energy sources amid Dubai’s continuing diplomatic spat with Qatar. Yet the Baker Institute’s Krane is sceptical of any environmental claims. ‘It’s a terrible idea, both for the climate and for the local air quality. It will lower lifespans thanks to particulates,’ he says. ‘Dubai gets a lot of its GDP through tourism from countries that are acting on climate change. It’s going to make one of the world’s most emission-rich regions even richer.’
Jreissati says the plant undermines Dubai’s wider attempts to reduce emissions. ‘Its climate change mitigation efforts cannot be taken seriously when it is building a coal power plant. No matter how you label it, “clean” or not, coal is the dirtiest energy of all and the first fossil fuel that needs to be phased out. If the UAE wants to be considered as a leading country and serious actor in the fight against climate change it needs to drop its coal ambitions.’
CLIMATE OF CHANGE
No-one, though, is foolish enough to believe that all trends are heading in the same positive direction. Notwithstanding their ‘green’ visions, the nations of the Gulf collectively plan to boost refining capacity by 1.5 million barrels of oil a day over the next couple of years. In addition, most of these nations are becoming large and rapidly growing producers of petroleum products other than crude oil – among them gasoline, liquid petroleum gas LPG, propylene, naphtha (a key source of feedstock in petrochemical production), diesel and fuel oil, kerosene, and jet fuel.
Some observers believe a jarring jolt, perhaps in the form of an environmental catastrophe, may provide a catalyst. ‘The change is not occurring fast enough, oil is locked in for many years to come,’ says Renne. ‘A single environmental emergency that could be clearly assigned to climate change and really caused harm and social issues could deliver the momentum. That happened in China where air pollution was so bad that coal-fired plants were relocated and local measures were put in place such as free electric scooters.’
The tipping point, suggests Jreissati, could come sooner than anyone thinks. ‘In the near future, peak oil demand will be the final nail in the coffin of the oil era,’ he says. ‘As long as the region is stable and not being dragged into conflicts and wars then I am optimistic. The more the states feel the heat they will accelerate their unavoidable transition to renewables.’ Renne has picked up on this at a senior level too and adds that ‘Saudi Arabia has realised its reserves aren’t going to be around for ever.’
Despite reservations, Krane is optimistic that change will come to the region – just that it will not happen any time soon. ‘The great amounts of free land, that great solar resource, means there is a strong argument for it,’ he says. ‘As costs come down they could become a power exporting region. But that doesn’t mean renewables will take over from oil and gas.’
Gulf states will eventually follow the lead of governments in Europe and other jurisdictions, says Shehabi. ‘Everywhere in the world people are riding the wave of renewables and it’s the same in the Gulf. People will see that renewables improve their air, their breathing. If they are smart, that is where they need to be heading. There’s a lot of opportunity for a lot of things to happen.’
In a literal sense, ‘a wind of change is coming to the region on the renewable energy fronts,’ says Jreissati. ‘The real question is whether it will be fast and ambitious enough.’ Renne points out that at least 20 years have passed since talk first arose of giant solar arrays in the Gulf that, thanks to interconnectors, could supply all of Europe’s energy needs. We are still waiting.
Get the best of Geographical delivered straight to your inbox by signing up to our weekly newsletter and get a free collection of eBooks!