Energy Challenges--Even for the Gulf

Posted by: Stanley Reed on March 05

The oil-rich Gulf region is going through what could be a tough transition phase as it tries to come to terms with its own rising energy consumption. That was the message from experts from Cambridge Energy Research Associates at a recent breakfast on the shores of an artificial lagoon complete with water taxis at a Dubai hotel.

The Gulf, long a huge producer of energy, is also becoming a huge consumer. Demand for electricity, for example, is increasing at a world-leading 4% to 5% annual clip. That is forcing huge investments in the region’s power grids and consuming oil and natural gas that could be used for other industry and exports. Energy is still widely subsidized for political reasons, increasing consumption and distorting investment decisions.

The Gulf has the dubious distinction of being among the tops in the world in per capita energy consumption. It also lags in renewables—although some countries, notably Abu Dhabi, are now beginning to plough big bucks into clean energy initiatives. Abu Dhabi, through its Masdar program, wants to be a manufacturer of solar equipment but is far behind China in this particular race.

Of course, being such a huge consumer means that easy gains can be made through conservation measures—if countries have the political will. CERA sees business opportunities in both conservation and solar energy.