Environment Discounted: Energy and Economic Diversification Plans in the Gulf

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 proposed reforms. Dr Manal Shehabi is an applied economist with expertise in economic, energy, resource sustainability & policy making in resource-dependent economies, focusing on the Middle East and Gulf regions. She publishes in academic journals, books, and policy reports. Using economy-wide modeling and political economy, her research made important contributions to the analysis of economic and energy diversification, economic adjustments, decarbonization and hydrogen, and policy alternatives in Gulf hydrocarbon economies following the energy transition and oil price volatility. Her research also impacted policy making, for example she constructed an economic model for policymaking in Kuwait, led or co-authored various policy reports (such as to the UNFCCC, KISR, the IPCC, and G20’s T20 Italy), and conducted capacity building for economic and climate policymakers in Gulf countries and beyond. A polyglot, regularly advises policymakers & firms. Professor Walter Armbrust is a Hourani Fellow and Professor in Modern Middle Eastern Studies. He is a cultural anthropologist, and author of Mass Culture and Modernism in Egypt (1996); Martyrs and Tricksters: An Ethnography of the Egyptian Revolution (2019); and various other works focusing on popular culture, politics and mass media in Egypt. He is editor of Mass Mediations: New Approaches to Popular Culture in the Middle East and Beyond (2000). Dr Michael J. Willis is Director of the Middle East Centre at St Antony’s College, University of Oxford and King Mohammed VI Fellow in Moroccan and Mediterranean Studies. His research interests focus on the politics, modern history and international relations of the central Maghreb states (Algeria, Tunisia and Morocco). He is the author of Politics and Power in the Maghreb: Algeria, Tunisia and Morocco from Independence to the Arab Spring (Hurst and Oxford University Press, 2012) and The Islamist Challenge in Algeria: A Political History (Ithaca and New York University Press, 1997) and co-editor of Civil Resistance in the Arab Spring: Triumphs and Disasters (Oxford University Press, 2015). If you would like to join the live audience during this term’s webinar series, you can sign up to receive our MEC weekly newsletter or browse the MEC webpages. The newsletter includes registration details for each week's webinar. Please contact mec@sant.ox.ac.uk to register for the newsletter or follow us on Twitter @OxfordMEC. Accessibility features of this video playlist are available through the University of Oxford Middle East Centre podcast series: http://podcasts.ox.ac.uk/series/middle-east-centre