Low oil price must inspire increased focus on renewable energy: IRENA report

by  — 7 April 2016

Renewable Energy Market Analysis: The GCC Region, a paper published by the International Renewable Energy Agency (IRENA) in Q1 2016, has made a strong case for why Gulf Cooperation Council (GCC) countries should increase efforts to produce clean energy, writes The Edge’s executive editor Miles Masterson.

IRENA holds that uptake in renewable energy has so far fallen short of potential in the GCC. “This can be attributed to a range of factors, including institutional inertia faced with new markets, clarity in institutional roles and responsibilities, and lack of dedicated policies and regulations,” states its recent report Renewable Energy Market Analysis: The GCC Region.

According to the report, hydrocarbon exports, in the form of crude oil, petroleum products and other liquids and natural gas, were the main source of government budget revenues in the GCC, constituting almost 80 percent of total revenue in 2013, for example. (Saudi Arabia is the region’s largest exporter of crude, with almost 19 percent of global exports in 2013. Qatar is the largest exporter of natural gas, at almost 12 percent of global exports in 2013.)

This has of course spurred phenomenal economic growth in the region and concomitant energy consumption, which rose during the 2000s at around five percent per year, a higher rate than India, China and Brazil, for example. Qatar’s residential electricity demand alone grew at an average rate of 17 percent per year over the 2000s and early 2010s.

An increased need for energy, along with the slump in the oil price and its effect on state revenues, has highlighted the urgency for the region’s countries to ensure their renewable energy targets are met, if that  had not exceeded. Additional factors outlined by IRENA that contribute to this imperative are increased job potential and mitigating vulnerability to climate change. Growing populations and an increasing need to create employment opportunities is another reason, with IRENA estimating that achieving GCC renewable energy targets and plans could create an average of 140,000 direct jobs every year.

“If global temperatures continue to rise, the region will experience an above average increase in temperatures and decrease in precipitation. This would mean a rise in demand for air conditioning and desalination,” furthers the report, which also states, “in line with the countries’ Intended Nationally Determined Contributions (INDC) submissions to the Paris climate conference (COP21), carbon emissions can be reduced by a cumulative total of around one gigatonne (Gt) by 2030, resulting in an eight percent reduction in the region’s per capita carbon footprint.”

The concurrent decrease in reliance on traditional hydrocarbon energy resources would also result in a 16 percent reduction in water usage in the power sector, and of course could result in the region reducing 2.5 billion barrels of oil equivalent (2015-2030), IRENA estimates leading to overall savings of USD55 billion (QAR200 billion) to USD87 billion (QAR317 billion), depending on the energy prices at the time, for the GCC.

“Qatar is committed to deploying a considerable amount of solar energy,” says Dr. Khalid Al Subai, executive director of Qatar Environment and Energy Research Institute (QEERI), Hamad bin Khalifa University.

Nevertheless the agency holds, efforts have thus far fallen short of potential in the region. “This can be attributed to a range of factors, including institutional inertia faced with new markets, clarity in institutional roles and responsibilities, and lack of dedicated policies and regulations,” states IRENA.

But the current oil price, which though hovering around USD40 (QAR146) per barrel of benchmark Brent Crude, is climbing encouragingly away from the nadir of USD20 (QAR73) per barrel predicted by some bearish analysts in late 2015, that has created the urgency for Gulf states to refocus on renewable energy.


Grand challenges

Dr. Khalid Al Subai, executive director of Qatar Environment and Energy Research Institute (QEERI), Hamad bin Khalifa University, agrees. “Qatar National Vision (QNV) 2030 calls for the diversification of the economy and not relying mainly on natural resources,” he told The Edge. “The oil prices should emphasise the need to diversify the economy and look at energy security by adding other sources such as renewables to the mix.

“More support for research and development is needed to advance the renewable energy sector in Qatar,” added Al Subai. “QEERI, as a research institute of Hamad bin Khalifa University, is committed to doing its part in achieving QNV 2030, with the institute’s strategy to conduct focused R&D projects that address the national grand challenges: energy and water security.”

Qatar, reveals the IRENA document, plans to produce 20 percent of its energy capacity via renewables by 2030, most of which will come from solar energy. And despite the agency’s general criticisms of development of the sector across the GCC, Al Subai maintained this country is devoting sufficient resources to developing renewables.

“Qatar is committed to deploying a considerable amount of solar energy (mainly PV) on the Qatar grid in its effort to maintain energy security and sustainable development,” explained Al Subai. “The Supreme Committee for the 2022 World Cup along with Kahramaa, Qatar Electricity and Water Company (QEWC) and others are committed to introducing renewable energy. QEERI is supporting and assisting these efforts through grand challenge research and development projects in collaboration with the various stakeholders.”

In the Renewable Energy Market Analysis: The GCC Region report, 85 percent of respondents surveyed on the matter said they felt that reducing water and electricity subsidies would help the development of renewable energy in the region, a sentiment with which Al Subai also concurs. “This is one strategy to reduce consumption of energy and water in general, looking at energy and water cost more equally among various sources of energy. What we also need is to advance the innovation of renewable energy technologies through R&D and invest more in the clean tech sector,” he said.

Nevertheless, challenges remain to encouraging the increased development of renewables in Qatar and its neighbouring states, said Subai. There are several challenges on the technical, economical and societal levels,” he explained to The Edge. “From a technical point, we have to improve efficiency and reliability of renewable sources in the GCC (desert) environment and develop an infrastructure for accommodating the integration of renewables (such as smart grids). These are the focus of the grand challenge projects QEERI is undertaking,” Subai mentioned.

“On the economic side,” Al Subai continued, “the cost of renewables must go down to compete with other fossil-based sources. The society also has to embrace renewables as a means of protecting the environment and achieving energy security. We have to create an environment to nurture this new developing sector.” 

The full IRENA Renewable Energy Market Analysis: The GCC Region document is available for download at www.irena.org

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