The head of the International Renewable Energy Agency says the UAE should look to set a clear pathway to achieve its renewable energy goals, especially now that it has become competitive with traditional sources of power generation.
Adnan Amin, the director-general of the Abu Dhabi-based International Renewable Energy Agency (Irena), an intergovernmental agency promoting the transition to renewable energy globally, said that the countries of the Arabian Gulf, despite the potential conflict of interest for their oil-based economies, have been great supporters of renewable energy. He added that they have realised not only the long-term case for a transition to renewables, but also the short-term cost to their economies.
“They really have taken a far-sighted approach to renewables in the Gulf: the UAE, Qatar, Saudi Arabia, even Kuwait,” said Mr Amin in an interview with The National. “You really get the sense that something has changed, and for good reasons.”
The region as a whole has experienced the fastest-growing hydrocarbon consumption in the world, partly because of the heavily subsidised fossil fuels available to domestic users. “That means a massive opportunity cost, as governments have come to realise,” Mr Amin said. “If you develop renewable energy, you can increase exports or divert fossil fuel to highly value-added petrochemicals. That, together with international concern about carbon emissions plus the excellent potential for solar use, has driven change.”
On Sunday, Irena produced its first report on the state of the industry since it began operations four years ago. In it, the agency argued that renewable energy had over the past three years crossed a tipping point and become competitive with traditional sources without the need for government subsidy.
Meanwhile, a report last year by Chatham House, a London-based think tank, argued that the Gulf was pursuing an enormously wasteful energy policy. “In 2011, the [GCC] countries, despite the relatively small size of their populations, consumed almost as much oil and gas as Indonesia and Japan combined, a quantity greater than the entire primary energy consumption of Africa,” the report pointed out.
It went on: “ If the region’s fuel demand were to continue rising as it has over the last decade, it would double by 2024. This is a deeply undesirable prospect for both the national security of each state and the global environment.”
The IMF has estimated that fuel subsidies in the Gulf cost their economies more than they spend on health and education. Thus, the countries of the region, including the UAE, have adopted plans to substitute fossil fuels. In 2012, Abu Dhabi set a goal to produce 7 per cent of electricity from renewables by 2020, and Dubai a goal of 5 per cent by 2030.
Gulf countries have set out goals to reduce their dependency on subsidised fossil fuels. The UAE Minister of Energy, Suhail Al Mazrouei, is this month due to set out the country’s renewable energy policy in more detail, and Mr Amin said he is looking for a clear strategy for how it will reach the country’s targets. “He has to address how really the UAE will have a federal policy in place, a system for how the energy mix will evolve over time. It is difficult to see right now how it is going to go. Work needs to be done on that, and there needs to be a policy framework in place about how to reach those goals,” said the Irena director.
This is more possible now as the cost of renewable energy has fallen. In its report, Irena pointed out a number of milestones for renewable energy. For example, from 2012 the greater share of worldwide new power generating capacity has come from renewables instead of traditional sources. Last year, 58 per cent of new capacity was renewable, continuing a long-term trend in which traditional sources’ share has dropped from 81 per cent in 2001 to 42 per cent last year.
The future growth of renewables will be in the developing economies, including the Gulf, Mr Amin said. They have the opportunity to leapfrog developed economies in the same way they did in telecommunications, where mobile preempted the need to build a fixed line network, from which the developed economies are still moving away .
But a clearly set out policy and good execution are required to make progress. As the Chatham House report warned: “In all GCC countries the effectiveness of plans hangs in the balance, chiefly owing to governance challenges, lack of market incentives and unpredictable political support”.
Addressing these challenges is the next step for the Gulf countries, according to Mr Amin.
amcauley@thenational.ae
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