Advancing Renewable Energy in Resource-Rich Economics of the MENA: A Comparative Study of GCC Countries

A 2016 OIES Paper argued while the main obstacles to deployment of renewables in MENA countries  are grid infrastructure inadequacy, insufficient institutional capacity, and risks and uncertainties, the investment incentives lie on a policy instrument spectrum with two polar solutions: (i) the incentive is provided entirely through the market (removing all forms of fossil fuel subsidies and internalising the cost of externalities); or (ii) the incentive is provided through a full government subsidy programme (in addition to the existing fossil fuel subsidies). However, there is a trade-off between the two dimensions of the fiscal burden and political acceptance across the policy instrument spectrum, which implies that the two polar solutions themselves are not easily and fully implementable in these countries. proposed a combinatorial approach in which the incentive for renewables deployment is provided through a partial renewable subsidy program and partial fossil fuel price reform in a way that balances the fiscal pressure on the government against political acceptability. Additionally, the paper argues that the fact resource-rich countries are behind advanced economies in electricity sector reform gives them a last-mover advantage in the sense that they can tap into years of international experience to avoid design mistakes and create a sustainable solution that is compatible with renewables deployment and their own context. This paper applies the framework to a comparative case study of selected GCC economies.

By: Anupama Sen , Rahmat Poudineh , Bassam Fattouh

Categories:

Oil

Tags:

Latest Tweets from @OxfordEnergy

  • Oxford Energy Forum – The Future of Gas – Issue 116 https://t.co/cAa1cGsyOI

    September 24th

  • New OIES study assesses effectiveness of OPEC’s Declaration of Cooperation with non-OPEC producers: DOC accelerated… https://t.co/mLWRpKlPey

    September 22nd

  • OIES's @thierry_bros interviewed by @yannicrab on the consequences of Brexit on gas interconnectors - https://t.co/MNMHVklNXV

    September 21st

Sign up for our Newsletter

Register your email address here and we will send you notification of new publications, comment, articles etc. automatically.