Improving Energy Intensity in the Gulf Cooperation Council Countries

An international collaboration to support ambitious targets to reduce energy intensity in GCC Countries.

Governments in Saudi Arabia, the UAE, Kuwait, Oman, Qatar and Bahrain are all facing challenges related to escalating domestic fuel consumption. These include reduced export capacity, energy security concerns, rising subsidy bills, and increasing pollution.

They also share some important climatic, cultural, and market conditions as well as being linked by a common economic and political union. The GCC Energy Intensity Project, which began in late 2011, aimed to identify practical targets to reduce energy intensity in the GCC countries and a framework for policy-making to incentivize efficiency.

The project’s major sponsor was the UK Foreign and Commonwealth’s Gulf Prosperity Fund, with further contributions and support coming from the local partners mentioned below.

Working with regional partners, the project mapped on-going strategies and initiatives and collected country data to plot where and how much oil and gas could be saved.

Using data-based energy intensity measurements, the project’s series of workshops evaluated and enhanced on-going efficiency research, promoting commitment to high-level targets to reduce energy intensity. Research and recommendations drew on the experiences of utilities, policymakers, industry experts, and academics.

Final project outputs produced recommendations for setting targets appropriate to conditions in the GCC, experience-based ideas on overcoming governance challenges – a major issue for stakeholders – and a report on the potential for GCC-level coordination to support more effective implementation of national strategies.  

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The GCC countries are experiencing rapid growth in domestic energy demand with almost complete reliance on oil and gas. This is leading to a number of economic and social concerns. If current trends continue, internal hydrocarbons consumption could jeopardize the capacity of some countries to export their resources.

With current levels of economic dependence on hydrocarbon revenues and high population growth, this would give rise to serious financial and social pressures. Environmental and public health threats from the emissions from thermal power generation and heavy road traffic are also increasing.

As oil and gas exporters, GCC countries have opted for energy intense diversification strategies. However, using more energy is not necessarily generating more value for society. Energy intensity – the units of energy needed to produce each $ of GDP – is increasing in GCC countries.

Internationally, there are several experiences of success in reducing energy intensity through planned efficiency increases in key growth sectors. In view of this, the project explored the potential for national targets to conserve fuel and reduce wasteful energy practices in GCC countries.

A major part of the work focused on energy intensity (EI) targets, which have proved successful in several industrial economies including China where they emphasize curbing energy demand while increasing national prosperity. In a GCC context, these would need to account for national industrial development aims, oil price volatility and the specific capacities for increasing efficiency and replacing technology.

Given the shared challenges, GCC governments have a common interest in setting their national energy consumption patterns on a more sustainable path and they are at various stages of initiating policy and strategy towards this goal.

As such, the project also aimed to provide a forum for energy and industry stakeholders from different GCC countries to share current plans and experience and learn more about international efforts and best practice in this field.

Partners and contributors

This project was an international collaboration with support from the UK Foreign and Commonwealth Office and in-country research and contributions from GCC partners.

Chatham House led the initial energy saving assessment, facilitating inter-regional dialogue and offering international experience. Workshops involved experts and officials from over 60 regional institutions with interest in and influence over the energy sector.

These could not have taken place without the support of the institutions mentioned above under each workshop.

Partnering organizations contributing to research, expertise and reviews included the Saudi Energy Efficiency Center (SEEC), the Abu Dhabi Water and Electricity Authority (ADWEA), the Authority for Electricity Regulation (AER), Oman, the Saudi Electricity & Cogeneration Authority (ECRA), the Dubai Supreme Council of Energy (DSCE), the Masdar Institute and the Kuwait Ministry of Electricity & Water (MEW). 

The advisory committee

  • Dr Ibrahim Al-Muhanna, Advisor to the Saudi Ministry of Petroleum and Mineral Resources (MoPMR)
  • Dr Morgan Bazilian, former Special Advisor on international energy and climate policy to the Director-General of the United Nationals Industrial Development Organization (UNIDO)
  • Dr Hasan Qabazard, former Director, Research Division, Organization of Petroleum Exporting Countries (OPEC)
  • Dr Neil Quilliam, Energy and Climate Change, UK Foreign and Commonwealth Office (FCO)

Follow up work

The low price of fuel, electricity and water in the GCC as a barrier to more efficient use and sustainable energy investment was a recurring concern in workshop discussions. There is no such thing as a ‘correct’ price, and serious work assessing the societal benefits of current pricing systems vis a vis price reforms is urgently needed.

The next phase of work Valuing Vital Resources builds on both this project and the 2012 report Resources Futures.