ABSTRACT
Gulf Cooperation Council (GCC) states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE) have low utility prices incentivizing overconsumption of energy. The rentier economic system in the GCC, where political rights are traded off with economic privileges, may play a decisive role on transition to more sustainable energy consumption. Two important issues are considered in that regard: (1) energy consumption dynamics and (2) market entry barriers for clean, efficient, and renewable energy technologies (CERET). Recent collapse of oil prices and consequent government budget deficits resulted in partial elimination of utility subsidies in the GCC. Nevertheless, energy consumption and carbon emissions will likely increase due to growing population, economic activity, and low energy efficiency. The GCC states have an economic system shaped under the “rentier agreement” which may block development of CERET in the region. GCC states have high entry barriers for private businesses compared to the world. Entry barriers in the GCC states also increase when rent revenues (oil price) decrease and Gross Domestic Product (GDP) per capita is high. Plummeting oil prices and lack of comparative advantage may slow down CERET development in the GCC states. However, decrease in cost of CERET may incentivize deployment of these technologies in the GCC.
