The International Relations of the Green Economy in the Gulf: Lessons from the UAE’S State-Led Energy Transition
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May 2015 The International Relations of the Green Economy in the Gulf: Lessons from the UAE’s State-led Energy Transition OIES PAPER: MEP 12 Dr Mari Luomi OIES Research Associate The contents of this paper are the author’s sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2015 Oxford Institute for Energy Studies (Registered Charity, No. 286084) This publication may be reproduced in part for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgment of the source is made. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the Oxford Institute for Energy Studies. ISBN 978-1-78467-031-3 With thanks to the Kuwait Foundation for the Advancement of Sciences for funding support. i May 2015: The International Relations of the Green Economy in the Gulf Contents 1. Introduction ....................................................................................................................................... 1 2. Towards a Green Economy in the Gulf ........................................................................................... 3 2.1 The Role of Energy in the GCC States’ Ecological Overshoot ..................................................... 4 2.2 The Rise of Sustainable Energy in the GCC................................................................................. 6 2.3 The International Politics of the Green Economy ......................................................................... 8 2.4 Emergence of a GCC-Specific Approach to Green Economy ...................................................... 9 3. Framework of Analysis ................................................................................................................... 10 3.1 Acquisition of Means of Implementation ..................................................................................... 11 3.2 Role of the State and its International Relations ......................................................................... 11 3.3 The Energy Sector ...................................................................................................................... 14 3.4 The Case of the UAE .................................................................................................................. 15 4. The International Relations of the Green Energy Economy in the GCC ................................... 16 4.1 Multilateral and Regional Organizations ..................................................................................... 16 4.2 International Cooperative Initiatives ............................................................................................ 22 4.3 Bilateral Initiatives and Agreements ............................................................................................ 24 4.4 Domestic Initiatives ..................................................................................................................... 26 4.5 Foreign Trade and Investments .................................................................................................. 28 4.6 Development Assistance and Funding ....................................................................................... 31 5. Enabling Environments .................................................................................................................. 35 6. Conclusions and Lessons Learned .............................................................................................. 42 Bibliography ........................................................................................................................................ 47 ii May 2015: The International Relations of the Green Economy in the Gulf 1. Introduction The contours of a green energy economy in the Gulf are beginning to take shape, underpinned by a complex web of multifaceted, state-led international interactions. How are these providing the means of implementation for a transition to resource-efficient and low-emission economies? Are they alone sufficient, or is a more profound transformation of Gulf Cooperation Council (GCC) policy frameworks required? This study examines how the GCC states (particularly the United Arab Emirates) are positioning themselves vis-à-vis this emerging approach to sustainable development, and especially how they are seeking to acquire the means of implementation for national green energy economy transitions and beginning to put in place the enabling conditions for scaling up investments in sustainable energy. ‘Green economy’ has become a mainstream concept of the international sustainable development agenda. In its most common definition, green economy is described as being ‘low carbon, resource efficient and socially inclusive’ and an economy that ‘results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities’ (UNEP 2011, 6 and 16). Emerging from the 2008 global economic crisis, and promoted since by a number of governments and United Nations (UN) agencies, the green economy agenda uses public policy to fix systemic market and institutional failures, thereby seeking to better direct the economy towards sustainable development outcomes (UNCSD 2011a).1 In 2012, 191 countries participating in the second Rio Earth Summit (Rio+20) agreed to an outcome text entitled ‘The Future We Want’, in which they expressed determination to address ‘a green economy in the context of sustainable development and poverty eradication’, and affirmed green economy as an ‘important tool available for achieving sustainable development’ (UNGA 2012). The text also identified a number of associated benefits to a green economy, including: enhanced ability to manage natural resources sustainably, lower negative environmental impacts, increased resource efficiency, and reduced waste (ibid.). According to modelling studies, investing in a green economy also enhances long-term economic performance while maintaining and restoring natural capital (UNEP 2011, 24 and 504).2 Indicating strong support for this agenda, by September 2014 some 65 countries from around the world were already engaged in pursuing green economy policies and 48 in developing national green economy strategies (UNEP 2014a). Among these was the United Arab Emirates (UAE), a top global oil exporter with a high economic dependence on export revenues from fossil fuels – the cornerstone of the ‘brown economy’. The UAE, like most other countries, has only recently begun implementing green economy policies and tools. Even so, the pace and depth of the UAE’s engagement with the green economy agenda to date is without a regional parallel, with the other GCC states so far only just beginning to show an interest in the concept. Recent examples abound: in 2011, the Emirate of Abu Dhabi opened a regional office of the South Korea-based Global Green Growth Institute (GGGI) and, since 2013, the emirate has been home to the region’s largest concentrated solar power (CSP) plant. In 2014, Dubai hosted the first global conference of the UN Partnership for Action on Green Economy (PAGE), and in early 2015, after 1 A parallel concept, green growth, is defined here as a result of economic activities that create environmental and social benefits, and sustain or build natural capital. Green growth supports green economy transitions, but equally important are activities that convert ‘brown’ activities into green. Furthermore, as noted by Mohammed Abdelraouf (personal discussions, August 2014), green growth does not necessarily imply a transition into a green economy if the share of brown activities does not simultaneously decrease. 2 In UNEP’s modelling study from 2011, global GDP in a ‘green scenario’ overtakes that of a business-as-usual scenario within a decade, and even earlier if physical capital depreciation and natural capital depletion are factored in (UNEP 2011, 504). 1 May 2015: The International Relations of the Green Economy in the Gulf finalizing the world’s most competitive round of solar energy bidding, the emirate raised its renewable energy generation target from 1 per cent to 7 per cent by 2020 (WAM 2015a). Most interestingly, already in 2012, the UAE’s Prime Minister announced a national green economy initiative running through 2021. The implementation of the ‘UAE Green Growth Strategy’ was approved by the cabinet in early 2015 (WAM 2015b). Most of the recent literature on green economy-relevant developments in the GCC states has focused on policy developments at the national level, in the areas of renewable energy deployment and energy efficiency. However, as this study demonstrates, the green economy agenda is an international one: its origins are global, it is promoted by international development agencies and through international multi- stakeholder initiatives, and its pursuit is as interlinked with the international system as the GCC states’ political economies. A green economy transition requires ‘means of implementation’, such as finance, technology, and human and institutional capacity, which will in turn require an ‘enabling environment’ in order to be converted into tangible outcomes, such as economic development, jobs, and social and environmental wellbeing. There is an overall gap in understanding how countries’ relations and interactions with an international dimension are shaping the green