Dubai International Academy Model United Nations 2018| 10th Annual Session

Forum: League of Arab States

Issue: The question of the shift in the focus of energy production due to depleting oil resources.

Student Officer: Michael Leo

Position: Deputy President of League of Arab States

Introduction

The dependence of global commercial trade upon the oil industry has risen to near inconceivable levels; an opinion which is only reinforced by the juxtaposition of the current state of the international community’s reliance on fossil fuels [, in particular] and its state in the mid-19th century. Copious reserves of oil make up the base of contemporary trade economies, but the facility to retain and develop global supply is causing growing disquiet. Some analysts predict a peak in the immediate future, followed by a terminal waning in global oil production; others draw attention to the recent growth in ‘tight oil’ production and the possibility of developing unconventional fuels.i

Total world oil production in 2016 averaged 92,150,000 barrels per day [bbl/day]. A region of southwest Asia, commonly known as the ‘Middle East’ accounts for 31,789,000 bbl/day, a striking 34.5% of the world’s aggregate production.ii Nearly every country situated within the Middle East finds itself particularly dependent on oil to fuel economic progress.

This heavy reliance on oil and petroleum has developed because of the frequency of ample reserves, ease of access due to technological advances, and the need for efficacy and dexterity in today’s world. Oil economies around the world, those in the Middle East in particular, have undergone overwhelming boosts of national growth due to their oil exportation practices. This enormous success has blinded them from the shortcomings of having a solitary energy production commodity, which includes a lack of damage control options, as well as the price instability of the energy sector. When the oil shock hit the economy in 2014, several Middle Eastern countries were left to depend on funds reserved for other purposes to sustain their rapidly weakening economies, having experienced a fiscal deficit for the first time in almost twenty years. These efforts to stabilize economies are ongoing as most countries have yet to find and implement viable energy solutions.

The 2014 oil supply shock has resulted in a consistent drop in oil prices, exacerbated by events including the ‘Arab Spring’, the dominance of US shale producers, and the lack of coordination between Research Report | Page 1 of 17

Dubai International Academy Model United Nations 2018| 10th Annual Session oil producing nations. The turbulent state of global affairs has shaken the largely dependable political and economic nature of the Arab states that are solely reliant on their petroleum revenue streams. Low prices and high supply has proven to be a disastrous combination for countries experiencing high levels of unemployment in the public and private sectors, and exceptionally low levels of public satisfaction. Governments are gradually running out of budget surpluses, with several in debt, which has led to revolts and violent responses from the citizens of the affected countries.

Oil is the élan vital of modern civilization. It fuels every mode of transportation, and more; armed forces, agricultural production, all depend on oil. Oil by-products supply us with several of the day-to-day commodities modern lifestyles require. But the purpose of the agenda is to deal with the looming international deficiency of conventional oil -- an incident that has the capacity to wreak havoc and hardship on the economies of every country in the global community. The earth’s allotment of oil is restricted, and demand for oil and oil consumption continues to increase with time. Accordingly, geologists have predicted that at some future date, conventional oil supply will no longer be capable of satisfying world demand.

The agenda is centered on the recollection and implementation of strategies that have, and will continue to have substantial effects on the Arab Nations’ unyielding reliance on oil and petroleum. It will explore the possibilities that have been overshadowed by the relative monopoly held by the oil industry.

Consequently, it is the duty of the major oil producers of the world to begin shifting focus in energy production, so as to incite a revolution in the world’s primary energy consumption.

Definition of Key Terms

Energy Transition

Defined by the World Energy Council as a “long-term structural change in energy systems,” an energy transition is a particularly significant set of changes to the patterns of energy use in a society; or in this case, the world. Energy transitions have occurred in the past, and continue to occur worldwide.

A contemporary energy transition is being brought about by the transformation of the economics of oil, caused by energy disruption and geopolitical change. The primary energy mix is shifting towards lower carbon sources, driven by advances and growing environmental concerns.

Peak Oil

Marion King Hubbert, an American geologist, was the originator of the and peak theory. is an occurrence centered on Hubbert’s theory; it is the point in time when the rate of extraction of petroleum within a certain area has been maximized, after which it is projected to enter an

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Dubai International Academy Model United Nations 2018| 10th Annual Session irreversible drop. Peak oil is based on the observed rise, peak, fall, and depletion of aggregate production rate in oil fields over time. It is often confused with ; however, peak oil is the point of maximum production, while depletion refers to a period of falling reserves and supply.iii

Benchmark [Crude Oil]

There are several different varieties and blends of crude oil, with a continual spread due to differing volatility, sulfur content and transportation cost. A benchmark is a particular crude oil that serves as a convenient reference price for buyers and sellers of crude oil. West Intermediate [WTI], Brent Blend, and Dubai Crude are the three primary international crude oil benchmarks. The OPEC Reference Basket [used by OPEC], another well-known benchmark, is a weighted average of prices for petroleum blends produced by OPEC members. OPEC utilizes the OPEC Basket to make decisions regarding production. This makes the measure important for market analysts, and to the world oil market price as a whole.

Oil Glut

An oil glut is a market situation where the supply of crude oil far exceeds its demand, typically causing in a significant drop in its price.

Oil Boom

A sudden increase in the oil producing sector of a country’s economy. In most cases, the duration of these “booms” is short; the increase may initially stimulate , in terms of an augmented GDP. But, as demonstrated in several cases, these increases might later to scarcity in the face of high demand and low supply; or conversely, lead to gluts, due to high supply and low demand.

Macroeconomics

The section of economic study that focuses on international economic events on a large scale, with special importance given to the functioning and logistics of regional and global economies, and to factors such as growth rate, inflation, average income, and GDP- The study of macroeconomics is crucial to the understanding of this agenda, in order to fully appreciate the effects a shift in energy production, or lack thereof, will entail.

Primary Energy

Primary energy comprises commercially traded fuels, including modern renewables used to generate electricity. Based on the analysis of international energy experts, world primary energy consumption increased by approximately 1% in 2016. Oil remains the world’s dominant fuel, making up

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Dubai International Academy Model United Nations 2018| 10th Annual Session roughly a third of all primary energy consumed. Renewables in power generation accounted for a record 3.2% of global primary energy consumption, and are set to gradually replace conventional fuels at a steady rate over the next few decades.

Renewable Energy

Energy collected from resources that are naturally replenished on a human timescale is known as renewable energy. Some key terms involved in the primary sources of renewable energy are listed below:

Hydrogen Economy

The hydrogen economy is a proposed system of delivering energy using hydrogen. The term was created by John Bockris, a professor of electrochemistry. Advocates of a hydrogen economy backs hydrogen as a potential fuel for most power generation and energy storage needs. Hydrogen that is to be used as fuel can be generated by methods such as water electrolysis and reformation of .

However, this source of renewable energy faces many issues, given fundamentally low conversion efficiencies and competition from other sources.

Geothermal Power

Geothermal power is electricity generated by the heat generate and stored by the Earth. Dry steam and flash steam power stations are the primary used for this purpose. Geothermal electricity generation is currently used in 24 countries, while geothermal heating is in use in 70 countries.iv

Photovoltaics

Photovoltaics [often abbreviated to PV] is a term which covers the conversion of light into electricity using semiconducting materials that exhibit the photovoltaic effect; that is, the creation of voltage and electric current in a material upon exposure to light.

A conventional photovoltaic system utilizes solar panels, each containing a number of solar cells, which generate electrical power.

Economic Diversification

According to the United Nations, ‘economic diversification’ is generally taken as the process in which a growing range of economic outputs is produced. It can also be used to define the diversification

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Dubai International Academy Model United Nations 2018| 10th Annual Session of income sources separate from domestic economic activities, for example, income from oil exportation with the aim of diffusing risks by moving focus away from a single energy production sector.

Key Issues

In order to enable a transition in energy production, there are several concerns that must be addressed, the most important of which is the question of the Arab Nations. The nations of the Middle East and Northern Africa supply a majority of the world’s petroleum, with total daily production currently at over 31 million barrels a day. To shift even a small percent of the world’s primary energy consumption away from oil would spell disaster for these countries. Even now, are quickly depleting due to overuse, and with increased competition in the energy sector arising from the Far East, oil prices have seen a steep decline.

The rapid depletion of the value of oil in the last 4 years has only increased the inevitable necessity for the diversification in energy production by the Arab Nations. Arab Nations that were heavily oil-dependent faced the penalties of their decisions with high levels of unemployment, negative economic growth and budget deficits damaging the countries’ economic systems that had flourished until now.

Dependency of Oil-Producing States on Fossil Fuels

In spite of several attempts made by countries and intergovernmental organizations to increase the utilization and production of alternate energy sources [including solar, wind and hydroelectric power], the absence of effective coordination in R&D, and high research cost has resulted in any sort of substantial progress being halted. Consequently, fossil fuels have continued to serve as the world’s primary energy source. Fossil fuels account for more than 90% of primary energy consumption, as of 2017. This extent of dependency has forced most oil-producing nations into a virtual corner, where the option of diversifying energy production is near laughable. OPEC, as of 2015, has an 81% share of the total global oil reserves, 65% of which can be found in the Middle East alone.

However, given the suitable climatic conditions of the Middle East, Arab oil-producing nations could consider solar energy as a possible renewable energy source. It is an opportunity for them to become leaders in diversified and sustainable energy production processes, and would serve as a way out of their oil dependent state.

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Dubai International Academy Model United Nations 2018| 10th Annual Session

Decline in Oil Prices

The historic oil shock of June 2014 saw the world face a drop in oil prices from a an all-time high of around $125 per barrel; a decline which continued until it reached an all-time low of less than $30 per barrel as of February 2016. The peak came as a shock to the nations that had up until then completely depended on income from petroleum exports, and the incident is now one of the most critical macroeconomic developments of the last decade.

This situation of deteriorating commodity prices found itself created amidst a mixture of excess supply and recessive demand along with a slew of other reasons, such as the decelerating development of major emerging markets [primarily the economies of Brazil, Russia, India and China], the aggressively competitive western shale oil producers that allowed the US and Canada to cut imports, and the indisposition of major oil-producers [OPEC and non-OPEC exporters] to cut oil production.

The glut saw oil-exporting countries face the consequences in the form of decreased government spending, current account deficits, and shrinking international assets. Major oil-producing countries were forced to either sell out their shares in oil resources to explore alternative income schemes, or wait out the price fall, relying on capital in the interim. Subsequently, many OPEC and non-OPEC oil-producers have agreed to implement production cuts in order to “resurrect” the falling oil price. Due to several major producers unexpectedly surpassing the agreed cuts, the initiative seems to be heading in the right direction. Unfortunately, in order to avoid such a situation in the future, especially for the severely affected, oil-dependent countries, the curbing of production will not cut it. Diversification of energy production, and the diffusion of the economies of these nations has once again proven to be absolutely necessary.

Oil Depletion

Global oil supply is considered fixed, due to the fact that while petroleum forms naturally, it does so on a geological time scale, much too gradual to replenish itself at the rate at which it is currently extracted. Petroleum reservoirs are formed over millions of years, through the decomposition of plant and animal matter within the ocean floor.

The global decline in oil production has gained relevance at an alarming rate. The United States Energy Information Administration predicted in 2006 that world consumption of oil will increase past 98.3 million barrels per day in 2016 and 118 million barrels per day in 2030. With 2016 world oil consumption at 96.6 mbd, the international community may not have crossed the predicted mark, but this is no cause for celebration. A conclusion of the aforementioned Hubbert peak theory states that production curves of non-renewing resources approximate a bell curve. Thus, according to this theory, when the peak of

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Dubai International Academy Model United Nations 2018| 10th Annual Session production is passed, production rates enter a terminal decline. This terminal decline would mean that eventually, demand for petroleum would exceed the supply, resulting in a global petroleum shortage.

World Peak

In order to fully understand the implications of a global petroleum shortage, it must be understood that the effects of such a shortage would depend on the rate of decline and the development and adoption of effective alternatives. While previous shortages stemmed from a brief deficiency or surplus of supply, crossing Hubbert's Peak would mean that the production of oil would continue to decline, and that in any case, demand for these products would exceed supply, and must be reduced accordingly. The consequences of a world peak are severe. A few of the more likely possibilities have been listed below.

Possible Recession

In the event of a shortage, the oil price would skyrocket if the isn’t handled properly. With reference to past events, large and rapid increases in oil prices [called a ‘price shock’] have resulted in economic recessions. The oil price prior to the and the 1979 energy crisis was relatively low, after which it increased more than tenfold during that six- year timeframe. Even though the oil price dropped significantly in the following years, it has never touched the former base. Oil price began to increase again during the 2000s until it hit historical heights of $143 per barrel in 2008. As this price range well exceeded that which caused the 1973 and 1979 energy crises, they contributed to fears of an economic recession similar to that of the early 1980s; these fears might very well be realized, in the event that the energy transition has failed to progress enough to reduce oil’s dominance of the world energy mix.

Rising Food Costs

The cost of fuel for agricultural equipment would increase, driving the price of the final product higher. Along with this, higher transportation costs will increase retail prices; but most importantly, higher oil prices would cause farmers to switch from producing food crops to producing biofuel crops.v Quite simply, the law of supply and demand predicts that if fewer farmers are producing food, the price of food will rise.

Drastic Lifestyle Changes

Oil plays a major role in our day-to-day lives, with industries heavily dependent on this “black gold” as a fuel, among other purposes. For example, more than 90% of the US transportation industry relies of oil and petroleum. A large portion of the population in developed countries live in ‘suburbs’ settlements designed with automobiles in mind; with major changes to

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transportation, and possibly even housing infrastructure, these areas would become ineffectual. This, coupled with the forced shift to organic ‘’, due to the oil shortage, would most likely entail a move from urban to rural areas for a majority of the population.

Renewable Energy Challenges

The goals of the imminent energy transition have grown increasingly ambitious; building a society that demands less energy and is less dependent on nuclear power and fossil fuels, is a difficult task, if not impossible. The energy transition seeks to transform the global energy sector from primarily fossil- based to zero carbon before the 22nd century. The primary challenge of the energy transition is the need to reduce CO2 emissions. Commonly called the ‘decarbonisation’ of the energy sector, the removal of these harmful emissions is needed to limit climate change. This calls for urgent action on an international level. Even with a global energy transition underway, further efforts are required to mitigate the climate change and eradicate carbon emissions. With the proper deployment, renewable energy sources and effective energy use could achieve more than 90% of the carbon reductions required.

While renewable energy is the fastest growing fuel source, with its share in primary energy increasing to 10% by 2035, uncoordinated efforts and a lack of global investment may prevent the advance of renewables. The energy transition will primarily be facilitated by policy frameworks, market instruments, and advanced energy technology. A few of the challenges involved in increasing the share of renewables in primary energy include: the lack of necessary knowledge and tools in developing nations; the lack of energy technology sharing between countries; the reluctance of many countries to commence the shift from conventional fuel sources to renewables; and the lack of proper research and development due to a power sector dependent on a single income stream. The challenges to the implementation of the energy transition are many and varied, but with the proper implementation of intergovernmental legislature and assistance, these issues will simply serve as opportunities for the global community to prove its commitment to a sustainable future.

Major Parties Involved and Their Views

OPEC [Organization of Petroleum Exporting Countries]

OPEC is a group comprising of 14 of the world's major oil-exporting nations [Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela].

According to the OPEC Statute, the organizations mission is to “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure Research Report | Page 8 of 17

Dubai International Academy Model United Nations 2018| 10th Annual Session an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”vi

Due to recurring oil gluts, OPEC made a conscious decision to cut production by approximately 1 million barrels, after persisting with high quotas two years ago. Spearheaded by the Kingdom of Saudi Arabia, OPEC has formed agreements with several non-members to cut oil production; this is the first production cut of its kind in 15 years. While the organization has shown itself to be willing to cut production, by no means is it willing to accept a complete transition of energy production. OPEC insists that oil has, and will continue to be a major player in the international primary energy market and industry.

GCC [Gulf Cooperation Council]

The Gulf Cooperation Council is a regional intergovernmental political and economic association consisting of the Arab states of the Persian Gulf [Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates]. The organization aims to diversify its member states’ economies, in order to boost job creation and promote investment in industries besides petroleum. Its regulations seek to ease pressure on the oil industries of its member nations, through implementation of improved policies in various fields such as tourism, trade, religion, finance, customs, and agriculture. The joint efforts of its members to indorse alternative forms of energy, through projects such as connected power grids, aim to stimulate the smooth integration of alternative energy, and the sustainable growth of their economies.

IEA [International Energy Agency]

The IEA is a Paris-based self-directed transnational organization established in 1974 in the wake of the 1973 oil crisis. The IEA was initially created with the purpose of responding to physical disturbances in the international oil supply, in addition to serving as an information source on the international oil market. Over the years, it has evolved to function as a data source on statistics regarding most other energy sectors, as well.

The IEA advises its member nations on matters regarding energy policy and legislation; non- member nations, especially Russia, China, and India have also worked with the IEA. According to its mandate, the IEA emphasizes on , economic development, and the protection of the environment. The Agency advocates alternate energy sources [particularly the Photovoltaic Power Systems (PVPS) Program], global energy cooperation, and rational energy policies, all of which are crucial to the question of the energy transition.

IRENA [International Renewable Energy Agency]

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The International Renewable Energy Agency is an intergovernmental organization that seeks to support countries in the process of energy transitions, in order to facilitate a sustainable energy future through international cooperation. It was founded in 2009 and its statute was implemented in 2010. The agency is headquartered in Abu Dhabi. IRENA advocates the universal adoption of all forms of renewable energy in the pursuit of sustainable development and energy security.

With more than 170 Member States actively engaged, IRENA’s mandate promotes renewable resources and technologies as the key to a sustainable future and strives to help countries achieve their renewable energy potential. IRENA also publishes country-specific Renewable Energy Prospects, an informative report analyzing and providing recommendations for steps taken by countries. IRENA is unique as an energy agency, in the sense that it is an official permanent UN observer.

The Kingdom of Saudi Arabia

Saudi Arabia is one of the front-runners in the Middle East in terms of petroleum output, primarily due to its abundant reserves and advanced mechanized processes. It possesses over 18% of the oil reserves across the world, and is ranked as the largest exporter of petroleum [according to the OPEC Annual Statistical Bulletin 2017]. The country, once known as the largest producer of oil, globally and as part of the OPEC, has cut its production, a direct consequence of its agreement as an OPEC member to resolve the oil price issue. The Supreme Economic Council of Saudi Arabia has undertaken comprehensive socio-economic and fiscal reforms to move away from oil-dependency. Saudi Arabia released several statements last year, beginning with the structuring of a $50 billion renewable-energy plan to cut oil use. Saudi Arabia has released plans to turn to solar and wind power to temper domestic oil use in meeting growing energy demand.

The Minister of Energy, Khalid Al Falih, believes the renewable energy deployment program will not only diversify the nation’s primary energy mix but also catalyze economic development. The Saudi ministry’s active Renewable Energy Project Development Office has intentions to set up an ambitious government renewable energy investment program, which will allow Saudi Arabia to spearhead the energy transition movement in the Middle East.

The Russian Federation

In the past, the Russian Federation has shown reluctance to implement cuts on its production in the oil and petroleum industry; recently, however, Russia has displayed an unexpected willingness to cooperate and coordinate with the international community, in order to engineer effective deployment of energy transition strategies.

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Russia has planned the diversification of its fuel sources, particularly for power generation. With the plans for increased use of renewable energy, Russia is set to bring renewable energy consumption to 11% of primary energy consumption.

Despite these momentous efforts, certain fields require further attention. These include increased implementation of solar PV and wind development, long-term planning, and integration of renewables with existing plans. Hydropower is currently the most prominent renewable source in Russia, providing about one-fifth of all power generation capacity, along with bioenergy for heating in buildings and industry.

United Arab Emirates (UAE)

Due to its effort in diversifying its industries and the visions of its leaders which allowed for the implementation of alternative revenue streams and fuel sources, more than 70% of the United Arab Emirates’ is now derived from non-oil sectors, with steadily gaining popularity as a fuel source; a great feat considering the fact that the foundation of the UAE was built upon the Oil Boom. The UAE is in the process of developing renewable energy to reduce the nation’s dependence on oil and natural gas as fuel sources.

Since 2010, rising natural gas prices in the UAE have combined with rapidly falling technology costs for solar PV systems, in particular. This has made renewables an attractive option for power generation in the UAE. The Emirate of Dubai’s governance model and the creation of a UAE federal energy policy taskforce are important initial steps in the country’s renewable energy deployment plan. Other Emirates, like Abu Dhabi, have made investments in commodity and service activities to initiate the diversification of energy production and consumption, a prime example being the Masdar City project.

World Energy Council (WEC)

The World Energy Council is an international forum for discussion on topics relating to the utilization, storage, and sourcing of energy. Its mission is 'to promote the sustainable supply and use of energy for the greatest benefit of all people'.

Formed in 1923, WEC is a global energy body, accredited by the United Nations; it represents all energy resources and technologies of and demand, and addresses the challenges and opportunities facing suppliers and consumers of energy. The WEC's most important publications include an annual country-by-country Energy and Climate Policy Assessment, the Survey of Energy Resources.

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The WEC hosts the World Energy Congress, which is the world’s largest and most influential energy event covering all aspects of the energy agenda, and advocating the promotion of an affordable, stable and environmentally sensitive energy system for the greatest benefit of all.

Timeline

Date Event Outcome

26th May 1908 Anglo-Persian Oil Co. [now BP] strikes This stimulates the ‘race for oil’, a oil in Persia [now Iran] for the first time. wave of exploration, extraction and This is the first big petroleum find in the exploitation that will change the Middle East region's – and the world's – history.

2nd June 1932 The first oil well on the Arabian side of This to discoveries of oil wells Persian Gulf is discovered [in Bahrain], in neighboring countries Saudi coinciding with the collapse of the world Arabia, Oman, Qatar, and what was pearl market. to be the UAE, in the following decade.

10 – 14th September 1960 The Baghdad Conference is held at the OPEC is founded by its first five initiative of Saudi Oil minister Abdullah members [Iran, Iraq, Kuwait, Saudi Tariki, Venezuelan diplomat Pérez Arabia, and Venezuela]. The Alfonzo, and Iraqi prime minister Abd al- formation of OPEC leads to healthy Karim Qasim. commercial growth in its member countries.

October 1973 OPEC proclaims an oil embargo, In the wake of the oil crisis, the targeted at certain nations participating International Energy Agency is in the Yom Kippur War. This is termed established. the “first oil shock”.

November 2005 The International Energy Agency This is the first edition to focus solely publishes the 28th edition of its flagship on the Middle East and North Africa, publication ‘World Energy Outlook’. specifically on implications of their energy setup.

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11 – 14th November 2012 1st International Conference on The conference brought together Renewable Energy Research and experts in alternative energy from Applications takes place. several industries to discuss future forecasts for expansion in the global energy transition.

June 2014 Oil prices fell from an all-time high of Oil producing countries are forced to $125/bbl partly due to the unexpected choose between selling out their fracking revolution, and the relatively shares in oil resources to explore slow economic growth in developing alternative income schemes, and countries. sweating out the price fall, relying on capital in the interim.

20th January 2016 The lack of coordination between OPEC The OPEC Reference Basket price members, and between OPEC and Non- per barrel falls to $22.48, less than a OPEC members, causes the substantial quarter of its June 2014 high. oversupply of crude oil over the past year to reach its peak.

30th November 2016 OPEC officially announces and codifies Declaration of Cooperation reaffirmed; their September 2016 decision to Russia and ten other non-members abandon their market-based approach, pledge to cut 558,000 barrels; and agreed to cut production at its 171st Indonesia "temporarily suspends" its meeting [by as much as 1 million bbl], membership, rather than accepting the the first production cut in fifteen years. organization's requested 5% cut.

13th December 2017 OPEC’s 5th International Energy OPEC leaders reinforce the idea that Executive Forum 2018 takes place in oil will continue to be a vital part of Beijing. primary energy consumption.

15 – 18th January 2018 The 11th edition of the World Future The conferences brought together Energy Summit takes place in UAE, as a over 150 global industry leaders to part of the country’s sustainable energy share their thinking, insights and initiatives. international best practice, to advance future energy, energy efficiency and clean technology.

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Previous Attempts to solve the Issue

With direct reference to the Arab Nations that rely so heavily on oil revenue, there have been several attempts to resolve oil dependency once and for all. Several of the major oil-producing nations in the Middle East have attempted to diversify their energy production, as well as the sources of their national income. The attempted solutions seek to leave oil behind, in an attempt to kick start the energy transition in the region. For example, in 2008, Bahrain launched its Economic Vision 2030 and soon followed up with its National Economic Strategy that charted plans to increase the integration of its economy with the private sector, in order to attract foreign investment, which is a bid to steadily increase job creation in various energy sectors over the next decade. The National Assembly of Kuwait passed a five year development plan in 2010 that projected the conversion of Kuwait into an economic hub for the Gulf region, through energy diversification and economic development targeting GDP growth. The Sultanate of Oman has not been able to take risks or substantial periods of time with its development strategies, due to the faster rate of depletion of their fossil fuel reserves as compared to their fellow Arab Nations. As a result, economic diversification has been a priority for Oman since the dawn of the century, and its overall aims to boost industrialization, privatization and energy diversification have been integrated into its Vision 2020.

While these ‘Visions’ were impressive, it would not be completely true to claim that every nation has achieved the rate of progress it had expected to. The UAE could potentially serve as an example of what successful economic diversification of national income sources looks like. The UAE as a former highly oil dependent economy has employed strategies to diversify its economy and energy production to counter the unpredictability of global oil prices. The country began to diversify into other sectors, most notably the creation of free trade zones. As a result of several efforts in this vein, the essence of the UAE economy has undergone a transformation and further branched into sectors including manufacturing, construction, tourism, trade, and retail that have helped maintain low oil dependency. The IRENA is even headquartered in the UAE as a result of its bid to foster sustainable development. Unfortunately, the only drawback was that the UAE began to increase imports of natural gas, thereby still depending on fossil fuels as a primary source of energy. The UAE is currently focused on developing on these strategies, with respective emirates taking initiatives such as Dubai’s Vision 2021 and Abu Dhabi’s Economic Vision 2030. Every one of these Arab nations wished to see further integration into the global economy, and it is safe to say that they did accomplish a great deal. Despite the obvious progress, it is important to note that oil still remains a large part of the primary energy of these nations.

Possible Solutions

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Although efforts have been made to less the oil dependency of these nations, there are several other measures that can be taken in order to expedite the energy transition, as expanded upon below.

Renewable Energy Sources

Renewable energy can be said to be unlimited, as supplies are continually replenished through natural processes. But these sources are limited in the sense that their availability varies geographically and across time. Some regions of the world are particularly well suited for wind or solar energy. Fortunately, solar energy potential is highest in northern Africa and the Middle East, which is especially convenient for the majority of the world’s oil-producing nations in the region. There is more solar energy that reaches the surface of the Earth each hour than the amount of energy consumed by the world in a year. The challenges of using the sun's energy – energy which can be obtained either from wind power or from solar power – is that the energy needs to either be stored in physical form of fuel for when it can be used in the future, or transported directly as electricity, through transmission lines.

Despite this, one important question is whether renewable energy is available in sufficient quantities to halt dependence on fossil fuels, while also being comparably reliable and suitable for different purposes. In response to this, a recent study [Appendix VII] concluded that renewable energy sources, based on wind, water, and sunlight [WWS], could provide all new energy globally by 2030 and replace all current nonrenewable energy sources by 2050.

An alternative considered likely by some is that oil will be replaced with a replacement fuel during the first half of the 21st century. The replacement fuel would likely be hydrogen. A hydrogen economy would then replace the current oil-based economy. Another possible replacement fuel is biogas, which is composed of methane.

Financial Development in the Private Sector

Aside from the question of renewable sources of energy, it is also important to consider the question of relieving the financial pressure on oil-producing nations in the region, so as to allow them to explore alternate energy options in the first place.

Arab nations must acknowledge the commonly present inefficiency of the public sector with respect to industries that would do much better economically if privatized. With Bahrain and the UAE in mind, it is also crucial to attract foreign investment. In the cases of several Arab Nations, attracting foreign investment will be a necessity, due to the instabilities and conflicts within the countries, and as a direct result of regional conflict. Proper policies and regulations would have to be put in place by governments in order to entice investors; an excellent example would be the free trade zones set up in the UAE. To create the best possible economic environment to enable a smooth energy transition, and in order for their nations to be front-runners in terms of research and development, governments must fully Research Report | Page 15 of 17

Dubai International Academy Model United Nations 2018| 10th Annual Session support efforts to invest in further research, high quality labor forces and possibilities for the mechanization of energy-related processes.

Noting that the outcome of this agenda will directly affect the people of the region, it is crucial that the Member Nations work together in order to form comprehensive resolutions that present solutions with strong foundations and a guarantee of effectiveness, with the environment of implementation and the likelihood of success in mind.

Appendix

i. OPEC Agreement https://goo.gl/nYQfDR ii. Peak Oil Report https://goo.gl/kGN4mQ iii. IMF Economic Diversification Case Study [GCC] https://goo.gl/VwxjMb iv. BP Statistical Review of World Energy 2017 https://goo.gl/LWgGxg v. IEA Energy Transition Report https://goo.gl/8NLQJe vi. WEO 2005 https://goo.gl/rMWTuH vii. WWS Research Paper Part 1 https://goo.gl/Ek4xju

Bibliography

i Miller, Richard G., and Steven R. Sorrell. The Future of Oil Supply. Philosophical transactions. Series A, Mathematical, physical, and engineering sciences 372.2006 (2014): 20130179. PMC. Web. 1 Jan. 2018.

ii BP. Statistical Review of World Energy. June 2017. Digital Report. Web. 1 Jan. 2018.

iii Hirsch, Robert L. PEAKING OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT. US Department of Energy: 1–91. 2005. Web. 14 January 2016.

iv Geothermal Energy Association. Geothermal Energy: International Market Update. N. p., 2018. Web. 4 Jan. 2018.

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v Brown, Lester. How Food And Fuel Compete For Land - The Globalist. web.archive.org. N. p., 2018. Web. 4 Jan. 2018.

vi Secretariat, OPEC. OPEC Statute. 2012. Organization of the Petroleum Exporting Countries. Web. 31 Dec. 2017.

vii Scientific American. A Plan to Power 100 Percent Of The Planet With Renewables. N. p., 2018. Web. 4 Jan. 2018.

viii Nicola Armaroli, Vincenzo Balzani, The Future of Energy Supply: Challenges and Opportunities. Angewandte Chemie 46. N. p., 2007. Web. 3 Jan. 2018.

ix Smil, Vaclav. Energy Transitions: History, Requirements, Prospects. Praeger, 2016.

x Rebecca Wright, Hiroki Shin, Frank Trentmann. A Brief History of the World Energy Council. worldenergy.org. N. p., 2018. Web. 4 Jan. 2018.

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