The Energy Transition in the Middle East: The Outlook for 2040

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Published in partnership with the King Faisal Center on Research and Islamic Studies.

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The views and opinions presented here are solely those of the author and do not reflect the views of the United States Government, the National Council on U.S.-Arab Relations, or the King Faisal Center on Research and Islamic Studies.

Summary

Discussions about post-oil planning in the Middle East were rather common around fifteen years ago, when experts sought to focus attention on the need for economic diversification and consultancies aimed to help clients prepare long-term strategic visions.  Governments that had the foresight to recognize the scope of the problem and the political will to commit real resources to it, have already begun the lengthy, arduous process of changing public mind-sets, bureaucratic cultures, and regulatory regimes.  Some will succeed, gaining a competitive advantage over regional neighbors in terms of technology, efficiency, and productivity, making them valued partners for the international community in terms of maintaining peace and security in the Middle East.  Others will survive, but their growth will be stunted and they will struggle to explain to the international community how they are contributing to global efforts at climate change and why Western countries should continue to lend them political, military, and financial support.  Those governments that have not yet begun to address the problem probably do not have the time that will be required to accomplish all the necessary steps before peak demand arrives, their oil exports lose value and/or market share, and they can no longer maintain the patronage networks that are the backbone of regime survival.  In a sense, we can already see the outlines of the post-oil future taking shape around us and we can start to assess its impact on industry, governance, and society, even if oil itself will continue to have value for decades to come and energy companies transform to meet the needs of the global economy.

The Future is Now

One thing that we must keep in mind is that for most people who are currently reading this article, these fundamental transformations in the region will occur in our lifetimes.  This story begins in Canada, far away from the date palms and camel races of Riyadh and Abu Dhabi.  Jason Kenney, the provincial premier of Alberta province, ran in 2019 on a conservative platform of deregulation of the oil industry, in support of the profits from oil sands that it generates for Alberta’s residents.  He now finds himself shifting tack, as Alberta’s government seeks to develop investment in renewables and forms of energy with lower CO2 footprints, while at the same time proposing a fund that taxes carbon emitters to help pay for carbon capture and storage.  Investors and insurance companies have signaled that they are wary of projects that do not meet certain basic environmental criteria, and the Keystone XL pipeline will likely face serious obstacles from the new administration in Washington.[1]  The politics are not simple.  Oil sands from Alberta comprise the largest single source of U.S. oil imports and support for the oil industry is a mainstay of the Conservative Party’s platform.[2]  Even as the Alberta government explores energy diversification, it has also funded the Canadian Energy Centre to rebrand the image of Canada’s oil industries and backed indigenous groups that are willing to support energy projects through legal action.[3]  Kenney and the Conservatives in Edmonton are caught between the oil politics of the present and the climate activism of the future.[4]  This is what the energy transition looks like – oil producers and politicians having to reposition themselves to account for changing public, corporate, and governmental tastes.  It is a story that will play out throughout the Middle East over the next ten to twenty years.

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Crown Prince Mohammed bin Salman’s Visit to the United States: A Personal Perspective

On March 23, 2018, Al Jazeera Arabic’s program Min Washington, a weekly current affairs show hosted by Dr. Abderrahim Foukara, interviewed National Council on U.S.-Arab Relations Founding President and CEO Dr. John Duke Anthony.

The focus of the interview was on Saudi Arabian Crown Prince Mohammed bin Salman bin Abdulaziz Al-Saud. The Crown Prince is currently visiting the United States.

Following is a transcript of the interview. Included at the end is an additional question asked and answered that did not make it into the program’s final cut. The transcript has been edited for clarity.


Min Washington: Founding President and Chief Executive Officer of the National Council on U.S.-Arab Relations Dr. John Duke Anthony has followed developments in the Arab region closely for decades. This includes Saudi Arabia.

Dr. Anthony, how do you assess the visit of the Crown Prince to the United States and its timing?

Dr. Anthony: What Saudi Arabia’s Crown Prince is doing is what he has not yet done extensively beyond his meetings with U.S. officials in Washington, D.C., and various private sector leaders in New York City.

In this instance, he is spending time in those two cities again but with additional groups and individuals in both places and, also, in other locations such as Boston, Houston, Seattle, Los Angeles, and Silicon Valley in California.

Beyond meetings in Washington, D.C., Saudi Arabian Crown Prince Mohammed bin Salman’s visit to the United States has included (clockwise starting at top) discussions with Christian and Jewish religious leaders, meetings with former U.S. leaders such as former President Bill Clinton, coffee with businessman and philanthropist Michael Bloomberg, and the signing of an agreement with SoftBank and its founder Masayoshi Son to develop an ambitious $200 billion solar power project. Photos: Saudi Press Agency and Saudi Royal Court.

He is doing this for two broad strategic reasons.

One stems from his awareness that he is largely unknown to large and significant sectors among the American people.

The other is his wanting to build on the meetings he had last year with President Trump and members of his staff – here as well as in Riyadh.

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A Quiet Revolution: Renewable Energy in the GCC Economies

Gulf Cooperation Council (GCC) oil and gas producers face the long-term question of how much and how quickly global markets will move from fossil fuels toward cleaner energy. With one of the region’s key strategic and economic concerns being long-term energy demand, Gulf oil producers have long acknowledged that they have an interest in being ahead of the game in planning for future demand reductions in their key markets.

The Paris Agreement of December 2015 may provide clues to the future of clean energy in that it incentivizes increasingly ambitious climate targets and actions by participating states. If the accord is translated into lasting policies across different economies, and depending on the extent to which the policies are implemented, it may be that future generations will use and benefit from a cleaner, more sustainable energy supply. What might also occur is that oil and to some extent gas producers will face a progressively uncertain future for their fossil fuel-based exports.

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