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Published in partnership with the King Faisal Center on Research and Islamic Studies.
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.
Continue reading “The Energy Transition in the Middle East: The Outlook for 2040”
