112 F. AL-SULAYMAN
Economic Ambition and Dynamism
As discussed in the section looking at national champions in the Saudi
case, a recognition of the economic opportunities afforded by the energy
transition and the bureaucratic capacity to take advantage of these opportunities seems to be a defining characteristic of the Emirati case and
increasingly the Saudi case.
The pursuit of these economic opportunities by state-affiliated entities
has created new and powerful clients and constituencies that help ensure
targets are ambitious, and that plans materialize. The case of Masdar,
and increasingly ACWA Power, using renewable project tenders in their
home markets as opportunities to gain portfolio experience and credentials, and then using that experience to compete in international tenders,
is an example of this dynamic. Inversely the absence of such economic
actors in some of the other GCC states may go some way to explaining
the more modest renewable energy targets.
Clients and Rent Seeking Pressures
The political power of constituencies that currently benefit from subsidized energy is also an important factor in determining the pace and
extent of subsidy reform pursued by each state.
A salient example of this dynamic is the Kuwaiti National Assembly,
which represents both populist and mercantile voices and wields the
power to bring down governments. In recent years the Assembly has
steadfastly rejected efforts by governments to engage in subsidy reform,
even as neighbors have successfully implemented similar measures. 43
In other markets, the differential between electricity tariff rates for
commercial and residential consumers in Saudi Arabia for example—
$0.08 and $0.05, respectively—is also indicative of the power of specific
constituencies. In the Saudi case, this is evidence of the rigidity of the
state’s social contract with working-class citizens paying the lowest slab of
the residential tariff, and simultaneously, the malleability and weakness of
the social contract with the local private sector and business elite. 44 Similarly, the maintenance of low industrial electricity tariffs in Saudi Arabia of
$0.05 and low diesel prices (used for off grid generation) is a product of
the creation of powerful constituencies in decades past. These constituencies largely consist of industrial players that chose to engage in energy
Economic Ambition and Dynamism
As discussed in the section looking at national champions in the Saudi
case, a recognition of the economic opportunities afforded by the energy
transition and the bureaucratic capacity to take advantage of these opportunities seems to be a defining characteristic of the Emirati case and
increasingly the Saudi case.
The pursuit of these economic opportunities by state-affiliated entities
has created new and powerful clients and constituencies that help ensure
targets are ambitious, and that plans materialize. The case of Masdar,
and increasingly ACWA Power, using renewable project tenders in their
home markets as opportunities to gain portfolio experience and credentials, and then using that experience to compete in international tenders,
is an example of this dynamic. Inversely the absence of such economic
actors in some of the other GCC states may go some way to explaining
the more modest renewable energy targets.
Clients and Rent Seeking Pressures
The political power of constituencies that currently benefit from subsidized energy is also an important factor in determining the pace and
extent of subsidy reform pursued by each state.
A salient example of this dynamic is the Kuwaiti National Assembly,
which represents both populist and mercantile voices and wields the
power to bring down governments. In recent years the Assembly has
steadfastly rejected efforts by governments to engage in subsidy reform,
even as neighbors have successfully implemented similar measures. 43
In other markets, the differential between electricity tariff rates for
commercial and residential consumers in Saudi Arabia for example—
$0.08 and $0.05, respectively—is also indicative of the power of specific
constituencies. In the Saudi case, this is evidence of the rigidity of the
state’s social contract with working-class citizens paying the lowest slab of
the residential tariff, and simultaneously, the malleability and weakness of
the social contract with the local private sector and business elite. 44 Similarly, the maintenance of low industrial electricity tariffs in Saudi Arabia of
$0.05 and low diesel prices (used for off grid generation) is a product of
the creation of powerful constituencies in decades past. These constituencies largely consist of industrial players that chose to engage in energy