4 THE RISE OF RENEWABLES IN THE GULF STATES …
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intensive activities in the region with the understanding that the underlying social contract would ensure the continuation of subsidized energy.
As D Reiche rightly predicted:
The energy-intensive industries would fear for their competitive advantage
and act as a powerful lobby group against any policies making their business less competitive. It might be necessary to exempt this sector if first
steps in the direction of an internalization of external costs are taken. 45
More specifically, large state-owned entities like SABIC who have developed lucrative energy intensive business units producing and manufacturing steel and aluminum are now likely staunch defenders of subsidized
energy in the Saudi industrial sector and also therefore an obstacle to the
proliferation of solar PV in that sector.
Comparatively, in the UAE where the social contract has already
been altered—or where important political constituencies were protected
through targeted policy interventions—subsidies have been lifted to a
substantial degree for many heavy energy users. 46 Focusing on the
changes to the Emirati social contract would be beyond the scope of
this chapter, but they largely consist of providing investors with worldclass infrastructure and an inviting business and legal environment while
allowing other cost inputs, such as energy, to rise. This, in turn, has
allowed for the proliferation of rooftop solar PV in these markets, where
the LCOE of solar energy reached grid parity 3–5 years ahead of its
neighbors.
Soft Power Projection
Abu Dhabi’s ‘energy re-branding,’ as co-editor Li-Chen Sim put it,
proved to be the first iteration of this dynamic, which would take hold
in other regional capitals in more recent years. 47 Much in the same way
that the Oil Majors engaged in a concerted effort over the past decade
to ‘green’ their image, states in the region have also begun to understand
the soft power benefits of being perceived as sustainable energy players.
As with other dynamics, here too the UAE took an early lead, with
the establishment of Masdar in 2006, and the establishment of the UN’s
International Renewable Energy Agency (IRENA) in Abu Dhabi in 2010.
The story of Masdar is perhaps indicative of the fact that a number of
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intensive activities in the region with the understanding that the underlying social contract would ensure the continuation of subsidized energy.
As D Reiche rightly predicted:
The energy-intensive industries would fear for their competitive advantage
and act as a powerful lobby group against any policies making their business less competitive. It might be necessary to exempt this sector if first
steps in the direction of an internalization of external costs are taken. 45
More specifically, large state-owned entities like SABIC who have developed lucrative energy intensive business units producing and manufacturing steel and aluminum are now likely staunch defenders of subsidized
energy in the Saudi industrial sector and also therefore an obstacle to the
proliferation of solar PV in that sector.
Comparatively, in the UAE where the social contract has already
been altered—or where important political constituencies were protected
through targeted policy interventions—subsidies have been lifted to a
substantial degree for many heavy energy users. 46 Focusing on the
changes to the Emirati social contract would be beyond the scope of
this chapter, but they largely consist of providing investors with worldclass infrastructure and an inviting business and legal environment while
allowing other cost inputs, such as energy, to rise. This, in turn, has
allowed for the proliferation of rooftop solar PV in these markets, where
the LCOE of solar energy reached grid parity 3–5 years ahead of its
neighbors.
Soft Power Projection
Abu Dhabi’s ‘energy re-branding,’ as co-editor Li-Chen Sim put it,
proved to be the first iteration of this dynamic, which would take hold
in other regional capitals in more recent years. 47 Much in the same way
that the Oil Majors engaged in a concerted effort over the past decade
to ‘green’ their image, states in the region have also begun to understand
the soft power benefits of being perceived as sustainable energy players.
As with other dynamics, here too the UAE took an early lead, with
the establishment of Masdar in 2006, and the establishment of the UN’s
International Renewable Energy Agency (IRENA) in Abu Dhabi in 2010.
The story of Masdar is perhaps indicative of the fact that a number of