248 P. MAHDAVI AND N. UDDIN
low rents, diffuse systems, energy security, and increased employment
opportunities.
The first differing characteristic is the lack of Ricardian, or differential,
rents: that is, profits above and beyond classical income resulting from the
gap between world market prices and local production costs plus return
to capital. 39 This gap exists primarily because of the scarce nature and
inelastic demand of commodities such as oil, which accounts for its excessively large rents compared to other commodities. And in the MENA
in particular, the oil sector has particularly high differential rents given
production costs are often below $10 per barrel compared to $55 to $75
per barrel market prices, due in part by restraining long-term production growth within the OPEC framework. While renewables based in the
MENA could potentially boast lower production costs—given its relative
abundance of sunlight and wind potential—the obvious lack of global
scarcity for these ‘commodities’ precludes abnormally high market prices.
Further, the need for transporting electricity across long distances adds to
overall costs.
This loss of rents will change the fundamental nature of the allocative
rentier state. 40 Instead of serving as provider of rent-financed patronage
and targeted goods and services, the state in a decarbonized energy system
will instead be re-allocative. It will serve to redistribute revenues from
taxation to the mass public, just as in the traditional economies of non-oilrich states, notwithstanding variation in the degree to which this wealth
is equitably redistributed. 41 This shift from extractive-based fiscal governance to governance based on taxation of the broader economy—such as
income taxes, VAT, tourism, or municipality fees—is what Mick Moore
refers to as the ‘transition to the status of tax states.’ 42 Such a system
naturally fosters a negotiated relationship between citizens and government, one which involves bargaining for greater institutionalized societal
influence over fiscal matters in exchange for higher and higher levels of
domestic taxation and, therefore, government revenues.
A system with inherently lower rents also provides fewer incentives
for malfeasance and corruption. 43 Across the renewables value chain,
there are fewer opportunities for extortion as compared to the complex
and opaque segments of the oil system. This begins with differences in
upstream value, where would-be extorters can profit from the fixity of
assets, such as oil reservoirs and coal mines, while bureaucrats will find
less financial value in extorting prospective bidders on specific parcels of
land for solar and wind development. While this will vary across states
low rents, diffuse systems, energy security, and increased employment
opportunities.
The first differing characteristic is the lack of Ricardian, or differential,
rents: that is, profits above and beyond classical income resulting from the
gap between world market prices and local production costs plus return
to capital. 39 This gap exists primarily because of the scarce nature and
inelastic demand of commodities such as oil, which accounts for its excessively large rents compared to other commodities. And in the MENA
in particular, the oil sector has particularly high differential rents given
production costs are often below $10 per barrel compared to $55 to $75
per barrel market prices, due in part by restraining long-term production growth within the OPEC framework. While renewables based in the
MENA could potentially boast lower production costs—given its relative
abundance of sunlight and wind potential—the obvious lack of global
scarcity for these ‘commodities’ precludes abnormally high market prices.
Further, the need for transporting electricity across long distances adds to
overall costs.
This loss of rents will change the fundamental nature of the allocative
rentier state. 40 Instead of serving as provider of rent-financed patronage
and targeted goods and services, the state in a decarbonized energy system
will instead be re-allocative. It will serve to redistribute revenues from
taxation to the mass public, just as in the traditional economies of non-oilrich states, notwithstanding variation in the degree to which this wealth
is equitably redistributed. 41 This shift from extractive-based fiscal governance to governance based on taxation of the broader economy—such as
income taxes, VAT, tourism, or municipality fees—is what Mick Moore
refers to as the ‘transition to the status of tax states.’ 42 Such a system
naturally fosters a negotiated relationship between citizens and government, one which involves bargaining for greater institutionalized societal
influence over fiscal matters in exchange for higher and higher levels of
domestic taxation and, therefore, government revenues.
A system with inherently lower rents also provides fewer incentives
for malfeasance and corruption. 43 Across the renewables value chain,
there are fewer opportunities for extortion as compared to the complex
and opaque segments of the oil system. This begins with differences in
upstream value, where would-be extorters can profit from the fixity of
assets, such as oil reservoirs and coal mines, while bureaucrats will find
less financial value in extorting prospective bidders on specific parcels of
land for solar and wind development. While this will vary across states