9 GOVERNANCE AMID THE TRANSITION TO RENEWABLE …
253
and Iran have made renewable energy policy a low political priority. 62
This is particularly problematic for these two states given the bleak
outlook of their relatively high-carbon-intensive petroleum sectors in an
oil-constrained world.
Potential Scenarios for How the Transition
Will Affect Fiscal and Political Stability
Will the Rise of Competitive Renewables from Oil Spark Rivalry
Between Competing SOEs? Or Will This Instead Result in a Unified,
Transformed SOE?
Reforms that advance the transition to non-hydrocarbon sources of
energy will unsurprisingly create political adversaries for incumbent
leaders. A major fear among MENA oil producers is the potential for challenges from state-owned oil companies. These fears are not without foundation: shifts to renewable energy in sub-Saharan Africa have prompted
backlash from prominent SOEs who seek to thwart a broader transition to
renewable energy. 63 The seeds for such backlash may already be playing
out in the case of Morocco, where the state-owned utility ONEE is grappling with reforms that prioritize public-private development of renewable
electricity generation. Despite serving a major coordinating role in the
transition, ONEE is witnessing the disruption of its core business model:
with a declining pool of customers, the utility is faced with less revenue
from electricity sales and a dwindling capacity to provide credible power
purchase agreements to new investors. 64
SOEs such as national oil companies (NOCs) and sovereign wealth
funds (SWFs) have traditionally managed the government’s largest
revenue flows, such that many MENA producers lack a robust, independent financial sector. They also play a crucial role in the labor market: SOE
and SOE-related institutions account for much of the state employment in
the MENA, where state employment is already a large portion of overall
employment. For example, 30% of the Saudi and Iraqi workforce and
15% of the Kuwaiti labor force is employed by SOEs and other government entities. 65 These numbers are significantly higher when looking
at the share of national labor: in Kuwait, for instance, over 90% of the
non-expatriate labor force is employed by the state. 66
But if properly governed, SOEs can thrive in a renewable energy
system. NOCs in particular are uniquely positioned to pivot into
253
and Iran have made renewable energy policy a low political priority. 62
This is particularly problematic for these two states given the bleak
outlook of their relatively high-carbon-intensive petroleum sectors in an
oil-constrained world.
Potential Scenarios for How the Transition
Will Affect Fiscal and Political Stability
Will the Rise of Competitive Renewables from Oil Spark Rivalry
Between Competing SOEs? Or Will This Instead Result in a Unified,
Transformed SOE?
Reforms that advance the transition to non-hydrocarbon sources of
energy will unsurprisingly create political adversaries for incumbent
leaders. A major fear among MENA oil producers is the potential for challenges from state-owned oil companies. These fears are not without foundation: shifts to renewable energy in sub-Saharan Africa have prompted
backlash from prominent SOEs who seek to thwart a broader transition to
renewable energy. 63 The seeds for such backlash may already be playing
out in the case of Morocco, where the state-owned utility ONEE is grappling with reforms that prioritize public-private development of renewable
electricity generation. Despite serving a major coordinating role in the
transition, ONEE is witnessing the disruption of its core business model:
with a declining pool of customers, the utility is faced with less revenue
from electricity sales and a dwindling capacity to provide credible power
purchase agreements to new investors. 64
SOEs such as national oil companies (NOCs) and sovereign wealth
funds (SWFs) have traditionally managed the government’s largest
revenue flows, such that many MENA producers lack a robust, independent financial sector. They also play a crucial role in the labor market: SOE
and SOE-related institutions account for much of the state employment in
the MENA, where state employment is already a large portion of overall
employment. For example, 30% of the Saudi and Iraqi workforce and
15% of the Kuwaiti labor force is employed by SOEs and other government entities. 65 These numbers are significantly higher when looking
at the share of national labor: in Kuwait, for instance, over 90% of the
non-expatriate labor force is employed by the state. 66
But if properly governed, SOEs can thrive in a renewable energy
system. NOCs in particular are uniquely positioned to pivot into