The Gulf Region is confronted with a significant policy dilemma about its energy market rules and regulations. Throughout history, the area has been significantly dependent on its enormous deposits of oil and natural gas. However, there is an increasing acknowledgment of the need to broaden the range of energy sources and foster sustainability. The policy challenge is to achieve a harmonious equilibrium among the objectives of maintaining a reliable energy supply, attaining financial gains from energy exports, and effectively addressing environmental considerations. Furthermore, it is essential for the Gulf Region to effectively administer energy subsidies, foster private sector engagement, and rectify discrepancies in energy accessibility to adequately cater to the requirements of all inhabitants. The resolution of these intricate difficulties necessitates the adoption of a comprehensive strategy in the formulation of policies and regulations.

1-Geo-policies and energy

1.1 The current energy landscape in the Middle East

The Middle East and North Africa are regions known for their resources constituted mainly of oil and gas. This represented an advantage for the governments, having low production costs associated with the lack of government legislation.

Fossil fuels have been the catalyst for the lack of investments in renewables in the region.
Nonetheless, later years have witnessed an increase in investments in renewables with countries gradually switching towards a more sustainable vision of the energy sectors. According to the latest report by GlobalData revolving around the energy transition in the Middle East, the power mix in the region is predominated by thermal power which represents about 90% of the total energy consumption in 2021, having natural gas as the main source for fuel. Furthermore, the latest global political atmosphere has accelerated the elimination of fossil fuels notably with the Russia-Ukrainian war.

Russia being one of the biggest suppliers of fossil fuels for the United States faced many sanctions, leading the world to accelerate the deployment of alternative energy sources, notably renewable energy.
With the IPCC reports issuing pressure on countries to increase the deployment of renewables, generation capacity based on oil is expected to witness an interesting decline of 30% until 2030.
In fact, such intentions are accentuated by the rising demand for low-carbon fuels, constituting a smooth transition passing from oil and gas to renewables through the intermediate of natural gas.

1.2 Infrastructure and system operation in different MENA countries.

The increase in demand for natural gas is favored by the adoption of carbon capturing and utilization techniques (CCUS). This tool shows itself to be effective for fossil fuel-producing countries in the middle east, which allow them to maintain their economic strength, and ensure their energy security. Therefore, CCUS represents for these countries as a reliable tool to transition smoothly from a dependence on fossil fuels to renewable energy generation. For example, the Kingdom of Saudi Arabia (KSA) pronounced its intent to fund CCS projects during the Middle East Green Initiative Summit of 2021 while Abu Dhabi through ADNOC is currently capturing about 5 Mtpa of CO2/year, making them the leader in grand scale operations at a global level (GlobalData Energy, 2022).

1.3 Relation between energy sources distribution in the region and the policies of some countries through partnership

Policies and partnerships are currently being established within the UAE, where emirates like Abu Dhabi and Dhabi are enhancing policies with respect to electric vehicle (EV) deployment through the Abu Dhabi Department of Energy, announced in May 2022 (GlobalData, 2022) in order to manage the successful and order deployment of EVs.
However, the lack of effective and regional legislation halts the efficacy in investing in new technologies and potential innovations that can phase out fossil fuels. Efforts remain minimal and reduced to national levels without observable improvement in regional collaborations. For example, Qatar has started an initiative to electrify the public transportation sector in the Qatar Free Zone Authority through the establishment of e-bus factories. Furthermore, with the great reserves of natural gas, hydrogen has been encouraged as a new investment project, leading to the region ceasing its way as an extensive hydrogen exporter to countries like Germany and Japan. Such initiatives incentivize the financial support to build ammonia production plants such as the one in Neom, Saudi Arabia.
While focus has been shed on gulf countries that have extensive oil and gas reserves, the Middle East and North African Region is extremely diverse, with countries like Syria, Lebanon and Jordan representing a Levantine sample, adequate for the deployment of solar and wind energy.
Like the Gulf region, North Africa relies heavily on fossil fuels, with solar energy only constituting 5% of the total investments. This number remains low, slowing these countries' transition towards renewable energy systems (Al-Ghwell, 2023).

2. Challenges of providing green energy for all the MENA region:

Present the different renewable energy opportunities for different clusters in the MENA region.

Factors Affecting Green Energy Transition Several factors influence the transition to green energy in the MENA region.

a. Regulatory Frameworks: Differences in renewable energy policies and regulations across countries significantly impact their progress. For instance, Egypt has implemented feed-in tariffs to incentivize solar adoption, resulting in a surge in solar installations.

b. Financing and Investment: Access to financial resources and international investments play a crucial role in green energy transition. Saudi Arabia, for example, has seen a significant surge in green energy investment, with approximately US$60 billion allocated to power projects. Egypt is not far behind, with around US$37 billion earmarked for power projects, and the UAE ranks third, with approximately US$26 billion in planned and ongoing power projects. (Source: Zawya, 2022)

c. Technological Infrastructure: Developing local capacity and technology transfer are vital. The United Arab Emirates, in pursuit of its goal to achieve net-zero emissions by 2050, has planned to invest approximately $54 billion in renewable energy projects over the next seven years

d. Grid Integration: Effective integration of renewable energy into existing grids is necessary for reliability. For instance, Jordan, faces limitations with its current grid capacity, which stands at 3, 200 MW and can accommodate only an additional 500 MW. In response, the government cancelled plans to accept proposals for constructing five wind-powered plants with a combined capacity of 400 MW due to the grid’s inability to absorb additional loads. Nonetheless, the Ministry of Energy and Mineral Resources announced a capacity expansion plan in late 2014 to increase the national electricity grid’s capacity by 1, 000 MW, facilitating the connection of more renewable energy projects to the grid (Source: PwC, 2019).

3. Energy market policies design and regulation:

Analyze the structure of energy markets, including the role of government, private sector, and competition in energy production and distribution.

3.1 Analyzing the Structure of Energy Markets:

3.1 Analyzing the Structure of Energy Markets:

Energy resources and infrastructure have traditionally been heavily regulated in the Gulf. The policy problem is adopting market-oriented reforms to stimulate competition and innovation while preserving government engagement to assure stability and create money.
Gulf Region governments control roughly 70% of energy resources, with state-owned energy companies dominating. However, private sector market participation is limited to 30%.
Promoting private sector engagement is crucial for efficiency and innovation. However, state-owned corporations are a major hurdle. The research seeks to balance public and private interests.
Private sector participation is expected to expand by 15% over the next decade, according to statistics. This prediction shows a shift towards private sector engagement.
The state’s dominance in the energy market restricts competition, which is concerning. Current modifications attempt to boost competitiveness via private-sector engagement, but how well they do this is unclear.

3.2 Building resilient supply chains:

Energy supplies may be in jeopardy due to the region’s fossil fuel dependence. The report examines efforts to diversify energy sources and the challenges of switching to renewable and alternative energy.
Statistical data predicts a 25% increase in renewable energy sources in the energy mix over the next decade. This expansion should be especially substantial for solar and wind power.
Infrastructure investment is critical to supply chain resilience. This includes grid upgrading and connectivity to improve system reliability.
The Gulf Region has continuously invested 10% of its GDP in infrastructure, according to statistics. Modernizing the electrical system and improving regional interconnections have been priorities. This research focuses on mitigating energy supply chain risks such as geopolitical crises. Strategic reserves and export route diversity are examined.
Geopolitical conflicts have caused supply chain delays, costing $10 billion annually. Strategic reserves make up around 5% of the region’s annual energy usage. Fair access and affordability to energy services are vital.

•This research examines how energy efficiency schemes promote responsible usage and reduce emissions.

Energy efficiency projects have reduced home and business energy usage, according to statistics. The last five years have seen a 15% drop in these initiatives. This reduced CO2 emissions by 20 million metric tonnes.

3.1 Building resilient supply chains:

Subsidy changes hinder the transition from massive energy subsidies to sustainable pricing that appropriately reflects costs while considering affordability.

Statistics show that subsidy changes have reduced the budgetary burden by 20%. This cut allowed the government to invest in sustainable energy and infrastructure. Considering energy infrastructure projects in impoverished areas and off-grid solutions for rural and isolated areas. Rural and remote access initiatives have added 2 million people to electricity services, according to statistics. The average electricity rate in distant areas has increased by 10%. This research examines carbon markets and investment options. This research examines the history of carbon taxes and emissions trading systems and their effectiveness in reducing greenhouse gas emissions. Carbon emissions dropped 15% during the last five years due to carbon pricing. Additionally, carbon market trading volume is estimated at $2 billion annually. The incentives for renewable energy investments and their effects on carbon emissions are examined in this study. Renewable energy subsidies have led to an average annual investment of $5 billion and a 30% reduction in energy sector carbon emissions. This report examines the region’s climate change mitigation efforts abroad. It focuses on the region’s international treaties and cross-border efforts. The statistical data shows that international cooperation has created 10 GW of renewable energy projects. About $15 billion has been invested in these projects.

4. Roadmap towards green energy for all region:

According to the IPCC special report, “Global warming of 1.5 ºC”, anthropogenic activities have contributed to approximately 1ºC increased average temperatures above the pre-industrial levels. The consequences of the increased global emissions are well noticed in the MENA region, with the region’s temperature already exceeding the global average temperature and reaching 56ºC, which is expected to be a new norm for countries like UAE, Saudia, Algeria, Iraq, and the connecting countries.

With the Middle East region accounting for 31.3 percent of the global oil production, the total energy supply by 2020 heavily relied on oil with 13,540,840 TJ and gas with 18,297,711 TJ. As an essential signatory to the Paris Agreement, the MENA region faces a critical imperative: it must transition to a new energy paradigm. To mitigate the impacts of climate change, the region must exploit its renewable energy potential and seek green, innovative energy sources

Why is there a need for an energy shift in the MENA region?

MENA region holds significant importance, holding 57% of the world’s oil reserves and 41% of the natural gas resources for the oil and gas importing countries. However, the region suffers from the drop in oil and gas market prices due to war, social disaster, and political upheaval. With this, the region must address its climate mitigation and adaptation strategies by investing to promote energy equity.

Why Does MENA’s Energy Investment Surge Not Align with Paris Agreement Goals?

The stakeholders in the energy sector in the MENA region include National Oil Companies (NOCs) with international oil companies, including BP, Shell, and Chevron. Other important stakeholders include oil field service providers majorly controlled by international companies.

MENA’s five-year (2022–2026) energy investment portfolio comprises a total investment of US$879 billion, a 9% increase over the investment projection for 2021–2025. Aligning it with the Paris Agreement, the region lacks policies and actions consistent with the 1.5ºC temperature limit.

Why fossil fuel remains the dominant energy source in the MENA region?

The dependency on fossil fuels in the MENA region results from the complex intricacies of the socio-economical and political factors. Middle East region holds the world’s abundant oil and natural gas resources, with just Saudia Arabia producing 12 million barrels of oil per day. European countries are very interested in the region to import new and comparatively cheap sources to produce energy.

Another major contributor to fossil fuel dependence is the subsidies provided by regional governments, hindering investment to promote energy equity and green energy production.

Why green energy transition has been slower in the MENA region?

•According to the World Energy Trilemma Index 2022, Qatar, Kuwait, UAE, Oman, Bahrain, and Saudia Arabia, the major fossil fuel-dependent countries in the MENA region, were among the top 10 performers in global energy equity.

•However, this equity transition level is fulfilled by ongoing production, consumption, and exploitation of hydrocarbons, but alongside implementing a carbon capture storage and utilization mechanism.

•The potential of solar and wind energy production has not been exploited to the fullest, and the MENA region shows excellent interest in the production and exportation of green hydrogen but from hydrocarbons, again utilizing carbon capture technologies.

With this, the governance, ownership, and the foreign country’s political and regional interests in the region have slowed the energy transition.

Why do conflict zones in Middle Eastern countries not utilize oil and gas reservoirs to transition to sustainable energy production?

In 2019, the geologists confirmed the presence of 122 trillion cubic feet of gas, which UNCTAD considers as potential Palestinian reserves that could generate a hundred billion dollars. The UNCTAD considers the Israeli occupation as a hindrance to the socio-economic development of the Occupied Palestinian Territories.

According to the UNCTAD report on The Economic Costs of the Israeli Occupation for the Palestinian People: “In Gaza, the occupation by Israel has prevented Palestinians from developing their energy fields, and natural gas continues to lie unutilized under Palestinian waters. With the blockade imposed by Israel on the Gaza Strip since 2007, any access to the gas fields, and the billions of dollars they represent, has become even more difficult.”
This comes at the time when the occupied Palestinian territories are again cut off from energy supplies, including access to generate electricity utilizing the off-grid solar panels, amid the intense bombardment starting from 7th October 2023.
Egypt, Lebanon, and the neighboring under-developed Middle Eastern countries are plunged into darkness amid the ongoing Israeli occupation as Egyptian energy production heavily relies on the gas imported from Israel.
The regional conflicts in the Middle East and the illegal occupation for years are directly contributing to the minimum to no progress in the energy transition in the Middle East region, increasing the total cost of the war borne by the Middle East and specifically the Palestinians.

POLICY PROPOSAL

Reducing negative impacts as well as maximising social and environmental benefits.

To address these challenges and facilitate a successful transition towards green energy in the MENA region, we propose the following policy framework:

a. Regional Collaboration: Encourage regional cooperation to develop cross-border renewable energy projects, share infrastructure, and facilitate energy trading.

Establish a Regional Energy Cooperation Framework by 2025: MENA countries should collaborate to create a regional governance structure dedicated to advancing the green energy agenda. This framework will promote coordination, data sharing, and policy harmonization across the region.
MENA Green Energy Alliance: Form a MENA Green Energy Alliance by 2024 to serve as a platform for regional cooperation, information exchange, and mutual support in renewable energy initiatives. This alliance should comprise representatives from all member states and facilitate collective decision-making.

Stakeholder Engagement: Foster active engagement of diverse stakeholders by 2024, including government bodies, local communities, and industry representatives, in the decision-making process. Establish mechanisms for public participation in shaping green energy policies and projects by 2024.

b. Renewable Energy Incentives: Standardize and streamline renewable energy policies to attract investments and support projects across the MENA region by 2024.

Green Energy Investment Hub: Establish a Green Energy Investment Hub to attract domestic and international investments for renewable energy projects in the MENA region. This hub will provide financial incentives, grants, and support mechanisms to encourage green energy investments. Explore various financial models, including Public-Private Partnerships (PPPs), to enhance private sector participation.
Financial Incentives and Tax Breaks: Introduce financial incentives and tax breaks for businesses and investors engaging in green energy projects. These measures should include reduced taxes, subsidies, and investment guarantees to promote private sector involvement.

c. Capacity Building: Promote technology transfer and build local expertise to enhance the renewable energy sector.

Technology Transfer and Research Collaboration: Promote international collaboration and partnerships to facilitate technology transfer and research collaboration. Encourage knowledge exchange between MENA countries and other regions with advanced renewable energy expertise by 2024.

d. Grid Enhancement: Invest in grid infrastructure expansion plan and energy storage solutions to ensure stable energy supply from renewable sources.

Grid Infrastructure Expansion: Invest in grid infrastructure expansion plan by 2025 to accommodate the growing capacity of renewable energy sources. Upgrade and modernize the grid to ensure a reliable and stable energy supply.
Energy Storage Solutions: Develop and deploy energy storage solutions, including distributed energy storage systems, with a target capacity of 2 GW by 2027. This will manage intermittent renewable energy generation and enhance grid reliability.

e. Promotion of Hydrogen and CCUS:

Hydrogen Production and Infrastructure: Develop a comprehensive strategy for hydrogen production and infrastructure. Establish green hydrogen production facilities powered by renewable energy sources by 2030. Promote the use of green hydrogen in various sectors, including industry and transport.
CCUS Technology Adoption: Promote the adoption of Carbon Capture, Utilization, and Storage (CCUS) technologies in energy-intensive industries, such as cement and petrochemicals by 2025. Create incentives for industries to capture and store their emissions while exploring opportunities for carbon utilization.

f. Social Inclusivity: Ensure that renewable projects prioritize local communities’ interests, create employment opportunities, and share economic benefits.

The following table illustrates the varying renewable energy share and current reliance on non-renewable sources for select countries in the MENA region:

Study the carbon markets and future pools of investments:

The Gulf Region policy plan is multifaceted:

Diversification: Promote renewable, nuclear, and hydrogen energy sources.

Continue market-oriented reforms that promote private sector involvement, competitiveness, and innovation while retaining government control for stability.

Infrastructure Investment: Build smart grids and connectivity to strengthen supply chains.

Risk Management: Create supply chain vulnerability mitigation and contingency plans. Energy efficiency, incremental subsidy reductions, and energy availability to neglected regions are key to efficiency and affordability.

Carbon price: Use carbon price to reduce emissions and encourage greener energy.

Renewable energy incentives: Provide financial incentives and subsidies for low-carbon technology developments.

International Cooperation: Continue climate change initiatives and cross-border projects.

Tracking MENA countries efforts in transitioning towards renewable energy:

To the ministries of Energies in the MENA Countries :

1. The MENA region offers lavish subsidies to fossil fuel consumers, which doubled in the pandemic time zone. The ministries must cut down the subsidies and redirect them towards research and development in the renewable energy sector and initiate the infrastructure development for renewable energy sources.

2. The ministries should set targets for renewable energy adoption and create a regulatory framework for harnessing the renewable energy potential. Utilizing the energy of the 22–26% of the planet’s solar rays received by the MENA region, installing wind turbines to utilize the high-speed surpassing winds and shifting to hybrid power generation can make the MENA region independent not only in energy security but a global exporter of the green energy.

3. Ministries should impose carbon taxes to promote green energy production.

To the United Nations Climate Change Secteriate:

UNFCCC should assist the MENA region in energy transition by offering green funding, capacity buildings, and technical assistance.
The UN must safeguard the Palestinian oil and gas reserves for the socioeconomic development of the region suffering from occupation and war for 75 years.
For the energy infrastructure destroyed or on the verge of collapsing in the MENA countries due to the forceful, unlawful displacement, political instability, and war, the United Nations must interfere to maintain regional peace and security and promote United Nations-led energy infrastructure rehabilitation, which must include restoring oil and gas supply, redevelopment of infrastructure and introducing renewable energy facilities.
The UN must cancel and ban the gas exploration “illegal” licenses provided by Israelis to BP, Eni, and other gas exploration firms and safeguard the lives, economies, and reserves of the occupied generations.

Addressing Possible Counterarguments & Conclusion

Arguments may raise worries about:

Oil and gas exports drive the economy.
Energy market changes may cost jobs.
Rate of subsidy changes and effect on disadvantaged groups.
The feasibility of switching to renewable energy.
Effectiveness of carbon pricing in a hydrocarbon-dependent area.

Balance sustainability and economic growth.

In conclusion, addressing the challenges of providing green energy for all of the MENA region requires a strategic and coordinated effort. By implementing the proposed policy framework and monitoring its progress, we can move closer to achieving a sustainable and equitable green energy transition in this dynamic and diverse region.