Gulf States Eye Demand Management But Progress Slow

Middle East governments are stepping up their pursuit of energy efficiency by encouraging consumers to manage their electricity consumption. But such policies are in danger of being undermined by huge subsidies for electricity supply.

Regional plans to cut electricity consumption through efficiency measures are based on real economic need. Even for countries with plentiful hydrocarbons resources, electricity provision is expensive and there is competing demand from other industries and export markets for oil and gas. But the policies announced so far appear tentative compared with current global thinking.

The OECD’s International Energy Agency (IEA) says Middle East governments plan to spend a total $169bn on improving energy efficiency during 2014-35 (MEES, 6 June). Yet the IEA’s recent World Energy Investment Outlook warns that “energy prices are critical to determining the attractiveness of efficiency improvements in industry.” Fossil fuel subsidies keep energy prices artificially low, “making efficiency investments less economic, or diminishing their cost-effectiveness; this applies to many countries in the Middle East.” (CONTINUED - 834 WORDS)