Leveraging renewable energy technologies for climate change mitigation and adaptation in the Middle East

Abstract

The Middle East region is blessed with some of the world’s most abundant renewable energy resources. The region also possesses some of the greatest hydrocarbon reserves on earth. Such a unique combination of physical characteristics has—at least historically—contributed to a somewhat ambivalent attitude to the evolution of climate change law and regulation in the region. Regulatory support for key enabling technologies, such as renewable energy, has fluctuated over time and between jurisdictions. The oil price crash of 2014 was instrumental in prompting Middle Eastern economies to re-evaluate their historic reliance on this commodity as a source of energy and export revenue. Since that time, renewable energy project financing has seen dramatic changes in the region. There has been a reduction in financing due to perceived risks and barriers, but also an increase in financing through the adoption of innovative public-private partnership (PPP) models. Such models have supported increasingly ambitious renewable energy targets and decarbonization objectives. Countries like the Kingdom of Saudi Arabia (which have traditionally, and almost exclusively, relied on the production and export of globally significant hydrocarbon reserves to finance large power projects) are, for the first time, implementing significant regulatory and legislative reforms. These reforms will deliver ambitious decarbonization policy objectives, involving significant private sector expertise and financing through adoption of best practice PPP models. Medium term projections for oil demand and export revenue in the Middle East remain mixed. In such circumstances, the delivery of renewable energy PPP projects, through private sector capital assisting cash constrained governments, will assume even greater importance, especially as the region attempts to chart a sustainably based recovery from the economic downturn wrought by the global coronavirus pandemic.