Increased focus on private sector investment in Qatar’s hydrocarbon sector and renewables is key to future energy security suggests recent research by Chatham House. Jamie Stewart, The Edge Energy & Sustainability Sector editor, recently spoke to report lead author Glada Lahn about the study.
Gulf states, including Qatar, are spending more money subsidizing their hydrocarbon-led energy sectors than they are on either health or education, according to a report released by United Kingdom international affairs think-tank Chatham House in August. The study, Saving Oil and Gas in the Gulf, draws on two years of research and workshops held in the region, and offers a long-term means of easing the burden, says Lahn.
Would the Gulf energy sector benefit from more private sector involvement?
Yes, the idea being to create a competitive market for providers. Establishing an independent electricity and cogeneration regulator must be a priority to create the right investment environment. Material infrastructure is equally important, namely a grid into which large scale and decentralised renewable energy can be fed.
What incentives must the state put in place to encourage the large investment required?
There should be a clear, long-term framework for private sector investors which offsets the very low cost of gas inputs to power generation by, for instance, setting the price for renewable electricity provided to the grid, often known as feed in tariffs (FiTs). If the government wants to relieve itself of the subsidy burden over time, the price of electricity fuelled by gas should move towards that of electricity produced by renewable energy over time – through a gradually rising domestic gas price and the gradually lowering of the FiTs as technology costs fall.
“New forms of energy must be developed with an integrated energy policy.” – Glada Lahn, author of Chatham House’s Saving Oil and Gas in the Gulf.
Qatar’s energy sector is based on natural gas consumption. Given that gas is less carbon intensive than oil, and the country sits on the world’s third-largest reserves of natural gas, is there a convincing environmental case for increasing the penetration of renewable energy in the overall mix?
Electricity fuelled by gas emits around two-thirds of the CO2 emitted by electricity fuelled by residual oil, but it still [causes emissions]. If we want to decarbonise our energy systems worldwide by 2050 – what the science tells us we need to do to keep the climate stable – then there is a choice between using some form of carbon capture and storage and clean energy, or a combination of the two. Across the GCC, demand for desalinated water is soaring so pioneering solar desalination techniques – as Qatar is – is a smart move. Around the world, electricity will also be increasingly used in transport, creating cleaner cities – something that is particularly important to Qatar as an international event destination.
What is the economic case for this?
Most of the Middle East countries are looking to diversify away from oil and gas export dependence. Growing new sectors such as renewables will allow energy exporters to stay on top in terms of global energy expertise and create some new sectors for the employment of nationals.
The United Arab Emirates (UAE) and Saudi Arabia, have begun down the path of nuclear power. Should Qatar?
It would not make economic sense for Qatar. In the case of the UAE, they want to offset rising costs for imported LNG, while in Saudi Arabia, they are concerned about maintaining oil export capacity and face constraints in gas production. Qatar does not have these problems.
But if the Qatari government is interested in nuclear power, how should it proceed?
An assessment of the lifecycle costs and benefits of nuclear power against demand side measures (and other low carbon energy sources, including carbon capture and storage) will show that much more gas and oil demand, and therefore emissions, can be avoided through efficiency measures at lower cost – and more quickly.
These can be through proven interventions such as building code enforcement, retrofitting, air conditioning appliance upgrades, vehicle fuel efficiency and behavioural change. As we show in our report, new forms of energy must be developed in tandem with demand side measures to get the most benefit, and this requires an integrated energy policy and far better coordination between all the relevant agencies than is currently the case. Source: The Edge Magazine