GRM 2010 GRM 2011

Abstract Details

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Renewable energy: A space for cooperation within and between the GCC, Iran, and East Asia
Paper Proposal Text :
When discussing Iran and the GCC, it is easy to get caught up in thinking of the countries being in constant cultural, political and economic competition. Similarly, when thinking of energy relations between the two, it is easy to remain overly focused on the production and export of oil and gas. This emphasis on petrochemicals becomes even more pronounced when considering the role of foreign powers, especially those in East Asia such as China or Japan, which are heavily dependent on imports to meet their energy needs. The geopolitics of China’s relations with Iran or Japan’s investment in the GCC are complex, but in the current global energy environment, these four pieces do not have to be sources of unhealthy competitions, but can also be a source of friendly competition or even outright cooperation. And one of the primary fields in which they can do so requires looking beyond oil and gas to the renewable energy sector.

All four of these regional players—the GCC, Iran, China and Japan—have expressed recent interest in developing their renewable energy opportunities. While the impetus to do so was higher for the petro importers before the recent drop in oil prices, long-term planning across all of these countries has encouraged them to continue to plan and invest individually or bilaterally in renewables. For instance, several countries in the GCC have recently increased their efforts to develop greater non-carbon energy capacity. Saudi Arabia and the UAE signed a framework for cooperation in research and development between the King Abdullah City for Atomic and Renewable Energy and Masdar, which are major initiatives in each respective country dedicated to clean, diversified energy. In 2013, Kuwait published its first renewable energy plan, with aims to meet 15% of their own energy requirements with renewables by 2030, while Sultan Qaboos’ Vision 2020 establishes the goal of Oman using renewables for 10% of their energy by 2020.

Iran, with a population of nearly 80 million, has a similar vested interest in diversifying its own energy sector. The country’s energy consumption is estimated to be nearly 80% higher than the rest of the region, so limiting that (specifically through cutting gas subsidies in 2014) and finding sustainable alternatives are becoming priorities. Iran has already taken early steps in that direction, with plans to increase national solar energy production to five thousand megawatts over the next five years, which is 25 times the current output. They have also implemented a feed-in tariff (designed to accelerate investment in renewables) that will extend over the next five years, attempted to encourage foreign investors by introducing an index formula to help stabilize fluctuation in the rial or allowing them to be compensated with oil instead of rials, and guaranteed that the Ministry of Energy will buy all electricity produced by renewable energy.

China has made a substantial commitment to renewable energy with its historic climate deal with the U.S. in 2014, where they pledged to double their clean energy generation by 2030. The government had already been investing heavily in the renewable sector (in 2013, 58% of their new energy capacity was from renewable sources) and has developed a number of initiatives to further develop this sector. These efforts include national- and local-level subsidies and tax breaks for investors in clean energy, as well as low interest rates for loans. They have also set up a number of innovation parks and energy industrial bases, such as the New Energy Economic Development Zone outside Beijing, which is a park that operates on a microgrid system, produces its energy through wind and solar power, and is actively seeking foreign investors and renewable energy companies to establish a presence there. China is, of course, also already exporting renewable technology around the world.

Japan is the fourth piece of this mix, not only because the country itself is striving to diversify its energy mix, but additionally because it has made great strides in renewable energy technology and is currently actively engaged with numerous GCC countries in developing the latter’s renewable capabilities. According to the director of the Japan Cooperation Center for the Middle East, the Middle East is one of the best environments for clean energy development and is very attractive to many Japanese environmental technology companies. As such, Japan regularly attends renewable energy forums with GCC nations, including an annual Joint GCC-Japan Environment Symposium that is now in its 23rd year.

Cooperation between apparent competitors in the energy sector is not unheard of. Aside from major treaties and climate deals, there are already centers explicitly devoted to international cooperation. For example, Chinese leaders in 2014 extended another five years of support for the Clean Energy Research Center, which facilitates research and collaboration between China and the U.S. on clean energy and could provide a model for cooperation between China, Japan, the GCC and Iran. Using interviews with key industry and government figures, supplemented with secondary source research, this paper will explore the different renewable energy policies and bi- or multilateral initiatives in each of these four regions. It will then offer recommendations on how they can create formal opportunities to cooperate on research and development as they try to meet their shared goals for diverse and sustainable sources of energy.