GRM 2010 GRM 2011

Abstract Details

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The Gulf Energy-Carbon Nexus: Meeting Carbon and Energy Challenges in the 21st Century
Paper Proposal Text :
Climate change has the potential to affect every country on earth, albeit in different ways. While the industrialized countries bear the historical responsibility for the accumulation of greenhouse gases (GHGs) in the atmosphere, developing countries, especially the Bric nations (Brazil, Russia, India and China) and the Gulf Co-operation Council (GCC) countries – Saudi Arabia, Oman, Qatar, Kuwait, the UAE and Bahrain – are rapidly catching up, and sometimes surpassing, the West as a result of breakneck energy-intensive industrialization.Despite their rapid economic growth, the rising stars of the developing world are still saddled with antiquated, GHG-spewing industrial technology, while their low adaptive capacity make unmitigated climate change a particularly harrowing specter.

The Gulf Cooperation Council countries (GCC), long viewed as one of the main causes of global warming, are now taking serious first steps in the fight against climate change.1 Collectively, the GCC states have one of the highest carbon footprints per capita in the world; this, however, places them in a unique position to capitalize on the emerging carbon trading market. Many GCC nations have recently undertaken multi-billion dollar investment plans in order to bill themselves as being “green.” The Gulf States will be able to combat global warming by tapping the lucrative carbon trading market, introducing carbon caps and by becoming a leader in renewable energy technology development.

Carbon trading in the GCC region will spur its booming financial market, with Dubai or Doha, as a regional trading hub, the Islamic finance sector and the carbon offset market, as integral parts of a dynamic mix. If the GCC becomes heavily engaged in carbon trading, it will have the ability to lead the world in the development of carbon projects through an extensive carbon and trading framework. GCC countries are already moving rapidly towards a more environmentally sustainable model as each member country has signed the Kyoto Protocol and many governments have delegated national authorities the ability to oversee GHG emission

A thorough policy and economic analysis is undertaken to determine which GHG abatement mechanism would be the best suited for the GCC, with maximum cost and environmental benefits. Based on the unique characteristics of the GCC members, a pan-GCC cap-and-trade framework is suggested. Optimally, policy makers should institute it in a phased, voluntary introduction, to be gradually replaced by a mandatory scheme. If the Gulf countries implement such a system, they would be able to rationalize the energy usage for domestic power production, and conserve their oil and gas production for future generations.