Publication: Gulf Economic Update SPRING 2022: Achieving Climate Change Pledges
Abstract
The Gulf Cooperation Council (GCC) countries were characterized by a robust economic rebound from the pandemic in 2021 and the beginning of 2022 as well as a partial restoration of external and fiscal positions following deep plunges in 2020. The war in Ukraine is projected to provide a windfall for the GCC; it has also placed energy security at the forefront of major importers’ agenda, which could accelerate the global green growth transition. The faster and bolder efforts to decarbonize the global economy, which the war in Ukraine is likely to speed up, implies that it is critical to invest the windfall in the GCC’s economic and environment transition. GCC countries are facing limits to the oil economy on which they have flourished for the last seventy years. GCC countries face twin challenges of (i) how to move to a more sustainable growth model that is less dependent on oil and downstream petroleum sectors and that can provide valuable jobs for their inhabitants while (ii) managing the transition to a global low-carbon economic environment that could see oil revenues greatly reduced within the next few decades. The current situation has sometimes been portrayed as a threat to the GCC or at the very least as a trade-off between faster growth and climate sustainability. However, this special focus section reframes the discussion by focusing on the opportunities for the region to restructure energy subsidies. to become renewable-energy powerhouses, and the importance of getting prices right for an enabling environment that can place the private sector at the forefront of the new growth model. The section also highlights the fiscal space that can be created by re-thinking energy subsidies and provides a political economy sensitive approach to addressing the concerns of households and industry. Linking the expected savings to investments in renewables and incentives for increased entrepreneurship and innovative sectors could represent a solution to one of the GCC’s greatest challenges, producing high income jobs for its youth.
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“World Bank. 2022. Gulf Economic Update SPRING 2022: Achieving Climate Change Pledges. © World Bank. http://hdl.handle.net/10986/37472 License: CC BY 3.0 IGO.”
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