Introduction

The GCC brings together countries that together dominate the oil market and have the biggest oil reserves in the world. At the same time its member countries are facing a huge challenge in supplying their economy with enough energy. Electricity production is increasingly based on burning of oil due to a lack of natural gas. In Saudi Arabia, electricity demand is forecasted to grow at an annual rate of 6% resulting in a tripling of demand for electricity over the next 20 years (Farugui et al. 2011). Under business-as-usual, all oil production would be consumed domestically by 2040 (Lahn and Stevens 2011). Fast-growing population, economic growth and electricity prices that are kept at a low level due to pricing of power plant fuel at oil production cost – substantially below the oil world market price1. In Saudi Arabia alone the annual cumulated difference between domestic and world market price for oil is estimated at 10 to 15 billion USD (Gulfnews 2011). The economies of the GCC countries are among the most carbon-intensive in the world. Given these national circumstances, energy efficiency policies as well as renewable energy efforts are severely needed and can create vast financial benefits. Opportunities have already been identified in several GCC member states, as documented in the Saudi National Energy Efficiency Program (2008) and have partially been implemented.

The 18th Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC) that took place in 2012 in Doha put the GCC in the spotlight regarding climate change policies. Four countries of the GCC – Saudi Arabia, Qatar, UAE and Bahrain - notified their willingness to engage in domestic mitigation action aimed at economic diversification. The GCC countries can host greenhouse gas emission mitigation activities under the Clean Development Mechanism (CDM).