Environment Trade-Off in Using Renewable Energy in Oil-Rich Countries

Each stage of economic development has been accompanied by a form of energy transition. The twenty-first century is already seeing the start of the next great transition in energy sources away from fossil fuels toward renewable energy sources. This transition is motivated by many factors, including concerns about environmental impacts, limits on fossil fuel supplies, prices, and technological change. A fast transition to a low-carbon and sustainable economy involves not only technologies but also policies and financial mechanisms. Given this context, renewable energy is emerging not only as a solution to meet growing energy demand while sharply reducing carbon emissions but also as a potential engine for economic growth and diversification. In order to achieve the goal, this study presents a review of renewable energy consumption and renewable energy policies for nine oil-rich countries. Also, strengths and weaknesses as internal factors, as well as opportunities and threats of renewable energy deployment as external factors, are introduced. Finally, suitable strategies, according to SWOT analysis and reviewing global mechanisms, are suggested to promote renewable energy use in oil-rich countries. The results indicated that oil-rich countries could embrace renewable energy deployment as an opportunity for economic diversification and positioning in the new markets that will be created. In these countries, the biggest factor currently preventing a transition toward renewable energy is the failure to eliminate subsidy and account for externalities. Energy subsidies can take various forms, including feed-in tariffs, tax credits and deductions, rebates, grants, performance-based incentives, and favorable loan terms. In these countries, the feed-in tariff policy can be one of the best renewable energy development options with a low level of risk for investors.