“We Need To Re-Think How We Run Our Economies”

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Mueid Al Raee is a Doctoral Fellow at the United Nations University (UNU-MERIT), Maastricht, the Netherlands. He has an undergraduate degree in Chemical and Process Engineering and a postgraduate degree in Business Administration with a specialization in Strategic Management and Multinational Finance from Sultan Qaboos University (SQU) in Oman. He was previously head of Program Management at OQ, a refining and petrochemicals business in Oman.

OPEC Fund Quarterly: Many regions have made great progress towards achieving universal access to electricity, but some are lagging behind. What innovations or policy measures would help them to get on track? 

Mueid Al Raee: This question deals not only with private power access, but also industrial power access in a broader manner. Let me give you a two-step answer. 

First, for any country that is lagging behind I would say: look to the latest technology. When dealing with energy shortfalls in either generation or access, policy-makers tend to start with “tried and tested” older technology. But that’s a very unwise decision because it’s very clear that very soon they will have to build new networks that are future-ready; that are compatible with the inevitable international trade standards that we’re going to see in the coming years and decades. So, it’s important to focus on technology that’s future-ready in terms of wind turbines, solar photovoltaics, whatever is available on the market that ensures emissions are at the lowest levels. 

Second, when it comes to international development – including the provision of energy to large populations and industries – we need to build up a stronger model of public-private partnership. Given the urgency of building a sustainable economy that also meets the developmental needs of the people, the public side now needs to do more than simply provide the physical infrastructure; governments now need to provide the right conditions for private enterprise to come on board to a much greater degree. Projects need to be less risky and more bankable, so there will have to be a lot of cooperation with UN agencies and multilateral development banks. Only then will we see the mass rollout of future-ready energy infrastructure for universal access. 

OFQ: Progress towards doubling the global rate of improvement in energy efficiency has been fair, but also patchy. What innovations or policy measures would provide more impetus and traction where progress has stalled? 

MAR: The simple answer is to produce energy where it’s needed to minimize transmission losses. But energy efficiency is about much more. SDGs 7 and 13 consider all the various components of the energy market, including industry, shipping, right down to the cars on our roads – and in each and every one of these areas there are many different innovations that can help improve efficiency. 

Mass transit is one example that can make a big difference. So, the next question is: what are the incentives, what support measures are there, what are we doing in terms of city design? That takes us to SDG 11. Look at the increasingly popular concept of “15-minute cities” where each neighborhood is meant to fulfil six social functions: living, working, supplying, caring, learning and enjoying. That model can really improve mass transport efficiency at national levels – but of course there are tradeoffs and that’s part of a much bigger debate. We also need to recognize just how much we are conditioned to overconsume as societies. That is a big part of our inefficiencies. So, we need to think again about how we run our societies and economies. Are we responsible consumers and producers (SDG 12)? We have to rearrange in a way that our industries and our businesses do not suffer, but without resorting to impulsive  protectionism. To ensure environmentally sustainable economic prosperity, every country will need the best, most cost-effective solutions customized to their developmental needs. At the same time, we know that our environmental and climate concerns are not restricted to borders, so neither should the solutions. 

OFQ: Essentially, you’re talking about a change in cultural governance, as much as focusing on innovation for efficiency. 

MAR: Yes, but it actually goes much further than that. For emerging economies, the very strong message is to take ownership of your projects. Based on experiences in so many countries, it’s clear that ownership leads to higher efficiency – because the government has a stake and the people have a stake, which helps to ensure that resources are not wasted. 

Whether it’s wind, hydrogen, green ammonia, or any new technologies that claim to improve efficiency – unless the end users are sufficiently aware and sufficiently care about making the best possible use of the energy and the technology, then massive inefficiencies will remain locked into the system. 

OFQ: That’s all very well, but how can we ensure a smooth, just and inclusive transition? Development needs to continue. 

MAR: Yes, that sounds like the old trope of needing to “keep the lights on” during the energy transition. Across many low-income economies, the lights are simply kept on with bottom of the barrel diesel generators. That’s the simple truth of it and that brings us full circle, back to my first point: Why wait? 

Most economies with large growth potential are waiting because they don’t have the capital for large infrastructure projects and because there are no companies ready to invest – because the risk is high and because governments are not able to offer sufficient “comfort” or guarantees. We need to get out of this vicious cycle if we’re serious about actions to limit and curtail environmental harm and if we’re serious about sustainable development. 

We need to stop thinking of renewables as the future – they must be the present, mainstreamed and normalized by 2030. There will never be a better time to jump on the carousel of the circular economy and build up a never-ending momentum. If we leave it too long, it will soon be too late. 

The UN and international development agencies need to push the political agenda and governments need to agree on common regulatory standards and conditions; in the meantime multilateral development banks can act as go-betweens between the public and private spheres. Everyone needs a stake. Our best hope of success is to put power in the hands of the people.