A green growth strategy could more than double the GCC’s projected GDP growth to over USD 13 tn by 2050, according to a World Bank report (pdf). Baseline projections under a “business as usual” scenario would see the region’s GDP growing to USD 6 tn by 2050, compared to c.USD 2 tn penciled in for this year. The region could also establish itself as a “lead producer” of green and blue hydrogen, the report says.

Putting the windfall profits to work: Bumper oil revenues — which have surged this year on the back of the energy shock triggered by Russia’s invasion of Ukraine — present an opportunity to accelerate the transition towards greener energy sources, especially as energy importers begin to place greater emphasis on energy security and decarbonization. Saudi Aramco and BP just yesterday provided a reminder of how lucrative 2022 has been for the oil sector, reporting huge profits for 3Q 2022.

It’s as good a time as ever to double down on renewables, which are now cheaper than fossil fuels: Lower capital costs for renewable energy has already been acting as a major driver behind an increase in installed capacity across the region. “Between 2010 and 2020 the global cost of solar PV projects fell by 85% … while the costs of onshore and offshore wind projects also fell by more than half,” the report says, making solar and wind projects some 30% cheaper than “the cheapest fossil fuel plants.”

Capitalizing on green and blue hydrogen: Falling green hydrogen costs — driven by the falling costs of renewables — promises to make the industry competitive by 2030 for domestic use and for export, the report says. GCC economies are looking to utilize blue hydrogen, which uses fossil fuels with carbon capture and storage, to transition away from hydrocarbons. Projects like Saudi Arabia’s blue hydrogen plant in Jubail and a new USD 5 bn green hydrogen project in Neom, as well as the UAE’s green hydrogen pilot project at the Mohammed bin Rashid Al Maktoum Solar Park, demonstrate the uptake of the technology in the region.

Investing in carbon sequestration: The GCC has incentive to invest in carbon-removal technologies, which can offset its continued investment in fossil fuels as well as offset the emissions in sectors like cement, iron and steel. Carbon capture and storage (CCS), CO2 removal and long-term storage solutions are options, as well as reforestation and bioenergy, the report suggests.

EVs have potential: Saudi Arabia is making forays into the electric vehicle industry, which is projected to grow globally to 147 mn vehicles by 2050, up from almost 7 mn in 2021. The country’s sovereign wealth fund, the Public Investment Fund, invested more than USD 1 bn in US EV manufacturer Lucid Motors in 2018 and the company broke ground on its Saudi plant earlier this year.

Private-sector financing is the critical enabler: While the region’s sovereign wealth funds can kickstart key green investments in the short run, the GCC will need private sector investment to fund and operate large-scale green growth. This is part of a need to migrate away from public sector energy projects and establish green incubators and accelerators to support the private sector.

Green growth = new jobs: The clean energy transition promises to create 85 mn new jobs across the world by 2030 and 25 mn by 2050 in the areas of energy efficiency, power grids, clean hydrogen, energy flexibility and renewables.

BONUS- Clean electricity is the region’s biggest chance to slash emissions: Electricity is responsible for 75% of the GCC’s emissions, with countries already making pledges to increase the capacity of renewables and reduce the use of fossil fuels to power domestic electricity. Saudi Arabia leads the region with its pledge to achieve 50% renewable electricity capacity by 2030. Using renewables for electricity also means freeing up excess capacity of hydrocarbons for export.