Middle East must use energy resources optimally

Countries should adopt a strategic, holistic approach towards optimising all aspects of the energy sector.

Energy demand continues and will continue to grow among GCC countries.
Going forward, the question of how to make optimal use of energy resources is set to become a burning topic - especially as standards of living become higher, energy demand increases and new supply sources come on stream.
In the Mena region, in particular, the collective annual primary energy consumption - across countries such as Saudi Arabia, the UAE, Kuwait and Qatar - has surged from 310 MTOE (one million tonne of oil equivalent) to 395 MTOE in the past five years. This figure - which represents a 4.5 per cent increase year on year - is a result of the rising energy demand of fast-growing populations and the push towards diversification through the development of a strong local industrial base driven by the petrochemicals sector.
Available resources cannot adequately meet domestic demand in a few years. In addition, there has been a parallel rise in population growth in the GCC, which increased by 4.1 per cent annually from 2000 to 2014. This makes effectively managing energy - across the region - a pressing concern.
Countries should adopt a strategic, holistic approach towards optimising all aspects of the energy sector.
Integrated strategy
In line with the above, an integrated energy strategy is a necessity for countries looking to extract more value from their resources. As part of the strategy, overarching key principles should be followed. These include establishing deep integration between resource utilisation and economic objectives at a national level; shifting some of the focus away from the monetary benefits of hydrocarbon exports; and building a more diversified economy through investments across the energy value chain.
More importantly, all aspects of energy should be observed in a coordinated manner rather than through individual initiatives. Decisions that affect the everyday habits of the public regarding electricity and transportation fuel prices for private and industrial use, installation of energy-efficient technologies and building code regulation should be taken in tandem with the plan for deployment of renewable and nuclear technologies and central oil and gas production. This will ensure that all decisions are purposeful and do not apply strain on living conditions if other more effective ways of saving energy exist.
To make this happen, it is important that all energy-related regulation and policymaking is taking place with strong coordination among the existing policymakers, who in the case of energy can comprise a very broad network representing producers and consumers of energy. Industry, commerce, transportation, economic development and urban development are a few of the sectors that can have a strong influence in national energy policymaking.
Due to the complex nature of the relationships, it is crucial that all stakeholders are aligned around certain key goals at the national level (typically economic development/diversification, security of supply, resource sustainability and cost competitiveness).
Transparency and clarity around common goals will ensure that there is clear understanding of the purpose behind sometimes difficult changes in the existing regulation (e.g. retail fuel prices) and support driving change at the national level.
The writer is principal at the Boston Consulting Group Middle East. Views expressed are his own and do not reflect the newspaper's policy.