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The Context of Fossil-Fuel Subsidies in the GCC Region and Their Impact on Renewable Energy Development

This discussion paper looks at fossil-fuel pricing and subsidies in the political, social and economic context of Gulf Cooperation Council (GCC) countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

It provides an overview of IEA and IMF estimates of fossil-fuel subsidies in GCC countries, as well as additional GSI price-gap calculations on subsidies for gasoline and diesel used as transport fuels and electricity generation. The paper then analyzes the impact that fossil-fuel subsidies have on renewable energy development in the region. It finds that even partial reform of fossil-fuel subsidies would assist GCC countries in meeting their economic, fiscal, social and environmental objectives, but that political opposition to increased energy prices is a key barrier to change.

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