Fossil-fuel dependence keeps GCC emissions high despite green targets

A new study has found that energy consumption remains the dominant driver of carbon emissions across Gulf Cooperation Council (GCC) economies, raising pressure on governments to pair economic diversification with energy efficiency, renewable power and low-carbon urban planning.

The study, titled "Energy Consumption, Economic Growth, and CO2 Emissions in GCC Countries: Panel Evidence and the Environmental Kuznets Curve," and published in Sustainability, examines Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates from 2015 to 2022 and finds that energy use per capita is the strongest and most consistent driver of CO2 emissions, while income growth follows an environmental Kuznets curve pattern in which emissions rise with development before declining after a high-income threshold.

Fossil-fuel dependence keeps emissions high across Gulf economies

GCC remains structurally tied to hydrocarbons, with oil and gas still central to electricity generation, industrial activity, exports and state revenue. The authors analyze panel data for the six GCC economies using pooled ordinary least squares and country fixed effects models with country-clustered standard errors. The approach allows the study to examine both cross-country differences and within-country changes over time. The dependent variable is CO2 emissions per capita, while the main explanatory variable is energy use per capita. The models also account for GDP per capita, trade openness, urbanization, foreign direct investment and industry value added.

The results show that energy consumption is the clearest predictor of emissions. Across the fixed effects models, a 1% increase in per capita energy use is associated with about a 0.72% increase in per capita CO2 emissions. The relationship remains strong after adding controls and testing alternative specifications.

The region has high per capita energy use, energy-intensive industries, hot-climate cooling demand, desalination needs and historically low domestic energy prices. Even as governments expand renewable capacity, fossil fuels continue to dominate energy systems and production structures.

Energy efficiency and renewable energy substitution are therefore the most direct policy levers for reducing emissions. Measures such as subsidy reform, stricter building codes, efficient appliances, industrial energy management, clean power investment and lower-carbon transport systems are more likely to produce measurable emissions gains than policies that do not directly address energy demand.

The findings also show why climate pledges alone are not enough. GCC economies have announced net-zero or long-term climate targets, but the persistence of below-cost energy pricing and high fossil-fuel dependence can weaken incentives for efficiency. Without deeper changes in energy use, emissions are likely to remain high even as economies diversify.

Income gains show an emissions turning point, but not all countries are there

The study tests the environmental Kuznets curve hypothesis, which suggests that emissions rise during earlier stages of economic growth and decline after economies reach a higher level of income, cleaner technology and structural change. The authors find support for this pattern in the fixed effects model.

The estimated income turning point is about USD 85,500 per capita in constant 2015 dollars. Qatar already exceeds that level, while the UAE is approaching it. Bahrain, Kuwait, Saudi Arabia and Oman remain below it, meaning they are still on the rising side of the curve, where economic expansion is associated with higher emissions.

This finding is important because it shows that income growth alone does not immediately reduce emissions. The downward side of the curve depends on cleaner technology, more efficient energy use, better regulation and shifts away from carbon-intensive production. Countries below the turning point need active policy to accelerate the transition rather than wait for income growth to eventually change the emissions path.

The result also helps explain differences within the GCC. Qatar's high income and advanced infrastructure place it beyond the estimated turning point, while the UAE is closer to a stage where economic development and emissions reduction may begin moving together. Lower-income GCC members face a harder trade-off because development, industrial activity and urban expansion still raise emissions.

For Saudi Arabia and Oman, the policy challenge is particularly urgent because both continue to urbanize and industrialize while pursuing diversification. The authors point to sectors such as utility-scale solar, green hydrogen and solar-powered desalination as potential routes to compress emissions growth and bring the effective turning point closer.

The analysis of trade and foreign direct investment is more mixed. Trade openness appears to reduce emissions in pooled models, but the effect disappears after accounting for country fixed effects. The study links this to the way hydrocarbon exports and oil prices shape trade-to-GDP ratios in the Gulf, making short-term trade variation a poor indicator of real structural change.

FDI is statistically insignificant across the models, suggesting that foreign investment is not yet acting as a strong pollution-reducing force in the region. For FDI to support decarbonization, the study indicates that investment would need to shift more clearly toward renewable energy, clean industry, low-carbon infrastructure and green technology.

Urban growth raises pressure for low-carbon planning

Urbanization emerges as another important emissions driver. The study finds that increases in the urban population share are linked to higher per capita CO2 emissions within GCC countries. This is especially relevant because Gulf cities face energy demands that differ from many other urban regions.

Hot desert climates generate heavy cooling demand. Desalination is energy-intensive and central to urban water supply. Car-dependent urban design increases fuel consumption. Large buildings, road networks and expanding urban footprints lock in energy use for decades. These conditions mean that urbanization in the GCC can raise emissions unless city planning is redesigned around efficiency.

The study argues that urban policy should be treated as climate policy. Building energy codes, district cooling systems, public transport, compact urban design, efficient water systems, solar integration and smart-grid technologies can reduce the carbon intensity of urban expansion. Without these interventions, new urban growth could lock countries into higher emissions despite progress in renewable energy.

The Gulf's emissions problem is not only about energy supply, the study notes. It is also about how energy is consumed across buildings, transport, water, industry and urban infrastructure. This makes demand-side reform central to decarbonization.

Implications and limitations

GCC governments need to prioritize energy efficiency because energy use is the most stable driver of emissions. Renewable power must expand faster if it is to displace fossil-fuel generation rather than simply meet new demand. Urban planning must shift before infrastructure choices become long-term emissions liabilities.

The study also calls for more targeted diversification. Industrial growth that relies on energy-intensive production can keep emissions rising. Diversification into cleaner sectors, supported by carbon pricing, R&D incentives and green investment, would help move economies toward the lower-emissions side of the income curve.

The authors acknowledge limitations of the study. The regression sample ends in 2022 because of energy-use data availability, while some descriptive indicators extend further. The study also interprets its findings as conditional associations rather than definitive causal estimates, since energy use, income and emissions can influence one another over time. Future research could extend the data, examine sector-level emissions and use methods that better address causality.