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Energy usage is considered to be sustainable when energy sources are developed to meet the needs of the current generation without upsetting the capacity of future generations to meet their own. Sustainability is a multi-faced objective. When applied to energy issues, it can be examined by looking at specific indicators, which link energy usage to environmental sustainability and to economic efficiency.

Among the main global pollutants associated with economic growth are Carbon Dioxide (CO₂) emissions, which are directly linked to climate change. Moreover, CO₂ emissions positively correlate with other types of airborne pollutants and thus can be seen as a good proxy for pollution in general.  In 2010, GCC countries exhibited the highest rates of carbon emissions per capita as shown in Figure 1. Indeed, Arab countries with high levels of CO₂ emissions per capita were also countries with high levels of GDP per capita. As such, there is a positive relationship between pollution levels and income levels in Arab countries, indicating that the trade-off between economic growth and environmental quality is not yet broken. This observation contrasts with what the traditional economic theory postulates: In the traditional economy-environment model, countries develop economically at the expense of the environment in the early stages. In contrast, a turning point occurs at higher stages of development after which emissions per capita drop.

Source: World Development Indicators, World Bank.

Turning to energy efficiency, GDP per unit of energy use is an indicator that captures the return on energy used, or the extent to which an economy is green/brown. Interestingly, we observe in Figure 2 that the least energy efficient countries all belong to the oil-producing group. Morocco ranks, at the opposite end, as the most energy efficient Arab country in 2011, where the use of energy equivalent to one kilogram of oil increased GDP by a value of around $12.6.

Source: World Development Indicators, World Bank.

Policymakers in the Arab region need to be mindful of the aforementioned trade-off between CO₂ emissions abatement and economic growth, which means that any abatement of emissions will come at a high economic cost. Thus, Arab governments are unlikely to commit to substantial abatement efforts in the near future. In such a context, substituting for renewable sources of energy allows for gains in energy efficiency and thus may help to alleviate this trade-off. Such policies will contribute positively to any future willingness by Arab countries to commit to any impending international environmental agreement on climate change.

Walid Marrouch is an associate professor of economics at the Lebanese American University. He is currently the Associate Chairperson of the Department of Economics at LAU. He is actively involved in academic research, in addition to consultancy work for a number of international organizations. He is also an Associated Fellow at the Centre for Interuniversity Research and Analysis of Organizations (CIRANO) in Montreal, Canada. He holds a Ph.D. in Applied Economics.