Climate Agreements’ Implementation Through Energy Transition and Economic Diversification in Kuwait

  • Nathalie HilmiEmail author
  • Shekoofeh Farahmand
  • Manal Shehabi
Part of the Gulf Studies book series (GS, volume 1)


The Paris Agreement has identified climate change mitigation as a goal, aiming to hold “the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C above pre-industrial levels” (Paris Agreement, art. 2.1). The Agreement also recognizes that the current need for adaptation necessary to achieve the said goal “is significant and that greater levels of mitigation can reduce the need for additional adaptation efforts, and that greater adaptation needs can involve greater adaptation costs” (UNFCCC in Sendai framework for disaster risk reduction, 2015 Art 7.4). Climate change mitigation and climate-resilient development require energy transition away from fossil fuels to clean and renewable energy sources. Energy transition is happening in most countries, with different motivations and objectives. Adaptation measures, by contrast, are those changes that need to be introduced in response to the global adoption of climate change mitigation. This chapter examines how Kuwait can head toward energy transition and a larger economic diversification following a structural transformation of its economy. The energy transition from fossil fuels to renewables is necessary in order to reduce CO2 emissions and to free up hydrocarbon resources for export. Economic sustainability entails securing alternative sources of revenue to substitute for that generated by oil rents, which would be a solution to the intrinsically unsustainable nature of oil rents and the lack of diversification. Efficiency-enhancing structural change is required to achieve productivity growth in non-energy sectors that are also export-oriented—thereby achieving meaningful diversification. Policy reforms include competition and private sector reform. Moreover, energy pricing reform and revising energy subsidization are required in order to rationalize energy consumption, achieve energy efficiency, and encourage a more diversified growth while reducing greenhouse-gas emissions.


Kuwait Climate change Energy transition Economic diversification Mitigation 


  1. Al-Harami. (2017). New Kuwait 2035 vision—Financial and economic hub eyed. [Online] Retrieved from:
  2. Atlas of Economic Complexity. (2019). Harvard University. Retrieved from:
  3. Beutel, J. (2019). Economic diversification and sustainable development of Gulf Cooperation Council countries. In Economic diversification in the MENA (Vol. 118, pp. 14–18). Oxford Energy Forum.Google Scholar
  4. Beutel, J. (2012). Conceptual problems of measuring economic diversification as applied to the GCC Countries. In G. Luciani (Ed.), Resources blessed: diversification and the Gulf development model (pp. 29–70). Gulf Research Centre, Gerlach Press.Google Scholar
  5. Bhatia, S. C. (2014). Energy resources and their utilisation. Advanced Renewable Energy Systems, 1–31.–1-78242-269-3.50001-2.Google Scholar
  6. El-Katiri, L., Fattouh, B., & Segal, P. (2011). Anatomy of an oil-based welfare state: rent distribution in Kuwait. Kuwait Programme on Development, Governance and Globalisation in the Gulf States research papers (13). The London School of Economics and Political Science, London, UK. Available at:
  7. Energy Information Administration. (2016). Country analysis brief (pp. 1–14) . Kuwait.Google Scholar
  8. Fattouh, B., Poudineh, R., & West, R. (2019). The rise of renewables and energy transition : what adaptation strategy exists for oil companies and oil-exporting countries? Energy Transitions, 0123456789.
  9. Global Carbon Atlas. (2019). CO2 emissions.
  10. IEA. (2019). World energy balances 2019. Retrieved from:
  11. International Renewable Energy Agency. (IRENA). (2019). A new world: The geopolitics of the energy transformation. Retrieved from:
  12. Malyshev, T., Alabdullah, Y. M., & Sreenkath K. J. (2019). Kuwait energy outlook. Kuwait Institute for Scientific Research, Kuwait City, Kuwait. Retrieved from:
  13. NewKuwait. (2019). Kuwait national development plan: A unified direction for a prosperous, sustainable future. [Online]. Available at:
  14. Nosova, A. (2018). Private sector and economic diversification in Kuwait. In A. Mishrif, & Y. Al-Balushi (Eds.), Economic diversification in the Gulf Region (Volume I, pp. 27–47). Macmillan: Palgrave.
  15. Observatory of Economic Complexity (OEC). (2019). Economic complexity rankings (ECI). Retrieved from:
  16. Olver, S. (2018). Towards a late rentier structure of labour market governance in the Gulf cooperation council: A comparative analysis of Saudi Arabia, Kuwait and Qatar (Ph.D. Thesis). University of Bath.Google Scholar
  17. Pindyck, R. S. (2004). Volatility and commodity price dynamics. Journal of Future Markets, 24, 1029–1047. Scholar
  18. Plourde, A., & Watkins, G. C. (1998). Crude oil prices between 1985 and 1994: How volatile in relation to other commodities? Resource and Energy Economics, 20(3), 245–262.CrossRefGoogle Scholar
  19. Ramey G., & Ramey, V. A. (1995). Cross-Country evidence on the link between volatility and growth (Vol. 85 (5), pp. 1138–1151). The American Economic Review (American Economic Association).Google Scholar
  20. Regnier, E. (2007). Oil and energy price volatility. Energy Economics, 29(3), 405–427.CrossRefGoogle Scholar
  21. Shehabi, M. (2017). Is energy subsidy reform in an oil-exporting small economy beneficial to trade? Illustrations from Kuwai. In: Working paper of the The Oxford Institute for Energy Studies.
  22. Shehabi, M. (2018). Maintaining the order: Contemporary Kuwaitisation dynamics and their historical perspectives. In M. O. Jones, R. Porter, & M. Valeri (Eds.), The Gulfization of the Arab World, Exeter critical Gulf Series (Vol. 1). Berlin: Gerlach Press.Google Scholar
  23. Shehabi, M. (2019a). Diversification effects of energy subsidy reform in oil exporters: Illustrations from Kuwait, Energy Policy. Forthcoming.Google Scholar
  24. Shehabi, M. (2019b). Is energy subsidy reform in an oil-exporting small economy beneficial to trade? Illustrations from Kuwait, World Trade Review. Forthcoming.Google Scholar
  25. Statista. (2019). Average annual OPEC crude oil price from 1960 to 2019 (in U.S. dollars per barrel). Available at:
  26. The Economist Intelligence Unit (2019).Google Scholar
  27. UN. (2015). The UN 2030 agenda for sustainable development. Available at:
  28. UNCTAD. (2019). World investment report 2019, special economic zones. Retrieved from:
  29. UNFCCC. (2018). The concept of economic diversification in the context of response measures, technical paper. Retrieved from:
  30. UNISDR. (2015). Sendai framework for disaster risk reduction. [Online] Available at:
  31. Van der Ploeg, F., & Poelhekke, S. (2009). Volatility and the natural resource curse. Oxford Economic Papers, 61(4), 727–760.CrossRefGoogle Scholar
  32. Vought, A. (2017). The ‘New Kuwait’. [Online] Retrieved from:
  33. World Bank. (2019). HH market concentration index. TCdata360. Retrieved from:
  34. World Integrated Trade Solution (WITS). (2019). HH market concentration index by country. Retrieved from:
  35. World Population Review. (2019). Population of cities in Kuwait. Available at:

Copyright information

© Springer Nature Singapore Pte Ltd. 2020

Authors and Affiliations

  • Nathalie Hilmi
    • 1
    Email author
  • Shekoofeh Farahmand
    • 2
  • Manal Shehabi
    • 3
  1. 1.Centre Scientifique de MonacoMonacoMonaco
  2. 2.University of IsfahanIsfahanIran
  3. 3.Oxford Institute for Energy Studies and St. Antony’s College, University of OxfordOxfordUK

Personalised recommendations