Greenpeace Study Says Energy Transition Beats Oil Expansion for UAE and Saudi Finances

The report compares a path of continued fossil fuel expansion with energy transition pathways that move at different speeds. It tracks the effects of each on economic and fiscal indicators in both countries up to 2040.

According to Al Bayan, the transition pathways deliver better economic and fiscal results by 2040 in six of the seven economic scenarios the report examines. Continued expansion of fossil fuel output keeps a limited edge in only one scenario, which assumes higher oil prices.

The study's headline figure comes from a scenario that assumes tougher economic conditions. There, a faster and orderly phase-down of fossil fuel production and use could improve the annual fiscal balance by the equivalent of 5.1 percentage points of GDP in the UAE and 5.3 percentage points in Saudi Arabia, compared with continued expansion.

Solar and Transport

The report says that, on its assumptions, large-scale solar plants are a cheaper way to generate electricity than new gas-fired plants. It also picks out transport as one of the most promising areas for electrification, with near-term economic and environmental gains and room for new clean-energy services.

The authors say current oil and gas revenue should be steered into productive economic activity and used to widen the non-oil revenue base, so that public finances depend less on energy price swings. They tie the success of any transition to how well governments match policy and investment to each country's economic conditions and build clean energy infrastructure.

Dr Hanan Kaskas, who leads political campaigns for Greenpeace MENA, said economic conditions in Saudi Arabia and the UAE differ, but that the findings show why both should diversify public revenue and direct investment into sectors that support long-term fiscal stability. She said using today's oil and gas resources to fund economic transformation is an opportunity for both countries to keep up with global change.

How to Read the Findings

Greenpeace campaigns against fossil fuel expansion, and the study's conclusions depend on its assumptions about prices, costs and demand. Al Bayan's report does not describe the modelling method or say who carried it out. The one scenario in which expansion wins, higher oil prices, is a reminder that the outcome depends heavily on where crude markets go.

The broad direction matches policy both governments already back. Each has made non-oil growth and revenue diversification central to its economic plans and has invested heavily in solar. Where the study departs from official strategy is on production. Both countries are still expanding oil and gas capacity, and their national oil companies argue that demand will last for decades.

The study also arrives as the question of how to power the Gulf's AI and data centre build-out becomes more pressing. At ADIPEC in Abu Dhabi this week, Mitsubishi Power said it expects UAE electricity use to rise by more than 75 per cent by 2033 and argued that solar needs backup generation to meet that demand. How the region balances solar and gas will shape both power costs for new digital infrastructure and the fiscal trade-offs the Greenpeace report describes.

The findings were published ahead of the COP31 climate conference.