Climate action versus inaction: balancing the costs for Gulf energy exporters

Abstract

Climate change poses a strategic dilemma for oil-exporting states of the Gulf. By sapping global demand for crude oil, climate action threatens the economic rents that underpin their governance and regime legitimacy. However, the Gulf states are also among the countries most exposed to physical risks of a warming climate and thus would benefit most from reducing ongoing accumulations of carbon in the atmosphere and associated adaptation costs. In other words, the political and economic risks of climate action run counter to the physical and environmental risks. These bifurcated interests differentiate the Gulf producers from oil exporters in more temperate regions, which would experience milder short-run damage—or even benefits—from a warming climate. A successful economic diversification strategy could address both physical and economic risks but would require structural changes in rentier governance.