The impact of electricity and water subsidies in the United Arab Emirates

Abstract

The United Arab Emirates (UAE) has some of the highest electricity and water consumption rates in the world. A driving factor is the presence of electricity and water subsidies and their impact on the investment in efficiency, technology adoption, and implementation of best practices. Decades of subsidization have made Gulf Cooperation Council businesses some of the world’s most inefficient energy and water consumers, and there is a growing consensus in the UAE that a comprehensive conservation plan is needed. However, for any comprehensive conservation plan to be successful, it must include tariff reform as a cornerstone. The social and political issues associated with tariff reform are not trivial. A comprehensive approach needs to be developed and implemented while energy prices are low and the initial impact on customers can be minimized.