The decision by Dubai, Egypt and other Middle East countries to use coal for future electricity generation needs is wise, said Hisham Khatib, honorary vice-chairman, World Energy Council, speaking at MEED’s Mena Power conference on 8 June.

“Of course there are environmental challenges, but we are not the main polluters,” said Khatib. “We have to look after our resources, and now there is the wide use of clean coal technology, so we can use coal without polluting the environment.”

Coal only costs $0.02 a million BTUs, whereas oil costs as high as $1.40 a million BTUs and gas between $0.08 and $0.12 a million BTUs, according to Khatib. In Jordan 90 per cent of generation is from crude oil, while across the region oil accounts for 33 per cent of generation, while only 61 per cent is from natural gas.

“The Middle East is the only region still to use crude oil in electricity generation,” said Khatib. “This is not due to a lack of gas, but there is not enough networking of natural gas between Mena [Middle East and North African] countries. For example Qatar has huge gas resources, but due to the lack of pipelines, it is not properly utilised, so the region resorts to crude oil not cheap natural gas.”

Khatib said coal does not face these distribution issues.

He also pointed to the role of subsidies in driving demand growth and overinvestment in the power sector, which is at 8 per cent a year in the Middle East, especially in Gulf countries. Global demand growth is at 2.5 per cent a year.

By 2018, Saudi Arabia  will have a generation capacity of 62GW. It already uses 660,000 barrels a day (b/d) for generation, which will peak at 1 million b/d in July.

“This consumption on the domestic market is at expense of the Saudi and Gulf economies,” said Khatib.

The region is expected to invest $410bn in the energy sector between 2016-2020, of which $350bn will be in the Arab world. Two thirds of this investment will be on generation capacity.

The GCC will invest £93bn in generation over the five years. North Africa will be the next largest investor, followed by the Levant.