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.