Fifteen Eighty Four

What happens when a state is not just funded by carbon—but fundamentally formed by it? In the hydrocarbon-rich monarchies of the Gulf, energy has never been a mere commodity. It has served as the scaffolding of sovereignty, development, and modern statehood. Since the mid-20th century, oil and gas revenues have enabled a political economy rooted in redistribution, infrastructural ambition, and socio-political stability. Today, however, this “carbon bargain” faces unprecedented recalibration, as climate imperatives, fiscal reforms, and energy transitions converge.

What we are witnessing is not merely a crisis of sustainability, it is a moment of political becoming. Much like Sauvy’s observation of the Third Estate’s historical yearning “to become something,” Gulf states are navigating an immense metamorphosis. This is not simply about leaving oil behind; it is about articulating a new basis for political and economic legitimacy after hydrocarbons. The urge is not just to survive a transition; it is to author one.

In The Gulf’s Climate Reckoning, I examine how this transformation is unfolding, not as a linear pivot from fossil fuels to clean energy, but as a deeper renegotiation of political legitimacy and economic structure.

Reform as Reconfiguration, Not Technocracy

In recent years, Gulf states have articulated bold visions of climate-conscious transformation: Saudi Arabia’s Vision 2030, the UAE’s clean hydrogen ambitions, and a wave of net-zero pledges. These signals convey an image of sovereign agility in the face of decarbonization. But behind the headlines lies a more nuanced reality: energy pricing reforms remain partial, fossil fuel subsidies often untargeted, and efforts to recalibrate distributional frameworks remain politically delicate.

Natural gas, widely positioned as the Gulf’s bridge fuel to a low-carbon future, a “post oil age,” offers a telling example. In economies such as Saudi Arabia, Qatar, and the UAE, gas-intensive industries, such as petrochemicals, aluminum, and cement, are often hailed as pillars of diversification. Yet these sectors frequently depend on controlled input prices, low labor absorption, and state-backed infrastructure. Rather than a break from the rentier past, they may represent its continuation under a new industrial veneer.

These dynamics are not accidental. They stem from a developmental logic that has long favored capital-deep, energy-intensive growth over labor-intensive or innovation-driven models. In such a system, subsidies are not mere market anomalies, they are instruments of political coordination This is where the architecture of the dual economy comes into sharp relief. Gulf states have long managed a bifurcated system: on one side, globally integrated, capital-intensive sectors; on the other, domestically sheltered, low-productivity service sectors heavily reliant on public employment and expatriate labor. Reforms aimed at adjusting energy pricing and expanding downstream industries are, at their core, attempts to reconcile this structural divide. Yet bridging it requires more than technocratic intervention, it demands a renegotiation of the political and economic coalitions that have long profited from its endurance.

Critically, this duality is not a purely endogenous construct. It demonstrates a development trajectory driven by the imperatives of global energy markets, the influx of foreign capital, and the strategic bargains struck under longstanding geopolitical arrangements. For decades, hydrocarbon rents obscured these structural fissures, while external partners often reinforced an energy-centric, export-led growth model. Today’s reform efforts, however uneven, signal not a rejection of that past but an aspiration to outgrow it.

In this way, the Gulf’s carbon reckoning is not just about accommodation, it is also about authorship. It is the latest expression of a long-standing regional aspiration to shape development on sovereign terms.

The Political Limits of Technocratic Reform

Consider the Jafurah gas field—Saudi Arabia’s $110 billion venture into unconventional shale. This massive project could enable a dual-fuel energy model less reliant on oil. Yet it proceeds under domestic gas tariffs that remain well below cost recovery levels. This is not a failure of policy design, but a reflection of policy boundaries. Unilateral price liberalization risks disrupting sectors long accustomed to preferential terms. Rather than interpret these constraints as inertia, we might better understand them as a clear statement of competing obligations: to international investors and decarbonization partners on one side, and to domestic stakeholders conditioned by decades of subsidized provisioning on the other. In such a context, reform is not just a technical fix, it is a political balancing act.

A Crisis of Legibility

As the global energy transition accelerates, it brings with it a new governance regime centered on visibility: carbon disclosure, enforceability, and policy traceability. These demands clash with the traditional opacity of rentier systems, where discretion, such as over spending, subsidies, and contracts, has historically been a source of strength. But this model is under growing pressure.

Today, capital flows are increasingly tied to emissions metrics. International trade privileges hinge on climate alignment. And multilateral forums are recasting fossil subsidies not just as inefficient, but inequitable. As these norms consolidate, the once-autonomous space of domestic energy policymaking is increasingly assessed against external accountability. The challenge, then, is not that Gulf states are resisting reform, it is that the foundations on which reform must stand are undergoing simultaneous reconstruction.

The Green Paradox and the Incentive to Accelerate

This external pressure also reveals a deeper paradox. International climate negotiations, particularly when framed as future constraints on fossil fuel use, can inadvertently incentivize producers to accelerate extraction in the near term. Known as the green paradox, this phenomenon suggests that announcing stricter future regulations may lead resource holders to monetize their reserves faster, before those policies take effect.

In the Gulf, this dialectical logic helps explain why decarbonization initiatives have, in some cases, coexisted with record-breaking investments in oil and gas infrastructure. It is not contradiction, it is strategy. States are navigating an uncertain regulatory horizon by securing present value from legacy assets, even as they cultivate post-carbon sectors. The paradox is that climate action, if not carefully sequenced, can produce short-term surges in hydrocarbon production.

Between Reform and Reinvention

Gulf governments are not passive observers of this transition. They are actively crafting green finance platforms, issuing sustainability-linked bonds, and cultivating decarbonization narratives. But the full realization of these ambitions hinges on a deeper reckoning with the distributional architecture of the carbon state.

Reform, in this context, is not just about phasing out subsidies or deploying renewables. It is about reimagining the foundations of legitimacy in a post-rentier order, where political authority is decoupled from the promise of perpetual energy abundance.

In The Gulf’s Climate Reckoning, I argue that this is not a story of failure or inevitability. It is a story of navigation, of how states forged in the carbon era are seeking to reconcile legacy institutions with emerging imperatives. Whether they can do so without unraveling the social contracts that have sustained them for decades remains an open question. But what is clear is that the climate transition is no longer simply about emissions. It is about governance, equity, and the political economies that made fossil fuels not only viable, but foundational.

Title: The Gulf’s Climate Reckoning

ISBN: 9781009389532

Author: Justin Dargin