The advances in development achieved by the UAE over the past four decades now require a restructuring of certain sectors to cope with the goal of sustainability.

The energy sector tops the sectors that is need of change, more so as the global market itself is passing through significant changes that spare no countries, due to increased consumption and the lack of new sources. The economies will need to adapt to these far-reaching changes.

The UAE has already made significant strides towards clean energy sources, whereby it operates the largest solar power plants and is the first Arab country to have introduced nuclear power into its future programmes.

However, the pricing policy for these energy sources needs re-evaluation to suit the upcoming phase of growth. More so as this phase aims to diversity sources of income and reduce consumption to cope with development and consumer needs.

According to data, per capita fuel and electricity consumption in the UAE and the GCC is one of the highest in the world, and increases more than 10 times the global average, leading to rapid depletion of natural resources.

This high consumption rate does not necessarily reflect consumers’ real needs, and there is considerable wastage as a result of low prices, where they do not exceed 20 per cent of that in European countries. It should be noted that living standards are almost similar although there are no taxes of any kind applied in the UAE.

This suggests the need to reduce waste through social awareness on the one hand and reconsidering energy prices on the other, by pegging them to those in the international markets.

British Gas — the largest UK energy and home services company — announced last week that it is reducing gas prices by 5 per cent immediately after prices dropped in global markets.

Certainly, such localised steps would lead to significant economic results, which would lead to a decline in per capita consumption to normal levels and ease pressure on state budgets through dropping subsidy on energy prices and directing those funds to the development of other sectors that contribute to economic diversification.

However, it will affect the performance of all economic sectors as well as the prices of goods and services, which will require avoidance of some of the negative phenomena — high inflation and the low competitiveness of goods produced — associated with such change.

These can be absorbed through the gradual linking of local energy prices to these in international markets, which would help control inflation as well as give more time to manufacturers to cope with rising production costs.

As demand for energy resources doubles every 10 years, the situation is no longer appropriate, especially as the increase happens as a result of the overconsumption.

So, this requires greater understanding and cooperation by everyone, who must also be fully aware of the importance of energy sources, which would contribute to the success of state-led efforts to preserve resources and ensure their sustainability for future generations.

This will also have its positive impact on environmental aspects that are no less important than others, such as reducing pollution and fossil fuel consumption.

This move coincides with other steps taken recently, and through which it was made available the provision of convenient and relatively cheap public transport for all, including those with limited incomes.

In recent years, public transport services have developed significantly, and Dubai Metro achieved results beyond expectations. The Abu Dhabi Metro will become operational by 2020, while Etihad Rail is expected to be operational in two years.

The UAE’s approach forms a qualitative leap that will allow greater flexibility to restructure energy prices. This means the policy of liberalisation of energy prices will not be limited to the pricing aspect, but also includes the development of alternatives and considering living conditions. This allows both individuals and institutions to support an approach that is central to the UAE’s future development.

Success of this step is expected to provide a successful model for the best utilisation of available resources — a model that will be emulated by other countries in the region, especially the Gulf states which face similar challenges. There is also the need to keep in mind that a unified energy policy is within the scope of the Gulf bloc.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.