Low Carbon Energy in the Middle East and North Africa

Over the next few decades, favorable economics for low carbon energy sources combined with stagnant oil demand growth will facilitate a shift away from today’s fossil fuel-based energy system. Although the transition will impact all countries, its effects are arguably more profound in the Middle East and North Africa (MENA). This is because MENA countries are major hydrocarbon producers and significant hydrocarbon consumers and because hydrocarbons underwrite the ruling bargain between states, societies, and business. This chapter provides an overview of the two major themes explored throughout this volume. The first explores the role, evolution, interactions, and efficacy of energy stakeholders; the second relates to the geopolitical balance at the bilateral and regional levels during the energy transition. The contention is that politics, more so than economics or environmental pressure, will determine the speed and scope of low carbon energy uptake in MENA. While politics facilitates the transition to a low carbon energy system in some countries, it complicates the pathway for others.

Both Iran and Iraq are major oil producers; both have abundant hydroelectric, solar and wind potential, and face fast-rising energy demand which they have been challenged to meet. Yet both have struggled to adopt low-carbon energy on a large scale. The underlying reasons, however, are quite different. Iran’s pursuit of nuclear power has been driven by domestic security and nationalist interests. Its buildout of hydroelectric dams has been encouraged by local politics and insider business. Non-hydro renewables have suffered from turf wars, lack of institutional support, fossil fuel and electricity subsidies, and barriers to international finance, exacerbated by sanctions. In Iraq, by contrast, the period following the 2003 invasion, when alternative energy has advanced worldwide, has been marked by pervasive corruption, insecurity and mismanagement which have prevented realisation of most large-scale projects outside the upstream oil and gas sector. Despite severe electricity shortages and some targets for renewable energy installation, little progress has been made due to an unattractive investment model and rent-seeking political interests. Nevertheless, the economics of renewables is very good in both countries, neither has any fundamental opposition to them, and progress should occur over the next few years, even though halting and well behind potential.

When it comes to clean energy, the United Arab Emirates is a paradox. On the one hand, the UAE is a champion of renewable and nuclear power, an oft-cited example of an OPEC member that has made significant progress in zero-carbon electricity generation. On the other hand, the UAE is completing one of the largest coal-fired power plants in the Middle East. If current government goals are realized, the country will generate far more power from coal, the most carbon- and pollution-intensive fuel, than it will with renewables. Three main pressures lie behind the UAE’s decision to turn away from its 50-year legacy of natural gas-dominated power generation. First is the fragmentation of electricity policy among the seven emirates. Second are the diplomatic breaches with major holders of regional natural gas supply. And third are various economic drivers, ranging from volatile gas import prices to plummeting costs of solar panels. This paper finds that while uncertainties surround the eventual scale of renewables’ contribution, the increase in coal combustion appears destined to undermine the UAE’s already minimal carbon competitiveness. In the future, high per capita emissions could attract carbon-based trade penalties and sanctions.

Since 2018, the Gulf Cooperation Council (GCC) states have begun planning and deploying renewable energy projects on a larger scale than ever before, kickstarting a belated green energy transition. Despite their long-standing roles in the conventional energy world, and the abundance of both capital and solar resources, these states were rather late to the game. What explains the late start? What has changed in the political economy of these states that makes these new set of plans more credible? And what explains some of the differences between these states’ deployment strategies and capabilities? The chapter will begin by giving a historical and contemporary overview of the renewable energy landscape in the GCC countries over the past decade, looking both at the distributed and utility scales. Saudi Arabia will be taken as an in-depth case study, because of its size and fiscal situation. The chapter will argue that the rentier economic model explains why the block as a whole began deploying renewable energy relatively late, considering its resources. An argument will be made that rents do not explain the variation we now observe in ambition, strategy, and execution of renewable energy projects. Rather, economic dynamism, client and rent seeking pressures, soft power projection, and political leadership, are some of the reasons for this divergence.

Morocco is a leader in the Middle East and North African region in renewable energy. It seeks to source 52% of its electricity capacity from renewable energy by 2030. A traditionally fuel-poor country, Morocco aims to improve its energy security and to reframe itself as an energy-wealthy country awash with renewable energy resources. It has reorganized its energy organizations to institutionalize and rapidly scale up renewable energy development. The state grapples with multiple, sometimes competing forces in its energy policy. Nearly half of its portfolio will still come from fossil fuels, impeding energy independence and constraining budgets. Its closest neighbor, Algeria, is rich in hydrocarbons, but the countries have poor relations because of the conflict over Western Sahara. This has left Morocco in search of alternatives for natural gas imports and impeded political and economic cooperation, as well as grid integration, in the Maghreb. Moreover, the Moroccan government must balance its need for securing international financing and meeting international goals with domestic pressure to achieve an inclusive energy transition that benefits marginalized stakeholders. This chapter argues that all of these complex factors must be taken into consideration to understand Morocco’s renewable energy policy, overall energy policy, and geopolitical calculus.

The Turkish energy story is an enigma: Despite a bourgeoning energy demand, an abundant renewable energy potential and some initial progress in setting ambitious targets and designing a rudimentary legal and regulatory framework for renewables, Turkey is still not close to realizing its vast potential in wind, solar and geothermal; the share of non-hydro renewables in the overall energy mix has not reached any meaningful levels. There are significant delays and hurdles in project development, uncertainties about the sustainability of support mechanisms, and aggressive campaigns to accelerate fossil fuel production. This chapter analyzes Turkey’s mixed clean energy performance by mapping out the different political, economic, and geostrategic interests of domestic and external stakeholders, the changing coalitions over time as well as the institutional structure in which energy politics plays out. I argue that the limited policy reforms to increase the share of renewables in Turkey have been crisis-induced, externally conditioned, and politically expedient in an increasingly centralized institutional structure. The Turkish case is an example of a contradictory and somewhat reluctant state-led energy transition where the pace and nature of renewable energy reforms are driven less by societal and business pressures but more by the distributive, populist, and geostrategic calculations of the governing elite to stay in power.

Egypt has made notable progress in advancing its alternative energy agenda, which has incented significant private sector investment in renewable energy. Egypt’s effort to diversify its power generation mix has also led to the pursuit of large-scale nuclear energy capacity, which is currently under development. Yet the nation’s alternative energy objectives are ambitious, and many challenges remain. As the most populous country in the Middle East and North Africa region with significant geopolitical and economic power, Egypt’s energy sector evolution and its prospects for alternative energy development will impact the entire region and serve as a model for other nations to observe. Given the importance of the issue, it is necessary to analyze and review sector developments holistically, evaluating both the broader context of the Egypt’s energy sector and political environment, as well as specific energy regulation and markets, governance issues, investment prospects, and the driving forces compelling Egypt to pursue the development of renewable and nuclear energy. This chapter aims to provide this broader context while examining the specific issues that will impact Egypt’s alternative energy sector, its development prospects moving forward and its implicit energy sector roadmap for the region.

This chapter suggests that while alternative energy—AE—is sought after to improve the energy security and the economy, it can challenge the political status quo. This is the case in the Levant, a region heavily reliant on fossil fuel imports. Countries across the region are investing in AE. They have adopted regulations and financing models endorsing public–private partnerships. Consequently, AE is expected to challenge hitherto highly monopolized electricity markets but intensifies competition with incumbent fossil fuel imports and vested interests. In Lebanon, decentralized AE may impact the governance structure and circumvent bottlenecks that have prevented improvements in the electricity sector for decades. AE would improve Jordan’s political and economic stability and transform its relationship with foreign actors. As for Palestine, AE could reduce electricity dependence on Israel. On the regional level, AE may increase the prospects for electricity exchange, which may also subject countries to a risk of a switch of vulnerability from a supply disruption caused by pipelines, to one caused by grids, or may foster cooperation. The analysis covers the political economy and examines the opportunities and shortcomings in AE implementation. In so doing, it unravels the competition and conflicts of interests of the various stakeholders.

While some states in the Middle East and North Africa have pursued renewable energy policies, others have doubled-down on conventional fossil fuels and eschewed the development of renewable energy. What explains this variation? What implications do these choices have on domestic and international politics? Drawing on theories from political science and the political economy of development, we explore the transition from conventional to renewable energy in the Middle East and North Africa (MENA) region. We consider the impact of decarbonized, diversified economies on demands for inclusive governance and democratic institutions. First, we argue that the renewable energy transition will diffuse existing and future societal pressures by increasing youth employment, hindering corruption, and reducing fiscal volatility. Compared to the concentrated political economy of petroleum-reliant states, we posit that the up and coming renewables sector provides an opportunity for states to broaden and diversify their sources of economic and international political power. Second, we build theoretical expectations that fiscal reliance on oil exports and government time horizons explain variation in renewable energy policies in the MENA. We conclude with potential scenarios for how the transition will affect fiscal and political stability.

Nuclear power produces only 2.1% of electricity in the Middle East and North Africa (MENA) today. Abu Dhabi’s Barakah nuclear plant began commercial operations in 2020, Turkey’s Akkuyu is under construction, Iran is adding reactor units to Bushehr, Egypt’s El-Dabaa is in the pre-construction phase, Saudi Arabia and Jordan are drawing up their own plans, while Kuwait considered and rejected nuclear power. Consequently, by 2050, nuclear energy could account for 6–12% of the region’s electricity. This chapter uses the multi-level perspective framework to analyse the extent to which a niche technology in MENA, such as nuclear power, can be mainstreamed into the domestic power mix. Through this approach, the interplay between domestic stakeholders, regional influences, and international context are considered alongside the attributes of nuclear energy technology. Consequently, this chapter offers an in-depth study of nuclear power in Abu Dhabi enriched by comparative assessments of experiences in other MENA countries. In particular, it argues that the initial decision to ‘go nuclear’ is merely the first step. It is the ability to craft and sustain enabling coalitions of stakeholders (domestic and foreign) in favour of nuclear power, as Abu Dhabi has done, that explains much of the variation within MENA countries concerning the successful uptake of nuclear power.

Climate change presents a multidimensional challenge for the Arab region, deeply impacting energy transitions, economic diversification and socioeconomic resilience. This chapter examines climate change policies in a multi-level, comparative setting in four Arab countries: the United Arab Emirates and Saudi Arabia, which are net oil-exporting rentier economies; and Egypt and Morocco which are net oil importers boasting the region’s largest renewable energy capacities. Examining climate change policies at the domestic and international levels, the chapter answers three questions. Why are recent changes in domestic policy not reflected at the international level? Are there discernible differences in policy choices by oil exporters versus non-oil-exporting countries? Is a convergence of domestic rhetoric and policy and international policy positions on the horizon? The chapter finds Arab countries have made significant, even if still inadequate, progress in domestic climate policies and governance frameworks. At the international level, they are far from a unitary group, and several misalignments exist between their domestic and international-level policies and between rhetoric and action. Domestic energy diversification strategies currently act as the major driver of domestic climate policies, and multi-stakeholder governance models and a strong strategic vision offer most hope for more ambitious policies going forward at both levels.