KATARZYNA CZUPA, Weimar Dialogue
When asked about the renewable energy, one would undoubtedly think about the European Union, the United States or one of the highly developed East Asian states such as Japan or South Korea renown for their mania for making green almost every aspect of everyday life. I bet that only a few, if anybody, would look towards the Middle East in the given context. Yet, this region, and the Gulf States in particular, may soon outpace the West and become a new leader in a process of shifting economy towards a more sustainable model in terms of energy production and distribution. Interestingly enough, the European Union is likely to help it with that.
Centre for Global Efforts
Last month, the attention of the most important renewable energy stakeholders was focused on Abu Dhabi, the capital of the United Arab Emirates. For the fourth time in a row, this small emirate whose territory barely covers 972 sq. km (about 30 km less than Paris does), hosted the World Future Energy Summit, a business platform bringing together international policy makers, industry leaders, investors, experts, and journalists to discuss practical and sustainable solutions to future energy challenges. A three-day conference comprised exhibitions of the cutting-edge green technology as well as debates, whose speakers represented many prestigious institutions and companies such as World Bank, European Investment Bank, International Energy Agency, Citigroup US, BP Global and Islamic Development Bank Group. Among other things, participants discussed the changing global energy landscape and the opportunities for deployment and growth, especially in developing countries. They also addressed the issue of mobilizing the Middle East finance for sustainable energy access. [1] On the last day of the event, ‘Thirsty Energy’, an initiative of the World Bank was launched. It aims to response to interlinked water and energy challenges, including growing competition for energy and water resources stemming from expanding global population, and increasing uncertainty caused by climate change. The goal of the plan is to support integrated investment decision and planning by governments to mitigate water-energy related risks. [2]
Another significant event, conference entitled Solar Middle East, took place in Dubai at the beginning of February. [3] Similarly, it involved plenty of exhibitions and discussion panels providing an opportunity to exchange views and define challenges that renewable energy sector is to face in the nearest future. But the Gulf isn’t just another centre of high-level meetings during which politicians and CEOs of global companies gather only to conceive yet more futuristic ideas that would improve their image. Last year alone, about 100 projects worth more than 30bn dollars were launched across the region. In United Arab Emirates ten power and water plants have been constructed including the $740 million Noor 1 solar power plant, and Phase 2 of the Emal Power Plant which value is assessed at 580 million dollars. Kuwait approved 19 power and water projects worth $4.2 billion, including the $2.7 billion Al Zour North Independent Water and Power Plant. Some plans in the renewable energy field were launched also in Oman, Qatar, Bahrain, Jordan, Iraq, Yemen, Syria, and Egypt. [4]
Power of a Desert
According to Renewable energies in the Middle East and North Africa, report published in 2013 by OECD, between 2001 and 2011 world consumption of primary energy rose by over 30 per cent and is expected to increase by 33,6 per cent till 2035. As far as the MENA region is concerned, since 2000 energy consumption has grown by 5,2 per cent a year and probably will be rising 3 per cent a year till 2030 surpassing the world average[5]. Significant economic growth, the energy intensive nature of the region’s industries and even more importantly rapidly growing population are driving forces behind soaring demand for electricity (as OECD estimates, it is to increase about 6 per cent every year). [6]
Taking into account all these factors as well as the fact that sources of oil and gas will eventually peter out (obviously due to technology innovations this ultimate moment may not come as soon as many expect), the MENA incumbents’ pursuit of reshaping mechanisms operating in the energy sector shouldn’t come as a surprise. The region is also perfectly suited for renewable energy production. As for solar power there is hardly any region with a higher potential for generating energy simply from sun’s rays. According to International Energy Agency, concentrated solar power plants could provide 100 times the combined electricity consumption of the MENA region and Europe together. The region is also a perfect location for wind plants, as the wind speed in the Atlantic and Red Sea and in some parts of the Sahara Desert exceeds 6.9 meter/second, a threshold for economic feasibility. [7] The future looks even more promising given an astonishingly low level of green energy in total energy production – in 2009 it represented only 4 per cent of total electricity generated in the region (according to the IAE the world average is about 20 per cent). [8]
Figure 1 – MENA Solar Energy Demand Forecast
Developing non-conventional systems of energy production is not only a noble move but also an economically logical one since it helps to retain access to an indispensable factor to economic activity for longer. It may also significantly stimulate employment by creating workplaces in such areas as design and fabrication, research and development of renewable energy components as well as construction and maintenance of plants. Delivering electricity to remote and undeveloped areas will undoubtedly boost entrepreneurship and help eradicate poverty.
Making these plans come true isn’t an easy task though. It demands huge investments, but in the case of the GCC countries that isn’t such a problem. The situation looks far worse in terms of adopting proper regulations (especially in the case of subsidizing energy prices) and sources of highly qualified workforce necessary to take care of modern and sensitive units that power plants consist of. Luckily, here comes the European Union.
Neighbourly Help
As of yet, the cooperation between the global South and North in terms of environment preservation hasn’t yielded any tangible benefits. The Doha Round, also known as the Doha Development Agenda, the latest round of trade negotiations among members of the World Trade Organization (WTO) launched in November 2001, has stuck chiefly due to controversies around environmental goods (established environmental technologies and environmentally preferable products), including those used in renewable energy production, whose OECD countries are main producers. One side has insisted that these inventions will protect livelihoods of future generations while the other one has claimed that they are simply yet another instrument of exploitation, as the most developed countries have comparative advantage in their production.
Nevertheless, far from the spotlight, some steps have been taken in order to reduce the tension. In November 2013, the EU-GCC Renewable Energy Policy Expert’s Workshop, a part of a “Promoting Deeper EU-GCC Relations” project, took place in Abu Dhabi. Moreover, since 2010, EU-GCC Clean Energy Network, a peculiar platform of cooperation in terms of renewable energy has been in operation. Its activities span organizing of events such as experts meetings, thematic discussions, training sessions and carrying out preliminary studies so as to enhance knowledge and good practices among member countries. In a not so distant future, this collaboration may also take a more measurable form. The Desertec Foundation, a German-based organization facilitating a flow of knowledge between regions in the field of solar energy, believes that thanks to the green technology, the MENA region will not only be able to produce electricity for their own needs but also will be able to export a bulk of it to the European Union. In 2009, the Desertec Industrial Initiative was established to implement the Desertec’s concept in the EUMENA region involving such measures as developing a framework for feasible investments into renewable energy and initiating pilot projects to prove feasibility[9]. No doubt that the Middle East won’t morph into global purveyor of green energy, but these projects will help already taken efforts to succeed. And given the vast deserts and abundant sources of capital, maybe someday prices on the energy market will be determined not by Organization for Petroleum Exporting Countries but a body comprising of the Middle East Green Energy Exporters.
- [1]WFES Conference Programme http://www.worldfutureenergysummit.com/Portal/summit/programme.aspx
- [2]Water Shortages Slow Energy Production Worldwide, January 20, 2014
- http://www.worldbank.org/en/news/press-release/2014/01/20/water-shortages-energy-production-worldwide
- [3]Agenda of Solar Middle East 2014 http://www.solarmiddleeast.ae/en/Education/Agenda/Day-1/
- [4] Brittlebank, $32.7 billion investment in renewable energy and water projects in Middle East, 26.07.2013, http://www.climateactionprogramme.org/news/32.7_billion_investment_in_renewable_energy_and_water_projects_in_middle_ea/
- [5]OECD, Renewable energies in the Middle East and North Africa, 2013 http://www.keepeek.com/Digital-Asset-Management/oecd/finance-and-investment/renewable-energies-in-the-middle-east-and-north-africa_9789264183704-en#page4
- [6]OECD, op.cit.,10.
- [7]OECD, op.cit.,30.
- [8]OECD, op.cit.,9
- [9]OECD, op.cit.,34.
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Katarzyna Czupa jest ekspertem Centrum Inicjatyw Międzynarodowych ds. Bliskiego Wschodu oraz koordynatorem projektu „Let’s talk about Islamic finance”. Obecnie pracuje jako młodszy analityk w firmie Analizy Online, gdzie zajmuje się analizą rynku funduszy inwestycyjnych. W okresie od kwietnia do listopada 2016 r. pracowała na stanowisku młodszego analityka w Domu Maklerskim Banku Zachodniego WBK, gdzie była odpowiedzialna za analizy rynkowe oraz wycenę spółek. W okresie od stycznia 2014 r. do kwietnia 2016 r. pracowała w CASE – Centrum Analiz Społeczno-Ekonomicznych na stanowisku koordynatora ds. projektów oraz asystenta naukowego. Obecnie realizuje studia doktoranckie w Kolegium Ekonomiczno-Społecznym Szkoły Głównej Handlowej. Jest absolwentką kierunków finanse i rachunkowość (Szkoła Główna Handlowa) oraz stosunki międzynarodowe (Uniwersytet Warszawski). W 2013 roku otrzymała stypendium Ministra Nauki i Szkolnictwa Wyższego za wybitne osiągnięcia naukowe.
