In the ever-evolving global conversation on climate change, the Arab region finds itself at a critical juncture. Historically not a major contributor to greenhouse gas emissions, this region is now confronted with the harsh reality that it is responsible for producing 30 percent of the world’s oil and 18 percent of natural gas. Despite the economic benefits derived from these fossil fuel reserves, the Arab region faces the severe consequences of climate change, with impacts surpassing the global average.
As the world grapples with the consequences of climate change, the Arab region’s carbon footprint per capita stands as one of the highest globally. Combustion of fossil fuels, particularly oil and gas, is responsible for up to 80 percent of carbon dioxide emissions. The region bears the brunt of severe climate impacts, experiencing an average temperature increase of 0.45 degrees Celsius. This alarming statistic represents more than double the global average, signifying a distressing vulnerability unique to the Arab world. From the ravaging storms haunting Yemen to the prolonged droughts tormenting Morocco and Tunisia, the region finds itself in the crosshairs of an unfolding climate crisis. Ghiwa Nakkat, Executive Director of Greenpeace in the Middle East, stresses the urgent need for decisive actions to address climate change and actively transition to sustainable energy.
Disparities and Challenges in the Arab Energy Landscape
In the intricate tapestry of the Arab region’s landscape, disparities are evident, particularly in the diverse composition of fossil fuel reserves among its nations. Some countries economically hinge on fossil fuels, armed with ample reserves and sovereign wealth funds supporting the transition to renewable energy. The likes of Saudi Arabia, Qatar, and the UAE exemplify this paradigm, investing in renewable energies spurred by oil and gas revenues. However, the situation is far from uniform across oil-rich nations like Iraq, which grapple with financial constraints hindering a clear long-term plan for renewable energy investments.
Laury Haytayan, the Director of the Natural Resource Governance Institute in the Middle East and North Africa, sheds light on this imbalance: Gulf countries such as Saudi Arabia and the UAE are using oil and gas revenues to develop society, particularly in renewable energy. However, some oil-rich nations, like Iraq, struggle due to challenges like corruption, institutional weakness, and a lack of a clear national vision. Haytayan emphasizes that these obstacles could worsen in the future, hindering alignment with climate goals and reducing dependence on fossil fuels.
For non-oil countries, especially those reliant on external partners for extraction and capital, such as Egypt and Algeria, the road ahead may pose challenges if demand for fossil fuels decreases. On the other hand, nations facing compounded crises due to energy shortages and internal instability, like Yemen and Lebanon, witness a surge in the use of renewable energy. Laury Haytayan emphasizes this point: “Solar energy production in Lebanon reached a maximum of around 1,000 megawatts in five years through individual efforts that responded to the electricity crisis.” Similarly, in Yemen, after 55 percent of power station infrastructures were affected by the war in 2015, solar energy systems became the primary source of electricity for 75 percent of the urban population in most Yemeni provinces.
Challenges of Energy Transition: Navigating the Road Ahead
In the realm of energy transition, the Arab region confronts formidable challenges, with the electricity sector still heavily reliant on fossil fuels at a staggering rate of 94 percent. Despite being a global powerhouse in oil production, the Arab region remains the least attractive for investments in renewable energy, garnering a mere 1.6 percent of combined investments in Africa and the Middle East.
Examining the strides taken by Gulf countries towards renewable energies, Hala Al-Kilani, a climate communication specialist, notes that the current efforts still fall short of the required standard. Nevertheless, certain Arab nations have made headway in achieving an energy mix based on renewable sources, driven by the escalating costs of energy imports and the inadequacy of fossil fuel resources. Leading this transition are countries like Morocco, followed by Egypt, Tunisia, and Jordan.
Ruba Ajjour, the Manager of the Climate Change Studies Division at the Royal Scientific Society, sheds light on the Jordanian experience in energy transition, emphasizing that “perhaps the most significant factor in making progress in investing in renewable energy projects is effective partnerships with the private sector.” However, incentivizing policies for the private sector lag behind in most Arab countries due to historical reliance on the government for basic services, a point highlighted in a paper by the Natural Resource Governance Institute.
Despite significant progress in solar energy production in some countries in the region that have experienced political and economic turmoil, such as Yemen and Lebanon, the experience, as described by experts, remains a decentralized experiment driven by necessity and is characterized as a pre-energy transition phase. While there is popular acceptance of the technology, interest in solar energy has recently declined, according to Hassan Al Awami, a development researcher affiliated with the Doha Institute. He explains that the reasons for this can be traced to the absence of technical expertise and weak oversight of imported devices, leading to decreased efficiency and undermining people’s trust, thus partially reverting to reliance on traditional commercial power plants that rely on fossil fuels.
A study on the sustainable transition of Yemen’s energy system underscores the need for legislative and national strategic frameworks. This becomes particularly crucial amid efforts to achieve political stability and reconstruction, necessitating the establishment of an independent fund to support renewable energy, drawing inspiration from Jordan’s successful experience with the Renewable Energy and Energy Efficiency Fund. According to Ajjour, this fund, affiliated with the Ministry of Energy and enjoying independent financial management, serves as an effective model in expanding renewable energy projects, attracting international funding, and gaining the trust of global donor organizations and development banks.
A Fair Energy Transition: What Does It Mean
Recognizing the economic and human costs of global warming, Ghiwa Nakkat emphasizes the crucial nature of energy transition: ”Energy transition is costly, but it is crucial to recognize that the economic and human costs resulting from the consequences of global warming will be severe.
According to Haytayan, oil-dependent economies face increasing challenges to their revenues due to the potential decline in future demand for fossil fuels. Therefore, they must prepare for an energy transition in sectors such as electricity, transportation, and industries heavily reliant on fossil fuel combustion, all of which contribute to exacerbating the issue of global warming.
A recent paper by the Natural Resource Governance Institute focused on achieving a fair energy transition in the Arab region. The recommendations put forth in the paper take into account the unique energy and economic situations of each country. The paper suggests that oil-producing countries should diversify their economies and invest oil revenues in developing the renewable energy sector, innovation, and financing scientific research for technology localization.
For non-oil-producing countries, amid expectations of a decline in future demand for fossil fuels, the paper advises creating conditions to attract investments in renewable energy, considering national and local interests. The benefits may include workforce training, technology transfer, and imposing social commitments on investing companies, contributing to enhancing local expertise and promoting the adoption of sustainable technologies.
It is essential to note that achieving a fair energy transition also requires considering the interests of local populations. Energy should first be directed to meet local needs before exporting excess energy. Haytayan emphasizes the importance of investing in renewable energy in a fair manner that respects the rights of local communities. Partnerships with Europe in clean hydrogen production are seen as a positive step, but they must be executed fairly to avoid the exploitation of Southern resources for the benefit of the North.
In the absence of democratic foundations in most systems in the Arab region, effective civil society participation in advocacy and awareness-raising becomes vital and necessary to achieve this goal, placing citizens’ interests at the heart of the energy transition process, as recommended by the paper.
Addressing Financial Challenges
Persistent financial and institutional challenges continue to impede the region’s journey toward an energy transition. The accessibility of climate financing through climate funds encounters obstacles, with no local Jordanian entity securing approval, reflecting bureaucratic complexities and regional conflicts, as highlighted by Ajjour.
An Oxfam report underscores that fragile states, receiving five times less climate funding, grapple with debt instruments dominating over half of the financing in 2019 and 2020. This situation hinders their transition to sustainable energy.
Climate communication specialist Hala Al Kilani emphasizes the responsibility of historical emitters to finance the transition in developing and fragile countries. Safa’ Al Jayoussi, Climate Justice Adviser at Oxfam, stresses the need for climate financing to reach affected local communities, advocating for grants over loans to alleviate the burden on fragile communities.
On the flip side, climate financing policies face complexities from responsible financial institutions like the World Bank. According to Jennifer Sara, Global Director for Climate Change at the World Bank Group, the World Bank “adopts loan financing policies for middle-income countries, but there is flexibility and a delay in repayment of up to two years in case of climate-related shocks.” Stefan Hallgarten, Senior Climate Change Adviser at the World Bank Group, confirms that the loan approach is highly preferred in most countries over grants, attributing it to enhancing a country’s borrowing and repayment capabilities and developing revenue models. However, grants are favored in the case of fragile states or when the debt ceiling is high or to support vital sectors like healthcare.
Despite the optimism surrounding COP28, Safa’ Al Jayoussi notes that outcomes fell short for fragile communities. However, the global shift away from fossil fuels marks a crucial step, initiating a new phase in achieving inclusive and sustainable energy transition goals.
