Energy Efficiency and Renewable Resources in the Arab Region

1. Energy Efficiency and Renewable Resources in the Arab Region Ibrahim Abdel Gelil Arabian Gulf University UNDP Regional Consultation Meeting 6-7 October 2010 Arabian Gulf University

2. Contents • Socio-economic Contexts • Energy Situation • Market Drivers for RE in the Arab Region • Positive Signs from the Region • Policy Framework • Institutions • Major Barriers for Market Development • Policy Recommendations • Opportunities for Arab-Arab cooperation

3. Socio-Economic Contexts • High demographic growth (1-3%) • High economic development • Urbanization (51% on average) • Economically diverse region: • oil-rich economies (Algeria, Egypt, and Syria) • oil-scarce (Jordan, Lebanon, Morocco, Palestine, and Tunisia) • Two major influencing factors for the past few decades: • price of oil • state controlled economies (especially in managing the energy sector)

4. Socio-Economic Challenges • High unemployment rates • High illiteracy rates • Inadequate funding for scientific research • Weak ability to attract foreign direct investments • Weak regional economic integration,

5. Energy Situation • Energy resources unequally available • Concerns about oil supply in oil importing countries (volatility of oil prices) • High energy and electricity demand growth • Access to electricity in rural areas • Renewable Energy resources are abundant but not yet significantly developed • Environmental concerns due to heavy reliance on fossil fuels.

6. Energy Demand • Drivers of energy demand: • Population growth • Rapid urbanization, and • Economic growth • Energy demand is likely to expand by 70% in the next 20 years relying 87% on fossil fuels (study by IEA). • This is unsustainable scenario due to: • Increase dependence on depleted resources • Raise energy burden at the expense of economic growth and development • Amplify the environmental impacts, in particular in urban areas.

7. Major Energy Indicators • Disparities across the region • Per capita CO2 and carbon intensity • High in the GCC • Low in the rest of the region • Average energy intensity (TPES per GDP) is higher than the world average • Average carbon intensity is higher than the world average • Oil and gas represent more than 90 % of the total primary energy supply • High rate of electrification (~ 100% in Lebanon, Kuwait) • Parts of the rural population still lack access to electricity, and use biomass to meet their energy needs (Yemen, Sudan).

8. Selected Energy Indicators

9. Major Energy Challenges • Securing energy supply for the oil importing countries • Securing access to modern energy services for rural population • Energy Diversification • Reducing GHG emissions, and • Creating enabling environment to attract investment in the energy sector.

10. Market Drivers for RE in the Arab Region • contributing to energy supply security, • reducing dependency on fossil fuels, • Mitigating local environmental problems, and reducing GHG emissions • offering good opportunities for CDM finance • efficiency gains and cost reduction of the renewable technologies • vast potential of solar radiation

11. Annual Direct Normal Irradiance of the year 2002 Direct normal irradiance (kWh/m2/y): 2000-2800 (www.dlr.de/tt/med-csp)

12. Technical Potential of Solar Thermal Electricity in selected countries (TWH/yr) (www.dlr.de/tt/med-csp)

13. Current CSP Projects

14. Positive Signs from the Region • Clear political commitments towards more sustainable energy sector as clearly reflected in many Declarations and policy documents. • Energy sector reform started gradually and took different shapes • Regional energy integration projects are planned or underway. • Several CSP projects in North Africa

15. Positive Signs from the Region/2 Commercialization of wind energy and introduction of CNG as a transport fuel in Egypt Widespread use of solar heating in Palestine, Tunisia, Morocco. Widespread dissemination of CFL in Egypt, Lebanon, Tunisia Energy programs at King Abdullah University for Science and Technology in Saudi Arabia MASDAR, the first zero-carbon city in Abu Dhabi Introduction of economic incentives in Algeria, Jordan, and Lebanon

16. Regional Energy Integration • Sub regional electricity grid interconnections are at different stages of implementation: • Interconnection of Egypt, Jordan, Syria, Lebanon, and Turkey • Interconnection of Arab Maghreb countries (including a connection with Europe) • Cross-boarders natural gas projects: • Arab Gas pipeline between Egypt, Jordan, Syria and Lebanon (with future prospect to Cyprus, turkey and Europe); • Natural gas projects between North African countries, and between them and Europe.

17. Energy Sector Reform • Restructuring activities of the energy sector are vital for: • improving sectors’ efficiency • encouraging private sector participation • attracting foreign direct investments (FDI), and • promoting independent power producers of solar thermal and other renewable energy technologies. • Sector reform has started in some countries and has taken different formats

18. Energy Pricing Policies • Historically, prices has been heavily subsidized in the region. • Prices are more heavily subsidized in resource-rich countries such as in the GCC, Egypt, Algeria, and Syria. • In net importers of fossil fuels (Lebanon, Jordan, Morocco, and Palestine) price distortions are less. • Governments are striving to phase out subsidies while alleviating its social impacts. • In 2007, Egypt announced a new plan to phase out energy subsidies for industry. • Jordan eliminated fuel subsidy in 2004 over four years. • Morocco phased out subsidies and is generating net tax revenues of about 24 %. • Gasoline is not subsidized in the UAE

19. Legislative Framework • Algeria is the only country in the region that has a feed-in-tariff. • Except in Algeria, there are no specific laws for promoting renewable energy technologies in the region. • Tax, fiscal measures and other incentives are adopted in some countries. • Laws to promote RE are being prepared in Egypt, Morocco, Jordan, and Lebanon.

20. Renewable Energy Institutions • Existing national institutions mandated with renewable energy development are: • CDER (Algeria), NREA (Egypt), CDER (Morocco), ANME (Tunis) and NERC (Jordan). • Regional cooperation projects supported by the EU are: • Mediterranean Association of the National Agencies for Energy Conservation (MEDENER) • Mediterranean Renewable Energy Center (MEDREC) in Tunisa for North African Countries. • Regional UN and other bilateral and multilateral organizations promoting renewable energy in the region include UNESCWA, UNEP, UNDP, GEF, EU, GTZ, USAID, and others

21. National Renewable Energy Targets Source: REN 21, 2010

22. Local Manufacturing Capacity The region has sufficient local manufacturing capacities to produce solar water heaters.. Local manufacturers are lacking national schemes for standardization, testing and certification. Few number of industry associations to promote local industries High potential of expanding local manufacturing of solar thermal technologies in some countries (Egypt, Tunisia)

23. Financial Schemes • Third Party Financing • ESCO and RESCO undertake fully the project financing, design development and operation. • Investment is reimbursed by payments related to the performance of the technology installed. • The concept of Energy service company (ESCO) has been implemented in Egypt and Tunisia. • The RESCO concept has not been applied yet in the region • Build-Operate-Transfer (BOT) • BOT has taken different shapes and it is implemented in financing some projects in Algeria, Egypt, Tunisia, and Morocco • Venture Capital • This financial mechanism has been rarely used in the region. • MASDAR new initiatives • Clean Development Mechanism

24. CDM: a driver and a financing mechanism for RE and EE • CDM offers opportunities to promote sustainable development through investment and clean technology transfer. • Worldwide there are a growing number of financing options for CDM projects. • World bank Carbon Funds • Government Carbon funds (e.g. Italian, Spanish,) • Private carbon funds (e.g. EU carbon fund, KfW carbon fund) • Only Egypt, Morocco, Qatar, Syria, UAE, and Tunisia have registered projects in the CDM since its inception in 2005

25. CDM projects in the Arab Countries Source: CDM projects database, 2010

26. Major Barriers for market development • Policy Barriers • Lack of / or weak political will both at the government and private sector levels. • Lack of national targets and / or strategies for promoting renewable energy resources. • Lack of / or weak legal and institutional framework. • Slow and incomplete liberalization process of the energy and electricity markets. • Weak or Lack of domestic R&D programs and low government expenditures in R&D.

27. Major Barriers for market development (2) • Market Barriers • Week capacity of information flow. • Low level of consumer awareness. • Difficulties to change consumers behaviors and attitudes • Lack of national standards, testing and certification schemes. • Weak capacity of local assembly / manufacturing distribution, installation and maintenance. • Lack of training programs for renewable energy professionals. • Low level of awareness of local financing sector. • Lack of innovative financing schemes. • Social implications of the energy subsidies.

28. A Proposed Pilot Initiative for Resilient Cities • Benefit from international experience such as “cities for climate protection campaign” of the I.C.L.E.I • Create a platform for Arab-Arab cooperation in this field • Test and demonstrate a range of policies and measures to build climate change resilience in the Arab cities • Disseminate lessons learned, successes and failures • Resilient city action plan would include activities such as: • Research and education • Disaster management policies and measures • Promotion of “green building” • Public Education

29. Major Barriers for market development (3) • Economic Barriers • Heavy subsidies provided by governments for oil, gas, and electricity. • High custom duties on renewable energy technologies. • High initial costs of solar thermal technologies. • Lack of internalizing external costs to societies due to heavy reliance on fossil fuels.

30. Thank you Ibrahim Abdel Gelil ebrahimas@agu.edu.bh 9/20/2014 30

31. Policy Recommendations Remove key barriers Establish national targets for EE and RE Integrate energy efficiency into energy, economic, and environmental planning Strengthen legislative and institutional framework Improve overall investment climate Develop proper financing schemes.

32. Policy Recommendations/2 Harness the potential for carbon finance in the region Provide financial incentives Attract private sector investments Develop standards, testing, and certification schemes Facilitate technology transfer Develop Institutional Capacity Develop capacity of research and development Raise public awareness

33. Opportunities for Arab-Arab Cooperation Regulatory and Institutional reform (Algeria, Tunisia) Energy price Reform (Jordan, Morocco, UAE) Energy Audits (Algeria, Tunisia) Economic incentives (Algeria, Tunisia, Morocco) Energy efficiency codes and standards (Egypt, Tunisia) Public awareness (Morocco, Lebanon)