Economic Research Forum (ERF)

Climate change policy in MENA after Paris

The Paris Agreement on climate change has set ambitious targets for reducing the carbon footprints of the signatory countries. This column outlines the commitments and challenges for policy-makers in the Middle East and North Africa.

In a nutshell

The agreements at the Paris climate change summit raise challenges for MENA countries that require thorough understanding and coordination among policy-makers.

MENA policy-makers must use both demand-side management and market-based policy instruments to take advantage of the enormous and cheap emissions mitigation opportunities in the region.

Countries have significant potential for energy savings through elimination of inefficiencies and waste and a potential of cutting back the region’s expanding carbon footprint.

The Middle East and North Africa (MENA) is a diverse region characterised by fragile ecosystems and high dependency on hydrocarbon resources. This makes the region vulnerable to both the physical effects of climate change and the socioeconomic effects of measures aimed at preventing and mitigating climate change. Dealing effectively with climate change risks therefore requires an adaptation approach that jointly addresses both types of vulnerabilities.

In terms of physical impact, a number of MENA countries have large carbon footprints, and rising trends in greenhouse gas (GHG) emissions pose a challenge to sustainable development

international pressure on many MENA countries to take on commitments to emissions reduction – in the form of Intended Nationally Determined Contributions (INDCs) – may compromise their future economic development. The majority of MENA countries had already submitted their INDCs by the time of the Paris Agreement, reflecting varying timeframes and commitments conditional on the level of financial and technical support provided by the international community.

In common with many other developing countries, MENA countries have framed their INDCs within the broader context of sustainable development and with a focus on adaptation. Morocco submitted the most ambitious INDC among the region’s countries, offering an unconditional target of reducing its GHG emissions by 13% from its ‘business as usual’ (BAU) level by 2030 and a stringent target of 32% conditioned on external financial support of $35 billion.

Lebanon offered an unconditional pledge of a 15% reduction in its GHG emissions compared with BAU and a 30% reduction conditional on international support. Tunisia offered an unconditional pledge to reduce its carbon intensity (carbon per unit of GDP) by 13% in 2030 relative to 2010 and by 41% conditional on external financial support of $162 billion. Algeria pledged an unconditional GHG emissions reduction target of 7% from BAU and a conditional target of 22% by 2030.

In addition to mitigation targets, the INDCs for these countries also report adaptation measures ranging from groundwater protection, surface water development, demand management and monitoring systems to addressing soil erosion and enhancing ecosystems.

Egypt, Oman, and Sudan have pledged INDCs that are conditional on international assistance in terms of financial resources, capacity building and technology transfers. The countries of the Gulf Cooperation Council (GCC) have offered INDCs that are deeply focused on adaptation with mitigation co-benefits through economic diversification. Their INDCs identify actions and projects related to energy efficiency and deployment of renewables, as well as the need for technology transfer to deal with agriculture, food security, protection of marine ecologies and management of water and costal zones.

The key sources of GHG emissions prevention and emissions mitigation in INDCs submitted by MENA countries are deployment of renewables, energy efficiency and switching the fuel mix towards natural gas. In addition to hydrocarbon reserves, the MENA region is characterised by a high potential for the deployment and use of renewable energy, especially solar power.

Despite the differences between countries in the region in terms of resources and availability of infrastructure, a shift towards clean energy production seems to be gaining momentum in the region for reasons related to competitiveness of solar energy generation, conservation of hydrocarbon reserves, environment, energy security and strategic positioning.

The growth in renewable energy capacity has also been accompanied by developments related to the policy framework, institutional capacity, price reforms and market structure of the power sector. The top performing countries in the region in terms of renewable energy deployment are Morocco, Egypt, Tunisia and the United Arab Emirates.

In contrast to the opportunities and country ambitions on deployment of renewable energy, there are obvious challenges facing the scale-up of renewable generation and share to the levels indicated in the INDCs of many of the MENA countries. Examples include Morocco, which has pledged to scale up the contribution of renewable generation to 42% of total electricity generation by 2020; Tunisia, which plans to ramp up the share of renewables in total electricity generation from the current 4% to 14% by 2020; and Algeria, which has committed to scale up the contribution of renewables in total electricity generation to 27% by 2030.

The principal challenges facing such ambitious short-term plans to make the transition towards low-carbon power generation in the region include transmission infrastructure, intermittency and storage requirements, economics, and availability of enabling regulations and institutions.

My analysis highlights the importance of monitoring the region’s carbon footprint and its implications for the transition to a low-carbon future. It is essential that policy-makers understand the agreements signed and the institutions that are part of the climate policy framework established as a result of the Paris Agreement and the decisions taken in previous international meetings on climate change in Kyoto, Bali, Cancun, Copenhagen and Durban.

In particular, policy-makers should take account of the climate commitments made by individual countries and the region as a whole via the submission of their INDCs. Market-based policy instruments have a major role to play in pursuing climate change objectives in the region although the relative use of those instruments and non-market tools is an issue for each individual country and its economic structure. Green tax reforms can play a major role in improving the economics of a domestic carbon policy.

Further reading

Babiker, Mustafa (2016) ‘Options for Climate Change Policy in MENA Countries after Paris’, ERF Policy Perspective No. 18.

Babiker, Mustafa (2010) ‘The Potentials for Energy Savings in the GCC Economies’, Journal of Development and Economic Policies 12(1): 31-58.

Babiker, Mustafa, and Mohammed Fehaid (2012) ‘Climate Change Policy in the MENA Region: Prospects, Challenges and the Implication of Market Instruments’, in Economic Incentives and Environmental Regulation: Evidence from the MENA Region edited by Hala Abou-Ali, Edward Elgar Publishing.

 

Most read

When you’re stuck in quicksand, stop kicking

As the golden age of oil nears its end, incomes in the MENA region are destined to fall precipitously from their artificial petrodollar-boosted levels. Using the analogy of how to respond to being caught in quicksand, this column argues that the quick kicks of investment in big projects and misguided wars will drag the region down further. While structural reforms are slow and boring, they are also indispensable for economic progress.

Getting more women into employment in Egypt

Despite significant increases in women’s education and health indicators in Egypt, their rate of labour force participation remains one of the lowest in the world. This column explains how marriage acts as an obstacle for women taking jobs in the private sector, and outlines potential remedies to the ‘marriage mismatch’.

How to diversify oil-producing economies

Many oil- and gas-rich countries have either announced or put in place policies to reduce their dependence on oil by diversifying their economies. This column argues that the key is to shift the focus away from the end goal of diversification and towards the transformation process of how to get there.

Ageing and pensions coverage in Arab countries

Arab countries experiencing economic and humanitarian crises are paying insufficient attention to the demographic trend of ageing populations. This column argues that providing economic security and healthcare for the elderly is one of the key challenges for the region.

Sticks rather than carrots to expand the formal economy

Reforms that get more firms and workers into the formal economy can come in the form of both inducements such as better information and lower costs – ‘carrots’ – and legal enforcement – ‘sticks’. This column surveys the research evidence on the potential of carrots, sticks and other development policies for promoting greater formalisation and the many benefits it can bring to the economy and wider society.

Women’s education: harbinger of another spring?

Cultural norms and the social environment in many Middle Eastern societies discriminate against women, limit their socio-economic opportunities and relegate them to a lower status than men. Can education bring a change? This column reports research on what happened to young women and their children when Turkey raised the period of compulsory formal schooling from five to eight years.