Economic Research Forum (ERF)

Climate change policy in MENA after Paris

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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.

 

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