Economic Research Forum (ERF)

The green energy transition: employment pathways for MENA

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The potential employment impacts of green and renewable energy in the Middle East and North Africa are multifaceted and promising. As this column explains, embracing renewable energy technologies presents an opportunity for the region to diversify its economy, mitigate the possible negative impacts of digitalisation on existing jobs, reduce its carbon footprint and create significant levels of employment across a variety of sectors. Green energy is not just an environmental imperative but an economic necessity.

In a nutshell

While the Middle East and North Africa region is traditionally reliant on fossil fuels, it is increasingly embracing renewable energy as a pathway to economic diversification, job creation and inclusive development.

With the potential to generate over five million jobs by 2050, the green energy transition offers a transformative opportunity to address environmental concerns, rebase economies on productive nodes, revitalise smaller businesses and reduce high unemployment among women and youth.

By investing in renewable energy technologies, research, training, innovation, green manufacturing and energy efficiency, MENA can secure a sustainable future and foster a more resilient, inclusive and diversified economy.

The Middle East and North Africa (MENA), a region that is renowned for its vast reserves of fossil fuels, is increasingly recognising the importance of making the transition to renewable and green energy sources.

Such a shift to sustainable energy solutions would not only address environmental concerns, but it would also be a strategic move to diversify national economies, unshackle their rentier structures, empower and energise MSMEs (micro, small and medium-sized enterprises), attract international investment and mitigate the risk of ending up with only ‘stranded assets’. Central to this transition is the opportunity to harness employment, take advantage of income-generation opportunities and promote inclusive development.

Analysis of the green energy transition in MENA, with a special focus on six target countries, highlights significant potential to transform the labour market, offering substantial benefits for the workforce, society and economy. Quantitative analysis, using input-output models and comparative estimates from international studies, underscores the significant job creation potential of green and renewable energy. These benefits extend across several domains, including infrastructure development, manufacturing, research and innovation, and energy efficiency. Together, they offer a pathway for sustainable economic growth and social progress.

Job creation in renewable energy sector

The adoption of green energy technologies, such as solar power, wind energy, biomass, hydropower and green hydrogen requires the establishment of new supporting industries and value chains, leading to job creation across sectors.

With abundant resources, the MENA region has immense potential to capitalise on renewable energy opportunities, requiring skilled workforce for construction, installation, operation and infrastructure maintenance.

Research, development and innovation

Investments in green energy initiatives stimulate research and development (R&D) activities, fostering innovation and technological advancements.

In MENA, governments and private entities are increasingly investing in clean energy R&D, aiming to develop efficient and cost-effective renewable energy systems. This will create employment opportunities for scientists, engineers and technicians specialising in renewable energy R&D. The growth of R&D centres and innovation hubs will promote knowledge transfer and enhance the region’s technical expertise.

Supply chain and manufacturing

Green energy projects are expected to entail the production and installation of renewable energy equipment, such as solar panels, wind turbines, batteries and other energy storage systems. Establishing a robust local supply chain and manufacturing capabilities can significantly contribute to job creation while reducing dependence on imports.

By supporting domestic production of renewable energy components, MENA countries can develop a competitive advantage in the global green energy market. This will generate employment opportunities in manufacturing, assembly, logistics and related support services.

In addition, the region is witnessing growing potential in downstream and off-stream industries, particularly the manufacturing of electric vehicles and batteries. Several regional countries, including Algeria, Egypt, Morocco, Saudi Arabia and the United Arab Emirates, are already making progress in this sector, showcasing their potential to expand employment and economic diversification further.

Energy efficiency and retrofitting

Promoting energy efficiency measures and retrofitting existing infrastructure for improved energy performance can also generate employment opportunities. As countries of the region seek to optimise energy consumption and reduce greenhouse gas emissions, the demand for professionals specialising in energy audits, building retrofits and energy management will rise.

Industries involved in the production and installation of energy-efficient equipment, such as lighting systems and HVAC (heating, ventilation, and air conditioning) solutions, will witness growth and create additional jobs.

Skills development and training

The transition to green energy requires a skilled workforce capable of meeting the demands of the evolving energy landscape. Governments and educational institutions in MENA can play a vital role by providing training programmes and vocational courses focused on renewable energy technologies and energy efficient systems and products.

By equipping individuals with the necessary skills, the region can enhance its human capital, fostering employment opportunities and sustainable development in the green and renewable energy sector.

Energy-intensive industries agglomeration

Unlike fossil fuels, green energy is not easily transportable, making it more challenging to separate energy-intensive industries from their energy sources. This could give the region a comparative cost advantage to attract these energy-intensive industries in heavy metals, chemicals and energy to locate in the region taking advantage of the wide geographical expanse in its abundant deserts and away from population centres.

In addition, countries in the region endowed with huge fossil fuel reserves are investing heavily in carbon-capture technologies and they are repurposing these reserves away from being used as energy sources. Instead, they are being used to manufacture industrial products such paints, fertilisers and chemicals.

Decommissioning of fossil fuels and recycling renewable energy infrastructure

Fossil fuel industries have produced several negative environmental externalities besides their negative contributions to climate change. These include primarily their localised problems with polluted or abandoned production sites, including mines, oil and gas wells, and pipelines and other decommissioned assets. The example of leaking methane from improperly decommissioned natural gas wells and pipelines is already cited to make a significant (and often undocumented) contribution to overall emissions of greenhouse gases (Chesnaux, 2020).

Decommissioning these assets will require considerable work to repair their environmental damage, offering a valuable opportunity to create jobs, particularly for displaced fossil fuel workers. Redeploying fossil fuel workers to clean up previous sites could be a logistically and geographically convenient transition measure. For example, a Canadian federal government programme has allocated $1.7 billion in financial support to remediate abandoned wells; estimates suggest that the programme will support several thousand jobs.

Given the huge fossil fuels infrastructure in the MENA region, these new employment opportunities would be a welcome offset to the expected declines in overall employment in the petroleum and gas sector. Future decommissioning of renewable energy assets, including wind turbines, solar panels, batteries, pipelines, transport vehicles and storage facilities, would create significant jobs opportunities in the region. Although estimates of the number of jobs vary, this could result in hundreds of thousands of jobs.

Quantifying the employment impact

The potential employment impacts of green and renewable energy in the MENA region are multifaceted and promising. Embracing renewable energy technologies presents an opportunity for the region to diversify its economy, mitigate the possible negative impacts of digitalisation and artificial intelligence on existing jobs, reduce its carbon footprint and create significant levels of employment across various sectors.

By investing in renewable and green energy infrastructure, R&D, local manufacturing, energy intensive manufacturing, energy efficiency measures and skills development, the region can unlock the full potential of the green energy sector, leading to a greener future and a more sustainable, efficient, diversified and well-paid workforce.

Increasing the share of renewable energy to 30% in the six countries could generate up to 1.2 million jobs. Gross employment estimates project 611,423 person-years in 2030 and 1,222,845 person-years in 2050. After accounting for the displacement of natural gas-based electricity, net employment would be approximately 525,824 person-years in 2030 and 1,051,647 person-years in 2050.

The employment generation capacity of energy efficiency is not large, but it will still contribute a total of 89,377 jobs in 2030 and almost twice this level in 2050 when the share of energy efficiency is 30% of total energy generated.

Expanding the scope to the entire MENA region, the total employment potential from a 30% renewable energy share in 2030, reaches approximately 2.54 million person-years with over 5.08 million person-years in 2050. This includes direct, indirect and induced employment across the renewable energy value chain, as well as gains from energy efficiency.

Conclusion

The region’s stakes in limiting emissions at home and abroad, managing its energy use efficiently, creating sufficient jobs for its growing population, dealing with its high unemployment rates of women and youth, improving and expanding its resiliency to deal with natural disasters and the expected high economic costs of climate change are leaving the region with no option but to expedite its transition to renewable energy.

More importantly, the transition to renewable energy presents a transformative opportunity for MENA. By investing in renewable infrastructure, R&D, local manufacturing, energy efficiency, and workforce development, the region can create millions of jobs, diversify its economy and secure a sustainable future. With the potential to generate over five million job-years by 2050, embracing green energy is not just an environmental imperative but an economic necessity.

Further reading

Chesnaux, Romain (2020) ‘Climate Change Nightmare: Canada Has a Gas Leak Problem’, The National Interest.

van der Zwaan, Bob, Lachlan Cameron and Tom Kober (2013) ‘Potential for Renewable Energy Jobs in the Middle East’, Energy Policy 60: 296-304.

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  • Hala Abou-Ali
    Hala Abou-Ali
    Vice President, Institute of National Planning and a Professor of Economics, Faculty of Economics and Political Science (FEPS), Cairo University
  • Atif Kubursi
    Atif Kubursi
    Professor, McMaster University

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