This rapid literature review collates evidence from academic and grey literature on the use of fossil fuels in the Middle East and North Africa (MENA). MENA, for much of its recent history, has been known for its energy wealth. The region is, however, significantly diverse, not only in terms of economic and political structures, but also in terms of energy resource and infrastructure.
MENA countries depend heavily on fossil fuels for energy supply and domestic consumption. The region’s countries are rapidly growing energy consumers, a product of the growth in gross domestic product (GDP), population, and the pressures of urbanisation. It is estimated that energy demands could increase by more than 5% per annum in the future Estimates suggest that in 1971 fossil fuel energy consumption represented 95.08% of total regional energy consumption, this peaked in 2008 at 98.71%. As of 2015 fossil fuel energy consumption represented 97.38% of total energy consumed highlighting the limited uptake of alternative fuel sources. The political economy of energy in MENA is characterised by a set of unique regional factors:
- the availability of large supplies in conventional oil and gas resources;
- the pivotal role played by hydrocarbon wealth in many MENA oil and gas producers’ economic development since the 1960s and 1970s;
- the particular social contract in many MENA countries where energy has, for many decades, been considered a public good to be provided by governments, if not for free, then at prices that have in many cases been merely a fraction of their price in any other international market for most of these countries’ modern histories.
Increasing demand across the MENA region is likely to increase stress on fossil fuel usage, because net energy exporters to use their fuel supplies inefficiently, and ultimately strain government finances. Net energy importers also are increasingly cognisant of the volatility of energy prices that threaten energy security. Rising prices for oil on world markets since the early 2000s have raised the cost of imported oil and oil products for MENA net energy importing countries, while many oil and gas producers (net energy exporting countries) divert growing shares of oil and natural gas production away from international markets, to supply domestic demand.
Despite increased demand and a slowly changing energy mix – fossil fuels continue to supply the majority of the MENA region’s primary energy needs, around 98% of the region’s energy mix. Other than oil and natural gas, only coal has an additional market share, albeit restricted to Morocco and Israel; while hydro-power accounts for the majority of the region’s overall small share (circa 2% of gross regional primary energy consumption) of renewable energy. Similarly, nuclear power has not yet made inroads into the region – with the exception of Iran’s nuclear
Renewable energy, alongside energy efficiency has gained significantly in appeal in the region, in particular in response to the parallel fall in renewable energy technology costs relative to fossil fuels. Ambitions for renewables differ across countries, as do market size and readiness, but the overall picture presented is one of a region increasingly appreciating the role renewable energy could play.
Renewable energy options such as wind and solar energy, overlooked for decades owing to missing commercial incentives, could offer the region a valuable energy alternative to fossil fuels in power generation. This could save MENA economies not only rising import costs for oil in electricity use, but also free crude oil resources for export. The MENA region’s climatic advantages (particularly in solar energy), together with its high level of reliance on oil for power generation, may indeed render some renewable energy technologies cost-competitive to conventional fossil fuels, provided the opportunity cost of alternative fuels is taken into account.
Plans and targets for the development of renewable energy are gradually being implemented in policies and projects, particularly in the GCC’s biggest energy markets, Saudi Arabia and the UAE. Deployment in other GCC countries and the broader MENA region has progressed more slowly. At the end of 2017, the region (GCC) had some 146 GW of installed power capacity, of which renewable energy accounted for less than 1% (867 megawatts, MW). The UAE accounted for 68% of the total installed capacity in 2018, followed by Saudi Arabia (16%) and Kuwait (9%). Although this is far from the capacity planned, it does represent roughly a four-fold increase from