1. Energy Efficiency and Renewable Resources in the Arab Region Ibrahim Abdel Gelil Arabian Gulf University 9/8/20151 UNDP Regional Consultation Meeting 6-7 October 2010 Arabian Gulf University

2. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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 9/8/20152 Contents

3. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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) 9/8/20153 Socio-Economic Contexts

4. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  High unemployment rates  High illiteracy rates  Inadequate funding for scientific research  Weak ability to attract foreign direct investments  Weak regional economic integration, 9/8/20154 Socio-Economic Challenges

5. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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. 9/8/20155 Energy Situation

6. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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. 9/8/20156

7. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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). 9/8/20157 Major Energy Indicators

8. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 9/8/2015 8

9. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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. 9/8/20159

10. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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 9/8/201510

11. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 9/8/201511 (www.dlr.de/tt/med-csp(www.dlr.de/tt/med-csp) Direct normal irradiance (kWh/m2/y): 2000- 2800

12. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 9/8/2015 12 (www.dlr.de/tt/med-csp(www.dlr.de/tt/med-csp)

13. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University CountryTotal capacity (MW)Solar Capacity (MW) Algeria155 to be increased to 500 25 40075 40075 40075 Egypt12731 Morocco40030 9/8/201513

14. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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 9/8/201514

15. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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 9/8/2015 15

16. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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. 9/8/201516

17. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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 9/8/201517

18. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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 9/8/201518

19. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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. 9/8/201519

20. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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 9/8/201520

21. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 9/8/201521 Source: REN 21, 2010

22. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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) 9/8/201522

23. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 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 9/8/201523

24. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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 9/8/201524 CDM: a driver and a financing mechanism for RE and EE

25. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 9/8/201525 Source: CDM projects database, 2010

26. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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. 9/8/201526 Major Barriers for market development

27. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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. 9/8/201527 Major Barriers for market development (2)

28. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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 9/8/2015 28

29. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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. 9/8/201529 Major Barriers for market development (3)

30. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University 9/8/201530 Ibrahim Abdel Gelil ebrahimas@agu.edu.bh

31. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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. 9/8/201531 Policy Recommendations

32. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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 9/8/201532 Policy Recommendations/2

33. UNDP Regional consultation meeting 6-7 October, 2010 Arabian Gulf University  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) 9/8/2015 33