Energy Politics In The Mena Region From Hydrocarbons To Renewables

Author : Luigi Narbone
Publisher :
ISBN 13 : 9789290849537
Total Pages : pages
Book Rating : 4.8/5 (495 download)

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Download or read book Revisiting Natural Resources in the Middle East and North Africa written by Luigi Narbone and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Oil has been crucial in domestic politics and international relations in the MENA since World War II. Renewable energy transitions will change the role of oil in MENA societies and these societies will change in the process. The social contract of the region's rentier states is 'no taxation and no representation.' Political acquiescence is bought with services, public sector jobs and welfare payments. Population growth, steeply rising domestic oil consumption and declining production profiles in some countries (e.g. Egypt and Syria) have led to reduced rents per capita. The various manifestations of MENA rentier states have become increasingly tenuous, whether they are rich, middling or poor rentier states or only semi-rentier states that rely on oil rents indirectly through regional recycling of oil rents (e.g. through strategic transfer payments and remittances). The supply shock in the wake of the US shale revolution and more recently the global demand destruction as a result of the Covid-19 crisis have accelerated this dilemma. In the longer run, a lasting paradigm shift could come from renewables. Renewables play a growing role in power generation and can increasingly compete with hydrocarbons in the transportation sector. E-mobility grows because of price declines and technology breakthroughs, for example in PV cells and batteries. Green hydrogen could be another technology that impacts oil demand after 2030. Saudi Aramco and other oil producers anticipate a peak oil demand by the mid-2030s. Only some sectors of the petroleum product markets such as petrochemicals will remain robust. This strategic scenario raises the question of whether rentier states in the MENA face a future without rents and how this would affect their domestic politics and international relations. As the global energy mix transitions towards renewables, technology is becoming strategically more important than location. Energy systems as a whole will change - their infrastructure, regulations and markets, not just the source that powers them. MENA countries have three options to successfully carve out their niche in global renewable energy transitions over the coming decades: (a) by using renewables for domestic consumption to safeguard oil for export, (b) by trading renewable-based electricity within and outside the region, for example to Europe, provided the necessary grid connections are established, and (c) by producing green hydrogen with the help of renewables and exporting it. If these transitions are successful in the MENA, power relations in the new energy systems will be different. Labour and capital will capture most of the remuneration along renewable value chains, not the owners of a particular resource. New economic actors (e.g. SMEs rather than centralised utility companies) will emerge which might articulate political interests over time. As former rentier states need to have recourse to taxation and are unable to maintain their side of the old social contract, the lack of political participation will be less acceptable than before. Renewable energy transitions are likely to engender socio-political change too.