Implications of Climate Change on Energy and Security in the MENA Region

Originally posted June 2011

Global climate change is expected to have severe effects on world energy production and consumption. Specific security implications will arise for the Middle East and North Africa (MENA).[1] These effects will impact international and national security, as well as economic and social security within countries. This article first explores the direct effects of climate change on energy in MENA countries. This is followed by a brief analysis of its potential security implications. Finally, the article recommends adaptation and mitigation measures to address some of the challenges on energy systems presented by climate change.

Impact of Climate Change on Energy in the MENA Region

Changes in Energy Demand

Climate change has already started influencing energy demand patterns in most countries in the MENA region. Peak hour patterns, air conditioning intensity, and need for water desalination are among daily life processes that have changed to cope with increasingly extreme temperature variations. Several examples of these changes are already happening today. Nevertheless, it is important to note that greater changes in demand may result from future effects of climate change. Energy supply will be affected as the global climate is altered.

First, countries are forced to rely more on energy-intensive methods of providing sufficient water supplies, such as desalination and underground water pumping when precipitation declines and evaporation from waterways increases.[2] This effect of climate change drives increasing energy demand and elevates costs that MENA countries must account for. Second, agricultural practices are affected by temperature changes as farmers become more dependent on more energy-intensive methods (e.g., by crops requiring more fertilizers, different irrigation methods, and more varied harvesting patterns) in order to maintain productivity levels. Finally, productivity habits are changing in the region as higher temperatures decrease the ability of laborers to work healthily in open-air conditions. Hours of operation for some businesses are therefore changing, for example to earlier or later hours in the day. This change in productivity hours (apart from changing peak hours of energy demand) may lead to growing overall energy consumption if hotter weather drives increased demand for air conditioning.[3]

Changes in Energy Supply

Energy supply has been negatively affected by changing weather patterns. One case in point relates directly to changing water availability. As water levels decrease due to lower precipitation and increased evaporation, capacity for electricity production (e.g., from hydropower and other water-intensive generation technologies) may decline.[4] Decreasing water availability can also negatively affect cooling and cleaning systems required for Concentrated Solar Power (CSP), nuclear power, and various other thermal generation technologies.

Stress on existing energy production facilities, which may lead to higher energy prices and power outages, is a concern too. Pressure on the available production capacities makes critical the need for MENA countries to examine options such as enhancing energy efficiency, shifting away from the current centralized energy production models, and allowing more players from the private sector to participate in energy production in order to mitigate supply disruptions.[5] It is worth noting that not all changes in temperature and weather result solely in negative effects on energy supply. Some opportunities seem to have arisen, for example, in some parts of the region where there have been more sunny days than before, which can increase the productivity of solar technologies and make solar farms more economically viable.[6]

Impact on Infrastructure

The existing energy infrastructure in the MENA region was not designed to cope with the effects of climate change and as a result risks of system failures are manifesting themselves through increasing numbers of energy outages. Developers will increasingly need to account for the changes described above — especially the impacts of decreasing water supplies — in building and managing energy infrastructure in the MENA region. It is important to note that many necessary changes to energy infrastructure require considerable lead times under business-as-usual scenarios, changes which may augment challenges for energy infrastructure. However, with the increased energy demand in many countries in the region, this lead time is expected to increase while the window of opportunity to avoid short-term energy shortages is decreasing. For example, nuclear power plants would need several years or even decades to be built from the day the policy decision about their construction is made (currently, eight years is the global average).[7] As climate change coincides with growth in populations and energy demand, adopting lower-carbon energy technologies that minimize lag time will be critical.

Impact on the Transportation sector

The transportation sector is one of the main energy-consuming sectors in any society (globally it consumes around 26% of total energy demand and represents 25% of the global CO2 footprint)[8] and it directly affects the daily lives of people. The existing transportation infrastructure in the MENA is currently not designed to address the challenges of climate change[9] and is not adequate for meeting the expected increasing needs of its societies. Any future incentives for mitigating climate-changing greenhouse gas emissions, such as carbon pricing or MENA countries signing international climate agreements, will require major changes in the region’s transportation sector.

Impact on the construction sector

Climate change is also resulting in important changes in the housing sector in the MENA as increasing temperatures, particularly in summer months, are also increasing the demand for air conditioning. Strongly related to that sector is the fact that 29% of global energy demand comes from households which are responsible for 26% of global CO2 emissions. That said, any improvements in this sector would have a substantial impact on global energy and CO2 footprints.[10] Therefore, some initiatives are being developed to increase the energy efficiency of buildings and to reduce related energy requirements. However, the necessary paradigm shift in household energy conservation and efficiency remains a distant goal that requires more demand-side management. Yet the MENA is still in the phase of expanding urbanization, with large numbers of new construction projects, which creates a unique opportunity for more sustainable development.

Other Economic Impacts

There is a wide array of additional impacts on the general energy economy that MENA countries must account for. Government budgets dedicated to energy subsidies will now have to deal with more extreme changes in energy consumption. In Egypt, for example, the government is facing new opportunity costs and difficult choices. Household energy consumption, which is highly subsidized by the government, is rising. At the same time, demand from businesses is growing as private industries seek to expand or as new, often energy-intensive, industries are created. This competition for energy supplies between households and businesses has direct implications on government revenues, as the government must choose (or strike a balance) between taxing industries on energy use to gain revenues, and paying subsidies to households for their energy consumption.[11] This debate is creating social tensions which are further exacerbated by the dramatic growth in household energy demand. As a result, energy (e.g., petrol) subsidies in Egypt increased from around 10 billion EGP in fiscal year 2001 to 40 billion EGP in 2006 to an expected 67 billion EGP in fiscal year 2010/2011.[12] This increasing transfer of subsidies to households is creating major opportunity costs for the government, further reducing its capability to provide reliable energy supplies for the existing industries (due to increased outages) which has negative effects on the industry’s hardware. Similar developments are common across the whole region, as governments are facing difficult choices about the future of their subsidy-based energy systems. A positive effect is that the region is currently witnessing the creation of smaller energy companies that are challenging the existing incumbent big public players. A larger number of companies has the potential for distributing the energy supply risk among a bigger number of energy suppliers and allows for more adapted local solutions. This provides just one example of how seemingly minor changes in the energy system driven by the effects of climate change do have the potential to drive extensive changes in social and economic dynamics.

Impacts of Climate Change on Security in the MENA Region

As we have illustrated above, climate change will create new dynamics in the energy sector across the MENA region. These changes might exacerbate or create new security concerns at the international and national levels, in addition to affecting domestic security and stability within MENA countries. Depending on the energy choices that countries make in addressing the threat of global climate change, transitioning to more sustainable energy sources could also produce positive security effects.

International Aspects

Changes in regional energy demand, including growing competition for reliable sources of conventional energy (oil and natural gas resources in particular), are creating several concerns. The finite nature of cheap fossil fuel resources could create supply and demand imbalances, with the potential to drive price increases for poorer populations within the MENA. Additionally, decisions by MENA governments to use available sources for exports rather than domestic consumption (in Morocco and Egypt, for example) could create new social and political tensions. On the other hand, international cooperation among countries could create security benefits if cooperation on renewable energy is developed between MENA and non-MENA countries or within the MENA region. For example, the governments of Qatar and the United States signed a Memorandum of Understanding on Renewable and Alternative Energy in early 2010 that will lead to knowledge exchanges and potentially joint funding for research and development in MENA; the US government signed an additional agreement with the government of Saudi Arabia to increase energy-related exchanges.[13] Business relationships centered on clean energy can likewise create economic opportunities and promote international cooperation while drawing foreign direct investment in infrastructure and water projects – all with the potential to bolster country-level and regional stability and prosperity.

Additional implications include indirect effects resulting from shifting international relations and geopolitics as global energy demand and supply change and affect the MENA and its role as the world’s primary energy exporter.[14] Also, increasing global demand and competition for raw materials, components, and qualified human capital related to alternative or new energy technologies (nuclear, solar/CSP, wind turbines, etc.) can result in increased costs and lead times for building new energy generation capacity, which subsequently can lead to a lack of perceived energy security.

National Aspects

At the national level, social and domestic stability could be challenged by insufficient generation capacity and thus inadequate energy supply. For example, in the summer of 2010 when temperatures were high in the region, Egypt was exporting gas based on existing contractual obligations despite pressing domestic needs. However, possible synergies could arise, as increasing domestic demand pushes for further regional cooperation such as increased regional connectivity of electric grids (e.g., using the different peak times and the available load capacities to supplement each other’s energy needs). This type of interdependence can incentivize greater cooperation among countries.

Additionally, there is potential for public instability and tensions resulting from shortages of energy and water. This could also hinder economic development and obstruct access to basic needs of the population. Depending on the choice of the energy mix, human development could be hindered and health conditions could deteriorate, resulting in further economic and social pressure on the governments across the whole region.

On the economic security side, inadequate energy supplies could inhibit business growth (e.g. according to the World Bank,[15] problems in access to electricity services constrain businesses opportunities in Lebanon). The lack of government action represents possible security implications as policy actions do not respond adequately to changing energy patterns.[16]

Governments’ decisions about where to devote financial resources for energy subsidies, tax policies, and other government support can have a broad range of implications for social, economic, and national security.

Types of Energy

The changing patterns of energy supply present several security risks based on the adoption of specific sources of energy. Nuclear energy presents potential proliferation concerns, economic and security risks, and huge potential costs to society (such as insurance costs not covered in the official costs of potential accidents in the initial cost assessment). The increased use of natural gas could result in additional competition for access to the available supplies among countries in the region and with regard to their gas export policies. The potential exploitation of unconventional fossil fuel supplies, such as shale oil, also presents risks to water supplies and environmental damage. With respect to renewable energy sources, potential security benefits could include increased reliance on domestic sources of energy supply and reduced environmental and climate risks compared to other energy sources. Increasing interdependence through electricity interconnections and trade among countries and regions could contribute towards improving relations.

Infrastructure

Economic and social stability issues may arise with a possible mismatch between extreme weather conditions (i.e., temperature extremes) and the existing energy infrastructure as energy demand soars or fluctuates. In the summer of 2010, for instance, the sudden increase in temperature/extended heatwave in the MENA region exposed the bottlenecks and inadequacies of the existing infrastructure in handling these conditions, e.g. for accomodating peak demand.[17] This could be made worse by the ineffectiveness in how countries plan for future demand and the related energy infrastructure.

Possible Benefits

There are also potential security benefits of energy portfolio diversification, technological cooperation, and development through improved national research and development (R&D) policies, which would encourage private sector investment in R&D and enhanced cooperation among countries, for example in renewable energy. In addition, energy diversification, increasing competition, and environmental benefits can all enhance societal stability and bring further security benefits.

Responding to Climate Change Through Mitigation and Adaptation

A wide variety of mitigation and/or adaptive actions may be taken to lessen or overcome adverse effects of climate change on energy. Both mitigation (reducing the contributions that lead to an increased carbon footprint) and adaptation measures (taking steps to reduce the negative impacts of climate change on energy security) will be important for coping with these security concerns and for leveraging potential security benefits. These measures could include international cooperation, national policies, and measures that apply to both levels.

International cooperation will be critical to addressing climate change-related issues in energy sectors across the MENA region. This should include cooperation among countries on energy demand management, for example in enhancing efficiency and energy savings/conservation. It will also be important for MENA countries to develop cooperation with the EU and United States on renewable/clean energy research, development, and deployment. In this context, it will be important for technology cooperation to include R&D conducted within the MENA, rather than simply transferring technology developed abroad into the region. There is also potential for regional cooperation among MENA countries in order to leverage shared infrastructure, including electricity interconnections for increasing regional power trading.

At the national/state level, it will be important for countries to shift to renewable energy sources in their energy mix in order to reduce demand competition for non-renewable sources such as fossil fuels. Governments should pay special attention to improving energy infrastracture management and improving planning to cope with the impacts of climate change. This will also require appropriate policies and regulatory frameworks that incentivize energy efficiency, a diversified energy mix and behavioral change. In particular, governments will need to encourage small businesses’ activities in the energy sector, for example by enacting policies that support local-level development of renewable energy sources. Additionally, governments can develop and implement higher, more environmentally friendly fuel standards while managing the potential social and economic implications of changes in their transportation sector on low income groups among citizens.

It is important to mention that there is plenty of room for the region to make further advances when it comes to efficiency improvements. According to an Energy Sector Management Assistance Program (ESMAP) report[18], MENA energy intensity was some 60% higher in 2009 than that of Organisation for Economic Co-operation and Development (OECD) countries and 40% above the world’s average. As a matter of fact the MENA region is one of the worst performers when it comes to energy intensity worldwide.[19]

Finally, many of these measures will apply to both the international community and the national governments in the MENA region. Incorporating likely climate change effects into energy forecasts and planning will be critical for all countries and international institutions. A good example is ensuring that energy plans account for increased sensitivity to water supply changes. For instance, CSP developers have to give greater considerations to hybrid and dry cooling technologies to conserve water. They should also combine renewable energy projects with desalination technologies in order to maximize energy production and efficiency in water consumption. As CSP projects may be funded and developed nationally or by international consortiums, adequate planning for climate change impacts on water and energy must be both national and international.

All countries could define feasible targets/policy goals and develop instruments for the implementation of the above while being conscious of security risks in designing these policies. In this context, governments will need to ensure timely implementation of the aforementioned measures and make sure that the results are delivered for the benefit of their citizens and businesses. Strengthening cooperation among the public sector, the private sector, and academia could be critical for this process, particularly using appropriate measures to enhance education, training, and capacity-building. Planning and budgeting for the immediate and long-term impacts of climate change should become a priority for the energy sector.

Conclusion

Implementing the above measures and accounting for the potential security concerns resulting from climate change impacts on the energy sector will continue to be challenging. Remaining obstacles in the MENA region include the need to drive the public debate on climate change and energy, governmental capacity to implement major shifts in policies, and public education. This transition is going to take some time. However, given that the effects of climate change are already visible, there are various mitigation and adaptation measures that will have to start immediately. The longer the wait, the more pressing the challenges will become for the region, especially for the poorest who have the least ability to adapt.