World Future Energy Summit 2019: Embracing the future and welcoming disruption
I had the privilege of joining the World Future Energy Summit (WFES) in Abu Dhabi this month. WFES is a global industry platform connecting business and innovation in energy, clean technology and efficiency for a sustainable future. WFES is part of the largest sustainability gathering in the Middle East, Abu Dhabi Sustainability Week (ADSW).
I used DNV GL’s Energy Transition Outlook 2018 as the basis for for my key messages in Abu Dhabi. Our global and regional forecast of the energy transition has a section dedicated to the Middle East and North Africa.
What is the regional energy picture today?
Economically and politically, the region is diverse and has vast petroleum resources, the largest being in Iran, Iraq, Qatar, and Saudi Arabia.
Lower oil prices since 2014, conﬂicts, and violence have hampered economic growth in recent years.
The region faces challenges from rising socioeconomic development, youth unemployment, and the need to meet rapidly-growing energy demand while considering water and food security, climate change, and local air pollution.
Regarding the energy trilemma, the region performs well on energy access and affordability, but is challenged on environmental sustainability due to high energy intensity and GHG emissions given the dominance of fossil fuels.
Dominance of fossil energy resources drives policy in many of the region’s nations. Electricity, gasoline, and water subsidies are widespread, driving high consumption per capita and draining government ﬁnances.
The region is taking serious steps to fulﬁl its renewable energy potential and diversify its energy sources. Jordan, Morocco, and Tunisia have set targets to transform their energy mixes. Egypt, Iran, and Turkey, which are the most populous nations in the region, have streamlined their policies to progress clean energy sectors and investment in renewable generation, and to attract foreign investors.
What is the future energy forecast?
The figure above shows how primary energy consumption in the Middle East and North Africa will continue to grow moderately and increase 36% by 2050. Growth in energy use is driven by manufacturing, buildings, and transport up to 2040, the year when transport energy demand peaks and starts to decline. In buildings, there will be a large increase in the energy demand for appliances and space cooling as technologies become affordable for a larger share of the population and average temperatures in the region keep increasing.
Regional oil and gas resources dominate the energy mix, and this will continue throughout the forecast period. Oil use will peak in 2035 at only slightly more than its current level. Natural gas, already the largest energy source, will see a further increase until it peaks in 2035, 30% above its current level. In the mid-2030s, the uptake of electric vehicles will increasingly challenge oil for road transport. Coal use will increase but will never become a signiﬁcant energy source within the region.
The forecast increase in electricity demand will be the primary driver of growth in natural gas use, which will almost triple between now and 2050, as shown in figure above. Due to low-cost domestic gas reserves, the uptake of renewables starts later than in most other regions. In 2030, onshore wind starts to grow rapidly, followed by solar PV and offshore wind. By 2050, solar PV will be the main source of power, generating 39% of total supply. Onshore wind will then be second, with a share of 28%.
Pointers to the future
- Systemic subsidization of energy and water is expected to reduce slowly with growing population, consumption, and budgetary pressures.
- Reduction of fossil-fuel subsidies is the irst step towards a price on carbon, but we foresee slow adoption of, and low, carbon prices for the region.
- With these nations now feeling the effects of climate change, rising water scarcity, and a need to export fossil fuels while still meeting domestic demand, key policies will include reducing per capita energy consumption and greening supply chains.
- Conlicts in Syria, Libya, and Yemen are regional destabilizers. The disagreements between Iran and Saudi Arabia hinder regional cooperation towards common goals.
- The region has vast potential in renewables, particularly solar energy. It starts the energy transition from a very low base, however, and near- and mid-term renewables expansion will mostly be for satisfying growing domestic needs and to diversify from fossil fuel.
- Renewable energy investment and uptake will mature. For example, Egypt aims to get 42% of its electricity from renewables by 2025; Iran 5 GW by 2020; and Turkey 10 GW wind and 3 GW solar by 2019. Turkey is commissioning new hydropower. Saudi Arabia, with the largest petroleum reserves, sees renewables as a strategic priority and is in- vesting in 9.5 GW of solar and wind by 2023. Its goal is for 30% of electricity to come from renew- ables by 2030. Israel aims to be reliant on natural gas and renewable energy for electricity generation and alternative fuels for transportation. It has the ambition to no longer import cars that run on gasoline and diesel fuels by 2030.