The energy transition throughout the MENA region has enjoyed significant momentum for the past five years. Various countries have pledged to work towards a green transition amid a global commitment to combat climate change but also to retain influence in energy markets. International organisations are looking to hold oil exporters accountable in terms of their climate commitments. Indeed, the impact of the COVID-19 pandemic has highlighted the need to diversify rapidly from hydrocarbons as global oil demand plummeted last year.
This quarter, we look at how the region is ‘going green’ while still retaining its influence on energy markets. There are numerous renewable energy projects in the pipeline of many MENA governments, and the region is expected to multiply its solar power production by more than 6-fold by 2025. With geographical perks that supply a streamlined supply of low-cost renewable electricity, opportunities throughout the region abound. Although the MENA region’s contribution is currently meagre, representing around 1% of global efforts, its input is set to grow exponentially. The region is now turning to new tools such as entering the green bond market to finance renewable projects as well as investing in hydrogen energy power plants.
The MENA region as we know it is also undergoing a diplomatic transition. Thorny regional issues are being addressed by several governments, which may result in rapprochement between former adversaries. We outline what to expect in the coming year.