Accelerating a just energy transition in MENA region

Accelerating a just energy transition in MENA region

Accelerating a just energy transition in MENA region
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As we approach the annual UN climate conference, or COP28, the global community of environmentalists has gathered in Riyadh for the Middle East and North Africa Climate Week to discuss the regional climate change agenda.

Whether it is economic, social or technological aspects of the ongoing energy transitions, every nation faces its share of challenges in this agenda. However, for the developing world, including the MENA region, these challenges are in many ways even more significant.

While meeting the emission targets they set under the Paris Agreement, they must also continue addressing their other sustainable development challenges to avoid creating new social disparities. Achieving this is imperative for a just transition globally.

Establishing a just transitions work program under the UNFCCC in 2022 signifies integrating this concept into mainstream global climate governance. In the context of climate action, a “just transition” refers to ensuring that everyone is part of the journey to net-zero emissions. The real challenge lies in translating this concept into action, especially given the persistent development obstacles in the Global South.

Governments must simultaneously prioritize various issues, ranging from social and workforce to economic and financial policies.

One necessary condition for a just transition strategy is allowing flexible and holistic approaches to climate crises, where countries can contribute to the global climate goals based on their comparative advantages. Only such an inclusive perspective can bring everybody on board instead of one-size-fits-all.

The circular carbon economy concept contains these key transition elements as a promising alternative to views that categorically reject abated fossil fuels as a part of net-zero pathways.

Building on the circular carbon concept, KAPSARC researchers have developed the CCE Index, which aims to support policymakers in benchmarking and policy planning through the lens of the energy-efficient framework.

Given the diversity of the index’s indicators, it can provide a quick snapshot of global and regional gaps hindering a just transition globally.

The MENA region represents an interesting case as a highly diverse region. It includes countries at various levels of socioeconomic development, wealth, and hydrocarbon revenue dependence. Yet, according to the CCE Index results, one common factor in the region is the low level of investment in low-carbon technologies despite the region’s high potential in areas such as renewable energy due to abundant sunshine.

While the region has ambitious and robust incentives, most countries still need financial support to accelerate investment.

Recent studies suggest that countries in the region would need to increase transition investment levels multiple times to keep up with the climate change agenda beyond the capacities of public resources, which renders private finance a must.

However, the region’s utilization of private climate finance has been limited, with less than 1 percent of global debt flowing into environment, sustainability and governance.   

Socioeconomic aspects of a just transition approach are just as critical to ensuring that no one in a society is left behind in this transition. The region generally scores high on energy equity and security in the CCE Index. Yet, it has much scope in human capital development and economic diversification.

While the resource-rich Gulf Cooperation Council economies naturally need further economic diversification, other MENA countries also need to build more diverse and robust economic sectors that can thrive in the emerging new global order with a focus on climate action and sustainability.

The first step in such direction is to advance human capital in the region, where individuals can acquire robust skills to better adapt to the emerging sectors.

Local private and public resources, including sovereign wealth funds and national oil companies, could take on a significant role in deploying low-carbon technologies; however, attracting global ESG funds will continue to be critical to delivering on long-term goals in the region.

For this, developing local ESG legal and regulatory infrastructures and integrating them into global markets is critical. Regional collaboration can contribute significantly to bridging the gaps.

More importantly, global institutions and initiatives, such as the Green Climate Fund and a new collective climate finance goal currently under negotiation under the UN climate convention, as well as the multilateral development banks, are critical for especially the middle and low-income countries of the region.

Socioeconomic focus on redeveloping cities’ public transport and promoting innovation across a range of sectors could spur job creation and improve welfare, which, naturally, is a long-term endeavor that requires patience and persistence.

  • Fatih Yilmaz is a fellow of the Climate & Sustainability Program at KAPSARC.
  • Mari Luomi is a fellow of the Climate & Sustainability Program at KAPSARC.
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