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chapter 2
Sustainable energy options
III. Energy Challenges
Despite the vital role of the energy sector in the economic and social development of Arab countries, the sector faces several challenges that are derailing the transition to sustainable development. Against a backdrop of rising demand, increased price volatility, gradual depletion of fossil fuel resources, and growing climate change concerns, policymakers face major challenges. A. Economic Diversification: Security of Supply
With respect to hydrocarbon endowments, Arab countries can be classified into two major groups: energy net exporting countries who are endowed with oil and gas resources with varied degrees, and energy net importing countries, who have little or no hydrocarbon resources. As mentioned above, both groups are highly vulnerable to the volatility of oil markets. Hydrocarbon revenues make up a significant source of governments’ revenues in oil exporting countries, as indicated in Figure 2. Any future decrease in demand for fossil fuels, for example as a result of international agreement on climate change mitigation, would cause an emerging economic challenge for FIGURE 2
Arab oil exporting countries. Thus, the need is unprecedented for shifting away from an economy based on finite fossil fuel extraction to one based on investments in renewable resources. For Arab oil-importing countries, the same shift to green energy sources would foster desperately needed energy security and economic sustainability. B. Energy Access
Energy access to poor and rural populations in some Arab countries such as Morocco, Algeria, Sudan, Yemen, and Palestine poses a major development challenge for those countries. Though the per capita energy consumption in the GCC sub-region is nearly four times the world’s average, more than 40 percent of the Arab population in rural and urban poor areas does not have adequate access to modern energy services. It is also noted that almost one-fifth of the Arab population relies on non-commercial fuels for different energy uses. Furthermore, the electrification rates in Arab countries in 20072008 varied from as high as 100 percent in Kuwait and Bahrain to as low as 25-30 percent in Sudan and Yemen. This is well reflected by the large disparity in per capita energy consumption indicators among different Arab countries in 2009. These were as follows:
Hydrocarbon Revenues (percent) as a Percentage of Total Government Revenues, 2006-2008
92 86.4
84.94 76.89
76.8
75
72 64.4 56.4
28.6
Libya
Saudi Arabia
Source: Abdellatif, 2010
Iraq
Algeria
UAE
Yemen
Kuwait
Qatar
Sudan
Syria