by World Region, 2014

past three decades. The average energy input to produce its output has risen more than 30 percent higher than in 1990 (figure 3.22, panel b). In contrast, all other regions were able to cut their energy input to produce a given amount of output.

Electricity and other energy prices are low in many parts of the Middle East and North Africa, leading to few efforts to efficiently distribute and use energy. Reflecting this negligence, almost 15 percent of the region’s produced electric power in 2014 never reached its destination (figure 3.23). Although this does not directly refer to the inefficient use of energy by industrial complexes themselves, it is a symptom of the same underlying issue: low prices that do not incentivize the economical use of energy or investments to increase energy efficiency. This makes clear that, in addition to the measures that industries should adopt (outlined below), investments in the electrical grid system and other infrastructure are needed to cut the losses of energy from source to destination.

Manufacturing firms are increasingly monitoring their energy consumption, but the adoption of energy efficiency-enhancing measures

FIGURE 3.23

Electric Power Transmission and Distribution Losses, by World Region, 2014

20

Share of electricity output lost in transmission and distribution (%) 15

10

5

0 East Asia and PacificEurope and Central Asia North AmericaLatin America and the CaribbeanMiddle East and North Africa

Source: Based on the World Development Indicators database. Note: “North America” includes Canada and the United States. South AsiaSub-Saharan Africa

is lagging. Recent data from the World Bank Enterprise Survey reveals that, on average, almost half of manufacturers in six of the region’s economies—Egypt, Jordan, Lebanon, Morocco, Tunisia, and West Bank and Gaza—monitor their energy consumption, and around a third adopt some form of energy management. However, less than a quarter had explicit targets for their energy consumption, and less than 20 percent adopted concrete measures to enhance their energy efficiency.

In contrast, comparable European countries were faring better.28 The low adoption of measures in some Middle East and North Africa economies results partly from the fact that only around 7 percent of manufacturing firms were subject to an energy performance standard, although around 22 percent were subject to an energy tax or levy, according to the Enterprise Surveys. On the upside, about 40 percent of manufacturing firms in the surveyed economies declared that they adopted improvements in the lighting systems in the past three years, and almost 30 percent had improved their heating and cooling equipment.

When firms were asked why they are not investing in proper energy management in the form of energy efficiency measures, the main reasons stated were (a) lack of prioritization relative to other forms of investment, and (b) lack of financial resources. Credit constraints have also been shown to be an impediment to the implementation of green management practices (EBRD 2019). Government regulation, as discussed in detail earlier in this chapter, is important to move the needle on green practice adoption by firms, but so is also raising awareness and customer demand. Larger rates of green practices—larger than those reported here—were found among firms that face customer pressure to act in an environmentally friendly way or that are subject to an energy tax or levy if they do not (EBRD 2019).

There is great scope for increased energy efficiency of industries. As mentioned earlier, low energy prices lead to low incentives for industry and private consumers to address inefficiencies in their energy consumption, and low prices do not encourage energy conservation (El Khoury 2012). However, increasing energy efficiency potentially represents the most cost-effective measure for reducing GHG emissions and improving air quality. The importance of raising energy efficiency to rein in excessive energy consumption has also been recognized by governments in the Middle East and North Africa. Box 3.12 provides examples from Saudi Arabia’s efforts to increase energy efficiency through various programs in both the industrial and residential sectors.

Measures for raising energy efficiency include market-based instruments. For example, auction systems could incorporate a set price for each unit of energy savings, for which key market actors like utility companies have to propose their projects that generate energy savings