This is how the MENA region can accelerate its renewable energy production

In the heart of the Middle East in late 2023, several major climate pledges were made at COP28. As well as commitments around energy efficiency and transitioning away from fossil fuels, 125 countries signed a pledge to triple renewable energy capacity by 2030.

The pledge said this would align with research by the International Energy Agency (IEA) and International Renewable Energy Agency (IRENA) on how to limit global warming to 1.5C, as well as “create new jobs, enhance lives and livelihoods, and empower people, communities, and societies”.

The Middle East and North Africa (MENA) region that hosted COP27 and COP28 has historically been associated with its natural reserves of oil. However, it is also a region that has a huge amount of natural resources that can be harnessed for renewables.

To that end, countries in the MENA region will add 62GW of renewable energy capacity over the next five years, according to the IEA, in their attempt to meet the pledge made at COP28. The pace of growth is also expected to accelerate to more than three times the previous five-year period, with solar capacity making up over 85% of the increase.

Saudi Arabia will account for over a third of this growth, with significant contributions also expected by the UAE, Morocco, Oman, Egypt, Israel and Jordan. These seven countries are expected to account for over 90% of the region’s growth in renewables capacity, the IEA research adds.

However, despite a growing commitment to climate action through net-zero targets, the MENA region still lags behind its global peers in this field, according to analysis for the World Economic Forum.

Yet there are areas where the MENA region can harness its immense natural resources to accelerate its renewable energy capacity growth.

The World Bank estimates that 22-26% of all the solar energy that hits the Earth is concentrated in the MENA region and it has the capacity to supply at least 50% of global electricity consumption.

The Forum’s Closing the Climate Action Gap report found that each unit of investment in solar energy would reduce emissions by twice as much as it would in a comparable North American or European country.

Furthermore, there is the space for these solar farms, with vast tracts of unusable available land throughout the region.

This available land can also be harnessed to bolster wind energy capacity. Morocco’s Atlantic coast, the Gulf of Suez in Egypt, the north-western desert in Saudi Arabia and the southern region of Oman have all been identified as areas with huge potential for wind power projects, the Arab Gulf States Institute in Washington says.

The Institute adds that wind projects in the region tend to not face the same obstacles as similar projects in the US and Europe, where it can be harder and more lengthy to secure permits and projects often face greater opposition from local communities.

By scaling up wind and solar projects, MENA countries can become hubs for green hydrogen production. This will have two benefits for the region.

Firstly, it can be used to phase out fossil fuels in sectors that are hard-to-electrify and, therefore, more dependent on fossil fuel generation, such as steel and cement production.

Secondly, hydrogen is likely to be in demand by countries across other regions worldwide, meaning it can harness its strategic location for exports to key demand locations in Europe and Asia.

Saudi Arabia, the UAE, Oman, Egypt and Morocco are actively exploring green hydrogen opportunities, signing memoranda of understanding for strategic partnerships and carrying out feasibility studies.

Projects like these reflect a growing realization of the financial opportunities that come with clean energy projects in MENA.

If the region exceeds emissions reduction targets and renewable projects are eligible, MENA could generate carbon credits for the Article 6 market, helping to further channel capital into renewables projects. When included in the Paris Agreement, Article 6 offered a framework for creating robust carbon markets that can attract the investment required for global decarbonization.

One of the largest lenders in the UAE, First Abu Dhabi Bank (FAB) says it has traded $84 million in carbon credits in just the first five months of having a carbon trading desk. This desk is offering carbon trading and financing options for corporate and investment banking clients for projects or organizations that work to reduce or remove emissions, FAB says.

As countries across MENA scale up their renewable capacity to strive towards the goals announced at COP28, it offers an additional incentive and opportunity for countries and businesses across the region.