Policy Research Reports
Transition to Renewable Energy in the Middle East and North Africa Region: The Imperatives, Benefits, Drivers, Barriers and the Role of MSMEs
No.
PRR 56
Publisher
ERF
Date
January, 2025
Summary
This report is one contribution to a large and rich compendium of seminal research studies conducted by a team of distinguished researchers assembled by the Economic Research Forum (ERF) and supported by a grant from the Canadian International Development Research Centre (IDRC) to undertake this important and unique project on “The Role of MSMEs in Fostering Inclusive and Equitable Sustainable Economic Growth in the Context of the Clean Energy Transition in MENA.”
In more than one sense the MENA region is a microcosm of the world. The region is home to major global fossil fuels’ producers and exporters as well as being home to a few fossil fuels’ importers. There is a relative imbalance in the adaptive capacity and resilience between rich and poor countries of MENA. Rich countries are in a much better position to dampen the economic effects of climate change through policy and adaptation strategies. They have some of the major Sovereign Wealth Funds (SWF) with huge investible funds such as Saudi Arabia, the United Arab Emirates (UAE), Qatar and Kuwait. The region also includes some of the poorest countries of the world such as Yemen and Somalia.
The scientific community in general and climate scientists in particular are convinced that carbon emissions from the use of fossil fuels are the main factors driving these climate change developments. It is now a well-established scientific fact that extraction and use of fossil fuels at the same rates and volumes as the world used in the recent past are inconsistent with sustainable life and threatens the very existence of life on our planet. The case against Business As Usual (BAU) where the use of fossil fuels and their contributions to climate change is typically argued on moral and environmental grounds is not sufficient or complete. There are valid economic reasons; however, that suggest that investing in fossil fuels exposes the investors to higher risks and lower returns than investing in renewable energy. Better yet, the development of renewable energy and phasing out of fossil fuels extraction, production and transportation hold the promise to generate more and better jobs, higher incomes, cleaner environment, more secure energy sources, more productive and diversified economies and better social outcomes.
The study proposes a policy road map to guide the region’s energy transition, with a particular focus on ensuring the active participation of the informal sector, the public sector, the private sector and particularly the MSMEs in this critical and unique transition. This road map outlines some key milestones, policy interventions, stakeholder responsibilities, and concrete measures that sought to provide a clear path for achieving regional and national renewable energy targets. By including the informal economy in this framework, and by emphasizing the targeting of the empowerment of women and the youth of the region, this road map could be relied upon to promote an inclusive and just transition that benefits all segments of society.
In a nutshell the road map prioritizes the reduction of regulatory and financial barriers faced by MSMEs, providing targeted support to informal businesses, developing public-private partnerships and cooperative clusters of firms to facilitate the adoption of renewable energy technologies across sectors. It also focused on raising public awareness, improving energy literacy, energy efficiency, training of labor, and building a supportive ecosystem for businesses and community stakeholders to transition to clean energy solutions.
Research Fellows
Atif Kubursi
Professor, McMaster University