Download publication

Book/Special report

Towards EU-MENA Shared Prosperity

Endowed with half of the world’s known oil and gas reserves, the Middle East and North Africa (MENA) region has become a cornerstone of the global energy architecture. This architecture is currently undergoing a structural transformation, prompted by two different forces: decarbonisation policies and low-carbon technology advancements. This book seeks to address the following research question: are MENA oil-exporting countries equipped to prosper in times of global decarbonisation?

By: , , , , and Date: August 17, 2017 Topic: Energy & Climate

This book was prepared in collaboration with OCP Policy Centre

Endowed with half of the world’s known oil and gas reserves, the Middle East and North Africa (MENA) region became – particularly during the second half of the twentieth century – a cornerstone of the global energy architecture (Yergin, 1991, 2011; Maugeri, 2006). This architecture is currently undergoing a structural transformation, prompted by two different forces: decarbonisation policies and technological developments.

The adoption and quick entry into force of the Paris Agreement (UNFCCC, 2015) marked a major step forward in global efforts to address global warming (IEA, 2016a). For the first time, developed and developing countries committed to act in order to limit global average temperature increase to well below 2°C, and to pursue efforts to further limit this to 1.5°C above pre-industrial levels. This should reinforce strong decarbonisation measures already being undertaken in different parts of the world, such as in Europe.

Meanwhile, technological advancements have significantly increased the cost-competitiveness of low-carbon technologies such as solar and wind power generation, power storage technologies and electric vehicles (IEA, 2016b; IRENA, 2017). This has already started to reshape the global energy system, notably by giving a greater role to solar and wind in the power generation mix. Global energy outlooks (BP, 2017; EIA, 2017; IEA, 2016a) generally see these trends as continuing in the future. Some outlooks even see these trends further accelerating, leading to a peak in global oil demand in the 2020s (BNEF, 2016; Carbon Tracker, 2017; WEC, 2016).

By transforming the global energy architecture, international decarbonisation policies and technological advancements could have an impact on the world’s key oil and gas producing regions, such as the MENA.

Surprisingly, the energy literature presents no comprehensive analysis of the potential impact of the global energy transformation on this region. This paper seeks to fill this gap by investigating the following research question: are MENA oil-exporting countries equipped to prosper in times of global decarbonisation?

We begin with an analysis of the macroeconomic context of the MENA region, showing the persistent over-reliance of MENA oil exporters on the oil rent. The political economy factors standing behind the lack of economic diversification in these countries are then analysed, particularly through the analytical lens of the Rentier State Theory (RST).

By proposing a scenario-based analysis, we then illustrate the potential impact of global decarbonisation on MENA oil exporters. This allows us to illustrate the incompatibility of current MENA oil exporters’ macroeconomic models with a global decarbonisation pathway consistent with the Paris Agreement. Finally, we argue that MENA oil exporters should consider economic diversification as a structural pathway to be pursued in order to ensure their future economic and political stability, even in a decarbonising world.

View comments
Read about event More on this topic

Upcoming Event

Jan
17
12:30

Energy digitalization: challenges and opportunities for the industry

What are the the industrial implications of Europe’s digital energy revolution? What new business models do we need to make the best of it? What policy frameworks do we need to facilitate this development?

Speakers: Laura Cozzi, Jean Jacques Marchais, Hans Nieman, Mark van Stiphout and Simone Tagliapietra Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic

Upcoming Event

Feb
8
10:30

Impact of Brexit on the EU energy system

This meeting will build on Bruegel’s recent report for the European Parliament (link) and will consist of two sessions. The first session will discuss the impact of Brexit on the EU energy sector, with a special focus on the consequences of Brexit for the Irish energy system. The second session will look at the impact of Brexit in terms of […]

Speakers: Georg Zachmann and Richard Tol Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article Download PDF

External Publication

European Parliament

The Impact of Brexit on the EU Energy System

What will be the impact of Brexit on the EU energy system? With or without the UK, the EU will be able to complete its market, to achieve its climate and energy targets with feasible readjustments, and to maintain supply security

By: Gustav Fredriksson, Alexander Roth, Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, European Parliament, Testimonies Date: December 19, 2017
Read article More on this topic More by this author

Blog Post

Moroccan job market issues, and labour trends in the Middle East and North Africa

Morocco is an interesting case of structural labour market disequilibrium despite respectable growth, and illustrates the issues facing the region’s oil-importer countries

By: Uri Dadush Topic: Global Economics & Governance Date: December 7, 2017
Read article More on this topic

Blog Post

Promoting intra-regional trade in the south of the Mediterranean

Regional integration is still a sure way for economies in development to achieve economic growth on the global market. The south of the Mediterranean has still a low level of intra-regional trade integration, dominated by some overlapping trade agreements and political instability. The EU has the opportunity to play a decisive role, promoting and coordinating the process.

By: Filippo Biondi and Maria Demertzis Topic: European Macroeconomics & Governance Date: December 6, 2017
Read article More by this author

Opinion

EU should pay member states to get rid of coal

The European Union should act to ensure the continued transformation of its energy system, and encourage member states to overcome their dependence on coal for supplying electricity. Helping coal-mining regions with the transition should require €150 million per year – a mere 0.1% of the total EU budget – and the EU would not even need to establish a new fund to support it.

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: December 5, 2017
Read article Download PDF More by this author

Policy Brief

Beyond coal: facilitating the transition in Europe

Europe has a dirty energy secret: coal is producing a quarter of the electricity, but three-quarters of the emissions. The EU should propose that its member countries speedily phase out coal and put in place a scheme to guarantee the social welfare of coal miners who stand to lose their jobs, making a better use of the European Globalisation Adjustment Fund (EGF)

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: November 23, 2017
Read article More by this author

Blog Post

The impact of Brexit on the Irish energy system – pragmatism vs. principles

Brexit promises pain for Ireland that could be cut off from the EU internal market and be left exposed to market instability in the UK. Georg Zachmann assesses the scale of the possible damage for Ireland, and how the UK and EU might use the special energy relations on the Irish island to commit to a pragmatic solution.

By: Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance Date: November 21, 2017
Read article Download PDF More on this topic

Policy Contribution

A new strategy for European Union-Turkey energy cooperation

In a period of stress in the relationship between the European Union and Turkey, cooperation over energy could be a bright spot, because of strong mutual interests. Fields such as renewables, energy efficiency, nuclear energy and emissions trading could make a real impact on long-term energy, climate and environmental sustainability, and on overall macroeconomic and geopolitical stability.

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Date: October 24, 2017
Read about event More on this topic

Past Event

Past Event

EU-Turkey energy and climate dialogues

This event is part of the joint Bruegel-IPC initiative European Neighbourhood Energy and Climate Dialogues. This is a closed door event, open only to Bruegel's members and a group of experts.

Speakers: Dirk Buschle, Ahmet Evin, Myriam Ferran, Philipp Godron, Daniel Grütjen, Sohbet Karbuz, Susanne Nies, Mehmet Oguctu, Megan Richards, John Roberts, Umit Sahin, Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 20, 2017
Read article More on this topic More by this author

Blog Post

We need a broader, greener EU-Turkey energy partnership

Energy is a vital part of the EU’s increasingly strained relationship with Turkey. It’s also one of the areas where there is still a lot of potential to find positive synergies. However, the EU’s strategy is too focussed on oil and gas. We need a broader and more sustainable approach to EU-Turkey energy relations.

By: Simone Tagliapietra Topic: Energy & Climate Date: October 19, 2017
Read about event More on this topic

Past Event

Past Event

Fiscal aspects of the Energy Transition

Relative prices of different energy carriers are affected by a number of fiscal instruments. At this event, we will hold a discussion on, how fiscal instruments can be adjusted to better accommodate the energy transition.

Speakers: Jos Delbeke, Karen Pittel, Ian Parry, Gregor Pett and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 17, 2017
Load more posts