This article addresses the emergence of North Africa as a key arena in the global energy transition equation, where the region has become a battleground for competing interests seeking access to its abundant resources, from natural gas to renewable energy sources like solar, wind, and green hydrogen.
The shift towards more sustainable energy systems has become an increasing priority for North African countries, as the ongoing global energy transition presents new and unprecedented opportunities.
The five countries spanning North Africa have significantly different conditions that affect their energy transition pathways. The region includes major hydrocarbon producers and exporters (Algeria, Egypt, and Libya), as well as countries that rely on imports to meet domestic demand (Morocco and Tunisia). The economic and political motivations of each country also vary considerably.
Most of these countries have already formulated strategies and commitments to increase renewable energy production, reduce carbon emissions, and enhance energy efficiency. While these commitments will benefit the environment if met, the goals of this transition are largely driven by economic incentives related to local needs and global energy markets. There is significant potential for countries in the region to take the lead and become regional producers of the materials necessary for this transition.
Moreover, North African governments may view the energy transition as an opportunity to achieve geopolitical gains both regionally and internationally.
Given these circumstances, to what extent is the shift towards clean energy a natural extension of the existing competition dynamics among North African countries? What are the manifestations of North African countries using the energy transition as a geo-economic and geopolitical tool to forge partnerships and gain influence regionally and globally? And will this have implications for future relations between these countries?
First: Ambitious Goals and Strategies
North African countries are active participants in global climate forums and have increasingly pursued ambitious renewable energy goals. They signed the Paris Agreement on climate change in 2016, with Morocco and Egypt hosting the United Nations Climate Change Conferences in 2016 and 2022, respectively.
Recognizing the role of renewable energy in sustainable development and its potential economic benefits, the countries in the region have made ambitious national commitments to renewable energy. Except for Libya, all North African countries submitted their initial Nationally Determined Contributions (NDCs) between 2016 and 2017. In 2021, Morocco and Tunisia updated their contributions, while Egypt submitted its third update in June 2023. Algeria has yet to update its 2016 NDC, which includes all national targets for expanding renewable energy capacity by 2030.
North African countries’ energy policies indicate a desire to achieve a larger share of renewable energy in electricity generation, though their plans differ in ambition and targeted timelines.
Morocco has the most ambitious and detailed contributions in the region. By 2030, Morocco aims to increase the share of renewable energy in its electricity mix to 52%, reduce energy consumption by 20%, and triple its installed renewable energy capacity within this decade.
Algeria and Tunisia have set ambitious renewable energy targets, aiming to generate 27% and 30% of electricity from renewable sources by 2030, respectively. Egypt aims to add renewable energy capacity to achieve a 42% share of renewables by 2035, in line with its Integrated Sustainable Energy Strategy 2035.
Despite most countries in the region achieving far less than their goals and relying heavily on fossil fuels for electricity generation, renewable energy is expected to play an increasingly important role in the coming years, given the size of committed and planned investments for the period 2021-2025. Egypt leads the region with $36 billion in energy investments, followed by Algeria ($23 billion) and Morocco ($12 billion). Tunisia and Libya have committed to and planned investments of $3 billion and $0.3 billion, respectively.
Renewable energy accounts for a significant portion of these investments—62% in Morocco, 39% in Tunisia, 36% in Algeria, and 15% in Egypt. The annual average investment is expected to reach approximately $15 billion during the period 2021-2025, with about $5 billion allocated to renewable energy.
Committed and planned energy investments in North Africa between 2021-2025
| Country | Implemented (GW) | Planned (GW) | Total (GW) | Share of Renewable Energy in Total Planned Projects |
|---|---|---|---|---|
| Egypt | 5.25 | 30.75 | 36 | 62% |
| Algeria | 0.5 | 24 | 24.5 | 36% |
| Morocco | 4 | 11.5 | 15.5 | 62% |
| Tunisia | 0.5 | 4 | 4.5 | 39% |
| Libya | 0 | 2 | 2 | 50% |
Most countries in the region are expected to become significant players in the renewable energy field, both regionally and globally. However, the financial needs of North African countries to achieve these goals are substantial. Estimates suggest a financing need ranging from $11 billion to $73 billion annually to achieve net-zero emissions by 2050, with a cumulative total of $3.636 trillion needed for the period 2020-2030, concentrated primarily in Egypt and Morocco.
Large-scale solar photovoltaic and solar thermal projects have received the majority of investments (60%), followed by wind energy (27%). Morocco secured the largest share of solar energy investments in Africa in 2010, and in 2018 attracted nearly half of the total $2.5 billion invested in solar energy projects on the continent.
Unlike the rest of the world, the public sector played a more significant role in financing renewable energy projects between 2013-2020, accounting for 46% of total investments. Public financing facilitated private investments in this sector, particularly in Egypt and Morocco, thanks to electricity sector reforms. These reforms also attracted significant private financing through independent power producers. Many of these projects received development support in the form of loans, grants, and technical assistance from various donors, totaling around $9 billion between 2011-2020. Development finance institutions and multilateral financial institutions played a crucial role through direct investments. However, private investments remain far below the region’s potential, though future investment prospects are equally interesting in understanding what the region can expect.
Second: Intense Competition in the Energy Market
The geopolitical dynamics of the energy transition in North Africa are characterized by a lack of integration and a vertical North-South model that pits each North African country against others in competition for resources, partnerships, and influence. Several important dynamics can be observed in this context:
Economic Partnerships: A New Energy Diplomacy
Countries such as Morocco, Algeria, Egypt, and Tunisia have announced ambitious renewable energy goals and strategies. Alongside meeting growing domestic demand, these countries seek to become future exporters. Leveraging these potentials, many North African countries have increased their competitiveness in this field, especially with the European Union, China, and India.
1. European Union Funding for the Green Transition
In February 2021, the European Commission proposed a renewable partnership with the Southern Neighborhood with a budget of €46.79 billion for the period 2021-2027, 30% of which is allocated to climate goals. The funding includes grants, technical assistance, financial instruments, and budget guarantees, specifically aimed at stimulating investments as a means of contributing to sustainable growth and combating climate change. The main project envisions the deployment of innovative financing tools, including green bonds, to promote energy transition by pushing towards a green economy in Egypt, supporting Morocco in achieving its renewable energy goals, and accelerating the energy transition in Algeria. This could include financial support, technology transfer, and/or strengthening trade relations and private sector investments.
At the regional level, one of the initiatives best embodying this vision is the Union for the Mediterranean’s Renewable Energy and Energy Efficiency Platform, which strives to enhance dialogue among key stakeholders.
Given the importance of electrical interconnection and energy system integration, other projects expected to come to fruition by 2030 include a new interconnection between Morocco and Spain (a 1,400 MW link already exists), the ELMED interconnection between Tunisia and Italy with a budget of €307 million, and the Algerian-Italian interconnection linking Algeria’s Chafia region to the Italian island of Sardinia, which is set to facilitate the exchange of 2,000 MW of electricity. Outside the Mediterranean framework, the Xlinks Morocco-UK energy project is the first of its kind, where electricity will be transmitted using an undersea cable spanning 3,800 kilometers, and other interconnection projects are under consideration.
So far, the most notable achievements in renewable energy funded by the European Union include a 240 MW wind farm on Egypt’s western Gulf of Suez coast, the first photovoltaic power plant connected to the national grid in Aswan, the Noor Ouarzazate solar power complex in Morocco with a capacity of 580 MW, and the ongoing Noor Midelt project with a capacity of 1,600 MW. While policies and regulatory frameworks have improved, financial constraints still hinder the scaling up of renewable energy sources. In this regard, the European Union can play a more significant role in mobilizing capital and investments, with the region expected to benefit from up to €300 billion in investments between 2021-2027.
Another area of cooperation that has gained unprecedented political momentum in recent years is green hydrogen, as outlined in the European Union’s RepowerEU plan. The demand for green hydrogen is expected to grow as an additional 15 million tons of green hydrogen will replace 27 billion cubic meters of Russian gas imports by 2030.
The plan envisions importing 10 million tons of that need from abroad. This has prompted the European Union to seek partnerships with several North African countries, given their immense potential. Countries like Morocco, Egypt, and Algeria have expressed readiness to enter the green hydrogen market to decarbonize their industries and export some to Europe. The crucial factors will be geographical proximity, the presence of pipeline infrastructure, and/or port connectivity.
Morocco is one of the few countries in the region that has designed and published a national roadmap for green hydrogen, making it an attractive future player. In June 2020, an agreement was signed with Germany, which committed €38 million to build the first green hydrogen plant in Morocco and allow its sale in the coming years. Similarly, during the United Nations Climate Change Conference (COP27) in Sharm El-Sheikh, the Egyptian government unveiled its strategic plan for low-carbon hydrogen, signaling its intent to become a significant player in this field, aiming for an 8% share (10 million tons annually) by 2040.
All of this will significantly contribute to developing the local and regional green hydrogen industries
. North African countries can also look forward to increasing their share in this growing global market.
2. China and India: Contending with the European Union
India’s growing political and economic weight is reflected in its partnership strategy with North African countries, especially in the context of new technological systems. The International Solar Alliance, founded by India in 2015 and supported by more than 120 member states, aims to deploy over 1,000 GW of solar energy by 2030. In this context, Egypt signed a framework agreement to join the alliance in July 2022, aiming to provide billions of dollars to North African countries to achieve their energy goals. This is part of India’s plan to secure a leading position in the global energy transition, particularly in Africa.
In parallel, Morocco is also developing a roadmap with India to enhance green hydrogen, solar, and wind energy technologies.
China, a pioneer in renewable energy, sees North Africa as a region where it can increase its economic influence. Since 2005, it has signed several bilateral agreements and joint statements with North African countries on energy cooperation. Algeria is the main destination for China’s investments, which are primarily focused on conventional energy sources and renewable energy. The two countries have implemented several initiatives and projects, including a solar plant with a capacity of 233 MW.
China is also investing in renewable energy projects in Egypt and Morocco, with Algeria and Morocco making agreements in 2016 and 2017 to promote Chinese direct investments and strengthen cooperation in solar and wind energy.
3. Local and Regional Rivalries
Given these dynamics, most countries in the region are experiencing heightened competition over energy resources, which can increase local tensions and spill over into regional rivalries, including:
A. Energy as a Source of Economic Growth
The goal of these projects and cooperation is not only to increase renewable energy’s share in the energy mix of North African countries but also to integrate these sources into new industrial sectors. For instance, Morocco has announced its aim to become a regional and global exporter of green hydrogen, a goal that has generated significant interest in Europe. Similarly, Egypt is developing an extensive green hydrogen strategy to decarbonize its industries and export hydrogen to Europe, which is the main market for this new energy source.
B. Competition for Investments
Competition for investments has also become intense in the region. Given the economic and environmental advantages of renewable energy, countries are actively seeking foreign direct investments, loans, and grants to develop renewable energy projects. This has led to increased competition among countries to attract investments, with some countries more successful than others.
For instance, Morocco has attracted significant investments in renewable energy, particularly in solar energy, thanks to its favorable regulatory environment, political stability, and strategic location. Algeria, on the other hand, has struggled to attract similar levels of investment due to its less favorable investment climate and political uncertainties. This competition for investments has the potential to create tensions between countries, especially if one country perceives that another is attracting investments at its expense.
C. Geopolitical Rivalries
The energy transition has also intensified geopolitical rivalries in the region. For example, Morocco and Algeria are engaged in a long-standing rivalry that has been exacerbated by the competition for influence in the renewable energy sector. Both countries aim to become regional leaders in renewable energy, and their competition for this status has contributed to tensions between them. Additionally, the rivalry between Egypt and Ethiopia over the Grand Ethiopian Renaissance Dam has implications for Egypt’s energy transition, as the dam could affect Egypt’s hydropower generation and water resources.
D. Energy Security Concerns
Finally, the energy transition in North Africa has raised concerns about energy security, particularly in relation to the region’s reliance on natural gas and oil exports. As countries transition to renewable energy, they must balance the need to reduce carbon emissions with the need to maintain energy security. This has led to debates about the pace of the transition and the role of natural gas as a “transition fuel” in the region. Countries that are heavily dependent on fossil fuel exports, such as Algeria, face challenges in diversifying their economies and reducing their reliance on hydrocarbon revenues.
Third: The Way Forward
The energy transition in North Africa presents both opportunities and challenges. The region’s abundant renewable energy resources and strategic location make it a key player in the global energy transition. However, the competition for resources, investments, and influence has the potential to create tensions and rivalries among countries in the region.
To navigate these challenges, North African countries must adopt a more collaborative approach to the energy transition. Regional cooperation and integration can help countries pool resources, share expertise, and attract investments. Additionally, countries should focus on creating favorable investment climates, strengthening regulatory frameworks, and addressing political and economic uncertainties to attract investments in renewable energy.
Moreover, the energy transition should be seen as an opportunity to promote economic diversification and sustainable development in the region. By developing renewable energy industries, countries can create new jobs, reduce dependence on fossil fuel exports, and enhance energy security.
Finally, the energy transition in North Africa should be aligned with global climate goals and commitments. Countries should continue to participate in international climate forums, strengthen their NDCs, and collaborate with international partners to achieve their renewable energy goals.
In conclusion, the energy transition in North Africa is a complex and dynamic process that requires careful navigation of geopolitical, economic, and environmental factors. By adopting a collaborative and forward-looking approach, North African countries can position themselves as leaders in the global energy transition and contribute to a more sustainable and prosperous future for the region.
References
Nationally Determined Contributions Registry, UNFCCC, 2024. https://tinyurl. com/mm67s5zm (accessed May 27, 2024).
Nationally Determined Contributions Registry, 2024.
“North Africa: Policies and finance for renewable energy,” Irena. org, Dec. 21, 2023. https://tinyurl. com/8t7ef6sk (accessed May 27, 2024).
“Planning and prospects for renewable power: North Africa,” Irena. org, Jan. 04, 2023. https://tinyurl. com/mvxr5erx (accessed May 28, 2024).
Policy Brief Better Policies to Accelerate the Clean Energy Transition Focus on De-Risking Investments in The Energy Transition in North Africa, RES4Africa Foundation, April 3,2024. (accessed May 27, 2024). https://tinyurl. com/2uc6a554
Amine Bennis, “North Africa’s Energy Transition: A Key Asset in the War? | ISPI,” ISPI, May 30, 2023. (accessed May 27, 2024). https://tinyurl. com/2n7a2bua
“Navigating the Transition in Times of Uncertainty: From a paradigm of energy security to electricity security in North Africa,” Policy Center, 2024. https://tinyurl. com/s755b8f5 (accessed May 27, 2024).
Nashat Shawamreh, “The Energy Geopolitics of North Africa,” The Washington Institute, 2023. (accessed May 27, 2024). https://tinyurl. com/4fh2pv4c
