Thesis - Re-mapping Solar Energy

FACULTY OF ECONOMIC, POLITICAL AND SOCIAL SCIENCES AND SOLVAY BUSINESS SCHOOL

Re-mapping Solar Energy Case Study: Cooperation between Europe and Egypt

2013-2014

Dina Hassan Student ID: 102121

Promoter: Prof. Dr. Nikolay Dentchev Master thesis submitted in partial fulfilment of the requirements for the diploma Master of Management.

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TABLE OF CONTENTS 1 Introduction................................................................................................................ 5

2 Research Method ....................................................................................................... 7

3 Literature Review .................................................................................................... 10

3.1 Europe & MENA’s Current Situation Towards Climate Changes......................... 10

3.1.1 Change In Europe’s Economic Patterns And How It Affects The Environment... 13

3.1.2 Market Trends In Developing Countries ............................................................... 14

3.1.3 Summary ................................................................................................................ 16

3.2 The Base of Cooperation Between EU and NA ......................................................... 17

3.2.1 The Appearance Of International Agreement Gathering EU And NA .................. 18

3.2.2 EU Policy Energy Strategy Towards Foreign Relations........................................ 19

3.2.3 Summary ................................................................................................................ 26

3.3 The Role Of Solar Energy Obligation ........................................................................ 26

3.3.1 Feed in tariff policy system ................................................................................... 28

3.3.2 Quota models and clean development mechanism ................................................ 31

3.4 Egypt’s Potentiality As A Host Country .................................................................... 34

3.4.1 Egypt's Economic Challenges As A Cooperation Motive ..................................... 37

3.4.2 The Beginning Of Solar Energy In Egypt ............................................................. 39

3.4.3 The Energy Policy Strategy In Egypt .................................................................... 40

3.5 International Cooperation Could Promote Safety/Certainty .................................. 42

4 Conclusion ................................................................................................................ 45

5 Bibliography ............................................................................................................. 49

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LIST OF FIGURES

FIG 1. SOLAR IRRADIATION. ................................................................................................................................................................ 10

FIG 2. EUROPE UNION ENERGY MIX IN 1995 AND 2007 .................................................................................................................... 11

FIG 3. PRODUCTION VALUE DISTRIBUTION IN EGYPTIAN INDUSTRIAL SECTOR ................................................................................. 16

FIG 4. EU-EURO-MEDITERRANEAN PARTNERSHIP "TRADE IN GOODS" STATISTICS ........................................................................... 19

FIG 5. THE CHANGING OF THE ENERGY RESOURCES’ MAP ................................................................................................................ 21

FIG 6. SYSTEM COST DEVELOPMENT PER KW IN PERCENT OF 2010 COST ESTIMATE ........................................................................ 24

FIG 7. THE SHARE OF RENEWABLE ENERGY’S CONSUMPTION .......................................................................................................... 28

FIG 8. THE GHG TOTAL EMISSIONS FOR 1990 TO 2011 ...................................................................................................................... 33

FIG 9. THE EXPECTED MEGAWATT BY USING THE CSP AND PV ......................................................................................................... 43

LIST OF TABLES

TABLE 1. SHARE OF RENEWABLE IN GROSS INLAND ENERGY CONSUMPTION, 2010 ........................................................................ 31

TABLE 2. TECHNOLOGY TRANSFER’S STATUS UNDER CDM ................................................................................................................ 32

TABLE 3. THE SELECTED LOCATIONS .................................................................................................................................................. 36

TABLE 4. EGYPT’S POPULATION AND ELECTRIC POWER INDICATORS (2007-2052) ........................................................................... 40

TABLE 5. THE SIX MAJOR AXES AND ITS RELATIONSHIP TO EACH OTHER. ......................................................................................... 41

TABLE 6. THE SOLAR POTENTIAL BY REGION/PER YEAR IN ALGERIA ................................................................................................. 44

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1 INTRODUCTION

This master’s thesis analyses and evaluates the problem of energy and climate changes likely to affect the

Mediterranean region and European Union in the near future. The proposed cooperation supposes to create

the idea of a new lifestyle with less pollution, less CO2 emissions and less threat to human life. The study

discusses how the clean energy solution, for a better life, can be reached through developing mutual

agreements on specific policies and international cooperation in the field of energy use.

The European Union has developed an ambitious program for renewable energy and climate change issues

(EC, 2010). In the coming decades, the increasing energy demand, accompanied with the shortage of global

energy, rising prices (IEO, 1995) and growing climate risks will lead to a real dilemma (United Nation,

2002). Furthermore, according to the Intergovernmental Panel on Climate Change, the EU must reduce their

global emissions before 2015, and have them further reduced to less than 50% of today’s emissions by 2050,

in order to achieve global climate security (IPCC, 2008), but this will only be achieved by converting the

energy system globalizing (WorldWatch Institute). Also, the commitment was made by the European Union

to stabilize their greenhouse gas emissions (GHG) to a certain level under a convention on climate change

(United Nation, 1998).

Yet, developing countries in the Middle East and North Africa (MENA) are more affected by global warming

than industrialized countries, because their agricultural productivity is eroded by the threat of droughts and

desertification (Howell and Allan, 1994). “Climate change-induced changes in both the seasonal runoff

regime and inter annual runoff variability can be as important for water availability as changes in the long-

term average annual runoff,” asserts the Intergovernmental Panel on Climate Change (2008, p58). In

addition, developing countries end up trying to belong to the industrializing group in order to progress and

achieve economic development, regardless of the climate change effect, thereby increasing global pollution.

Despite their differences, each political party may consider the challenges already facing them, and follow a

new strategic approach to energy that would help economic development and prosperity while working on

eliminating the GHG emissions. This approach can include generating renewable energy opportunities by

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providing know-how, as well as scientific and technological solutions that are cost effective and highly

efficient, in order to provide reliable energy sources without forsaking economic development.

For the purpose of understanding the previous statements, the objective of this master thesis is geared

towards answering the following research questions in order to provide a clear picture of the present

importance of that kind of cooperation in solar energy and sustainable energy systems.

Can Egypt and Europe cooperate on a large scale using Concentrating Solar Power (CSP) system and

High Voltage Direct Current transmission system (HVDC) for long distance to create a strategic

energy policy approach for the development of a sustainable solar energy infrastructure?

Can this kind of cooperation be considered another type of dependency, like oil, and thus, a lack of

independence?

What are the proposals and possible solutions to address the expected difficulties?

The remainder of this master thesis contains three chapters. First, we discuss the research method,

focused on the collection of secondary data. Second, our literature review assists in solving the dire economic

situation in Egypt while helping to achieve the objectives of EU energy and climate targets. The study

analyses and evaluates potential obstacles to solar technology use, the various theories that support or object

to the idea, as well as the problems with solar energy and its impact on the development of solar energy as an

alternative. It also takes into account the recommendations for and against the project to reach a win-win

situation. Third, we summarize the main findings of our study in conclusion.

When we re-discover, re-organize and re-map solar energy sources in the Sahara desert to meet the

challenges of internal energy demand, the benefits become worldwide.

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2 RESEARCH METHOD

This study focuses on assessing the mutual benefits as well as the challenges and obstacles to realizing

an international agreement between the European Union (EU) and Egypt to invest in solar energy, using

Concentrating Solar Power (CSP) technology systems in Egypt’s Sahara desert.

To reach its results, this study has adopted a specific means of collecting, choosing and analyzing data,

through analyze and evaluate the current situation in both parties according to scientific, theoretical and

historical perspectives. The qualitative analysis is the concept I used to collect the date, in order to

understand the real motivation, real obstacles and real challenges, on order to analyze the cooperation idea

factors. Where, understanding the circumstances surrounding the idea, that including the common interests,

various risks as economic and political one, environment and all other perspectives may help to reach to

interact structured if we focused on the main reasons that may lead to success or failure the concept. There is

a specific qualitative approach I tried to apply which is Narrative research approach (Creswell, 1994) with a

structured method from academic books, scientific journal, academic articles, different reports, internet

resources, newspaper articles and independent magazines, in order to understand and analysis the

background, the circumstances and the history of similar situation to build a “comprehensive set of themes”

(Creswell, 1994). So we could reach to clear patterns and boundaries to the partnership idea. Also, the public

opinion through the journal articles and documented newspapers is essentially in my study, in order to show

the direction of normal people and their degree of awareness towards pollution, GHG emissions, climate

change and its effect. I assumed that their financial support and aid to that kind of idea will represent an

important step towards the success of the idea.

Also the policy energy details and its history in Egypt have a shortage of information especially after the

dissolution of the Organization for Energy Planning in 2006. There is no systematic information published on

the scheduled time and the Supreme Council Energy has no role there. Thus, I tried to use some information

from the public field supported by international studies and statistics that are officially documented.

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I concentrate on the political risk, where according to what was proven from the study, it represents the

major risk from investors’ perspective. I have dealt with the historical perspective of how countries related to

one another regarding their mobility resources. Energy resources were considered the main tool for economic

performance around the world. It helped most of them achieve more progress, development and prosperity

that led to the increase of their GDPs. Fossil fuels were successfully used as a tool to change paths and

sovereign decisions. My target was to avoid falling into the same trap and to work on having the joint

cooperation in solar energy succeed

Then, it showed the investors and hosted country obstacles and challenges from their perspectives.

However, the study used vivid similar and applied examples in the area, in order to provide solutions that

alleviate barriers. The choice of countries was also done with several reasons in mind. There are several

countries in the Middle East and North Africa (MENA) region that could seemingly have more potential for

this kind of cooperation because of their lack of economic problems, and the relative stability of their

political status when compared to Egypt. This study focuses on Egypt for a number of reasons. Egypt is one

of the most important countries in the global Sun Belt countries, enjoying 2900-3200 hours of sunshine

(Comsan, 2010); thus, the rate of success of this project may be higher by a large margin in case of

cooperation. The Western Sahara occupies 68.1% of the area of Egypt; this immense desert begins from the

Mediterranean Sea to the Sudanese border in the south (UN, Egypt), and compared to other potential

countries, this amount of land in one country, almost free of population and full of Solar Radiation, could be

a real investment capital land to the other partner (Fig1). Also, its geographical location near European

countries (Maniatis and Tite, 1981) can facilitate the hassle of transportation and decrease the potential of

loss when carrying electricity, saving costs (Fig1). Moreover, Egypt is considered a virgin country in this

field on a wide scale, so it can make a big difference for each of the parties if they decide to cooperate and

exploit the advantages owned by each other. As for the choice of the other partner represented in European

Union, the reasons go back to the EU being one entity and having “developed beyond a mere market and is

more than an international organization” (Eriksen, 2007). All 28 states are under the same political ceiling,

foreign policy, defense system and single currency, sharing the same exterior problems and the same fears

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that may threaten their security in case of a decrease in energy support. Additionally, the European Union

already has international obligations that force it to reduce its global CO2 emissions and stabilize its

greenhouse gas emission to a certain level (IPCC, 2008), it is looking for more progress and economic

development with less climate risk. According to Eurostat, the dependency of EU on Energy imports from

non-EU member resources represented 50% in 2010 and is expected to increase to 70% in 2015. Thus, the

research for an ambitious plan in order to meet their needs can come from external sources to support its

emerging energy and help it abide by its agreements without affecting its desired level of development.

Looking at each part’s elements, it appears that there will be some challenges that would hinder the success

of the project and get it out of control, unless there are solid bases and laws governing this relationship. There

are some main issues that must be resolved and clarified not become real challenges later, including Egypt's

internal problems, especially political instability that have exacerbated after the revolutions of the Arab

Spring, as well as its lack of technology and weakness of government. These themes could also excite

controversy, where the Egyptian authority could potentially consider the project a representation of a new

kind of colonialism. There are many challenges facing Egypt and its national security and it is supposed that

there will be a plan to protect the project from internal disturbances and the instability of the political

situation.

The collected data contains different sets, views and analyses that could give a kind of intimation of

noncompliance, but the goal is to collect all possible potentials, obstacles and situations that appear not to be

related, and bind them together to reach a description of what may be hindering this kind of cooperation.

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Fig 1. Solar Irradiation.

Source: Dii (2012)

3 LITERATURE REVIEW

EUROPE & MENA’S CURRENT SITUATION TOWARDS CLIMATE CHANGES 3.1

Starting in 1990, the renewable methods of energy generation (such as wind energy, geothermal, and

solar energy) began to spread widely as alternative energy sources to fossil-generated energy (Matsubara,

Urai and Yamashita, 2010), which is considered one of the fundamental factors of global climate change. The

increase in carbon dioxide (CO2) concentration, which causes global warming and pollution, has been well

documented (EG Science, 2008). Energy is a vital element for economic performance and industrial growth

and the need for finding sustainable alternatives has become inevitable, especially in developing countries

where industrial growth is needed as a contributor to the general raising of the economic level.

The world is currently facing climatic changes caused by the global increase for energy demand,

which, in turn, causes an increase in the greenhouse effect. Economic performance around the world is

looking for more progress, development and prosperity, which leads to a continued increase in the demand

for energy and thereby widespread climate change, representing the greatest threat all over the world (Wirth,

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Gray and Podesta, 2003). These recent consequences impose on the globe’s leaders to find an alternative.

Such an alternative would need to have no negative impact on growth and prosperity to solve the hard

equation of climate change.

The current renewable energy production in European power may be high enough for its electricity

demands today, but future demand for electricity will increase due to expanding industries and economies.

The next figure shows the EU energy mix between 1995 and 2007 as a response to reducing nuclear power. It

may be difficult to achieve the full “decarbonised target” in a way that is reasonably sufficient and cost

efficient using a decentralized power grid within Europe. If so, countries outside Europe can help achieve

this desired target (Battaglini, Lilliestam, and Knies, 2009, p. 296).

EU Energy mix 1995 (Total 532 GW) EU Energy mix end 2007 (Total 775 GW)

Fig 2. Europe Union Energy Mix in 1995 and 2007

Source: EWEA and Platts PowerVision, 2008

The MENA region, on the other hand, may face a real challenge regarding shortage of fresh water, a

type of climate change that would be particularly evident to and impactful on individuals and communities,

in the amount of water available to them (Shuman, 2012). The threat of climate change to security, especially

in Africa, poses a real challenge and adopting new policies in line with this new reality has become a

necessary inescapable step (Brown, Hammill and Mcleman, 2007). The climate threat to “scarce water,

collapsing agricultural yields, encroaching desert and damaged coastal infrastructure” may cause more

instability in the region and more conflicts between neighbouring countries (Brown, Hammill and Mcleman,

2007). At the same time, however, neglecting economic & social development in developing international

climate policies in the region for the sake of controlling climate change could potentially lead to task failure.

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Hence, controlling the impact of climate changes in the region has to include taking into consideration the

economic and social conditions and the political experiences of the region (Brown, Hammill and Mcleman,

2007). Continuing to ignore the economic problems in developing climate policies for the region, as well as

having developing countries disregard environmental problems by neglecting to use or implement the

guidelines and recommended programs for preserving the environment and decreasing GHG emissions as

stipulated in Article 12 under the resolution of the Conference of the Parties serving as the meeting of the

Parties to the Kyoto Protocol (United Nation, 1998) will lead to worsening the situation globally. The

Intergovernmental Panel on Climate Change states, “In densely populated coastal areas of Egypt, China,

Bangladesh, India, and South-East Asia (FAO, 2003), desalination costs may be prohibitive. In these areas,

particularly in Egypt, research in new desalination technology is required to reduce the costs, especially

with the use of nonconventional energy sources that are associated with lower GHG emissions. Also,

desalination of brackish water can improve the economics of such projects” (2008, p58). International

obligations may not represent the real motivation that forces developing countries to work towards mitigating

their greenhouse gas emissions (considering it’s a vital option for their near future) and to change their

behaviour towards climate change, especially when they have to choose between their interests and economic

development on one end and fulfilling the obligations on the other, where the latter could impede or slow

down economic growth. In this case, the EU would have to lend a helping hand to MENA in order to exceed

the traditional phase in converting their energy sources to renewable ones. According to Chandler and

Schaeffer (2002), the per capita in developing countries represents an average 1/6 comparing to developed

countries, so developing countries will continue in their traditional plans in order to achieve more

development and more prosperity, while ignoring international obligations (Chandler and Schaeffer, 2002).

In his report, Barker compared the two scenarios: one where there were no additional climate policies and

one where there were, stating, “an increase of baseline global GHG emissions by a range of 9.7 to 36.7

GtCO2-eq (25 to 90%) between 2000 and 2030. In these scenarios, fossil fuels are projected to maintain

their dominant position in the global energy mix to 2030 and beyond. Hence, CO2 emissions from energy use

between 2000 and 2030 are projected to grow 40 to 110% over that period” (2007, p 22). This means that

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climate policies can play a main role in changing energy components and lead to more prosperity if applied

in proper ways that match the economic situation in region. Chandler and Schaeffar assume that if climate

policies are addressed to work on economic development, poverty alleviation, local environmental protection

and energy security from one side and international climate protection from another, without hindrances from

either side to the other, reducing global gas emissions in developing countries can work. They provide Brazil

as an example, asserting, “A tax incentive for buyers of cars with low-powered engines, adopted to make

transportation more affordable for the middle class, accounted for nearly 2 million tons of carbon abatement

in the year 2000” (2002, p. 7), as they used the tax incentive to eliminate their gas emissions through the

middle class with a real motivation for them to do so: better living standards. The real change happens if the

motivation comes into contact with a country’s reality.

3.1.1 CHANGE IN EUROPE’S ECONOMIC PATTERNS AND HOW IT AFFECTS THE ENVIRONMENT

During economic development in the European Union, there was an increase in the services sector

due to changing customer demand patterns. This trend was high labour and low capital -intensive. One

advantage with this labour-intensive trend is that it leads to a decrease in the unemployment problem,

especially in the educated sector. At the same time, low capital-intensive trends cause less effects on global

pollution from countries in the European Union, also leading to more sustainable development in different

areas. In most developing countries, economic patterns have been going in the opposite direction, where the

industrial sector has become the main factor in achieving economic growth (Soubbotina, 2000).

On another note, the idea of mitigating the Carbon effect has become one of the most important

priorities on the EU’s agenda, supported by patterns demand. According to Mccrone, Usher, Sonntay-

O’brien, Moslener and Gruning (2013), the year 2012 saw significant declines in the cost of PV systems,

reaching 40%, and the system of re-selling the remaining renewable energy at subsidized prices was raised

with a large increase. Even low investment in solar energy increased by an average 11% in 2012 compared to

2011 for reasons mentioned later. However, the number of PV megawatts installed increased from 28.8GW

in 2011, to 30.5GW in 2012 (Mccrone, Usher, Sonntay-O’brien, Moslener and Gruning, 2013). Returning to

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2007, developed countries invested two and half times what developing countries did in the renewable field;

this percentage increased by 18% in 2012 as the investment reached to average 224$ billon. However, this

amount is considered a huge one relative to 2011; it is less than average by 11% when comparing to 2009

and 2004 (approximately 1 and ½ times in 2009 & 6 times to 2004), but achieved only 6.5% of global

sustainable electricity generated. The positive effect was decreasing carbon dioxide by 900 megatons, while

GHG remained very high (Mccrone, Usher, Sonntay-O’brien, Moslener and Gruning, 2013). There are some

reasons for this decline, such as investors’ concerns towards the policies destabilize the support for

renewable energy, as in case in Spain when they begin to decrease the tariff support towards the PV projects

for year 2010 till 2012, and the same in Italy. (Mccrone, Usher, Sonntay-O’brien, Moslener and Gruning,

2013). The lack of sun radiation in a region may cause a real gap between the demand and supply.

The solution may not only be in the treatment of the interior reasons for the decline in the proportion

of internal investment, but could also be heading for the European Union from beyond the scope of the

European border to work on scaling the outside in the field of renewable energy (Correlje and Van Der

Linde, 2006). It has redirected energy security policy so that it is an integral part of the EU’s foreign trade

and relations and security policy. The EU is supposed to work on developing its own strategy, investing

actively in dialogue with producing countries in North Africa, Iran and even Russia, in order to get support

for its energy security (Correlje and Van Der Linde, 2006).

3.1.2 MARKET TRENDS IN DEVELOPING COUNTRIES

It’s important to understand who has the upper hand in developing countries, especially in a region

like MENA, and how they manage their economic policies. This can be useful later on in reaching the right

contact points to deal with that kind of cooperation. According to Jorgenson,“Governance is part of the

investment climate of a country and investment decision is mainly driven by profitability motives” (as cited in

Aysan, Nabli and Veganzones-Varoudaks, 2007). Hence, the good governance institution can play an

important role in creating a stable and secure environment for private investment. Also, the International

Finance Cooperation (IFC) provides the chance to capture high quality data to the private investment sector,

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while at the same time, good governance leads to high administrative quality and controls corruption,

bureaucratic quality and law and order (Aysan, Nabli and Veganzones-Varoudaks, 2007). This shows that

private businesses across countries can succeed greatly if there are good governance institutions.

Egypt is an example for developing countries, as it is known to have been an agricultural country until

the 19th century (IDA, 2006). However, Egypt needs to achieve more economic growth in the 21st century.

Total investment in Egyptian factories until 2007 reached LE 17,633,128 billion, the equivalent of 1,959,236

billion Euros (IDA, 2006). The chemical industry represents an average 14% of the industrial sector, with 56

factories (IDA, 2006), while ceramics and anti-melting material manufacturing represents 7% of the Egyptian

industrial sector and is considered one of the most important industries in Egypt. The production value

distribution in the Egyptian Industrial Sector is clear in Fig 3. While expansion in the industrial sector may

help in solving a lot of economic problems, through, for example, decreasing unemployment rates and

increasing per capita incomes, it could unfortunately also increase the source of pollutants by growth in the

chemical and ceramic industries (EEAA, 2002). This is an example of the phenomenon of the pursuit of

economic progress in the absence of climate policies geared to cope with this growth, as referred to before by

Chandler and Schaeffer (2002).

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Fig 3. Production Value Distribution in Egyptian Industrial Sector

Source: EEAA 2002

3.1.3 SUMMARY

Society, private business and governance institution in developed countries dedicate huge efforts to

mitigate carbon dioxide and GHG emissions. However, the problem is still prevalent in a huge percentage.

According to the previous view, and my personal point of view, the treatment is not supposed to only include

the interior problems of developed countries because any such solution would merely represent temporary

solutions, such as investors’ worry about the removal of subsidies on renewable energy sources or the

imposition of obligations on developing countries without considering their realities. In contrast, the kind of

cooperation suggested in this study would lead to an abundance of renewable energy for both sides and swap

assured access to both parties. With regards to the previous analysis, the two parties of the suggested

partnership have totally different patterns and move in opposite directions, with each working according to

its own agenda, priorities and interests despite the fact that climate change is threat to parties all over the

textile and leather industry

21%

food industry20%

metal mixing17% chemical industries

14%

metal products12%

ceramic and anti-melting material manufacturing

7%

metal extraction5%

pulp and paper industry

3%

wood industry1%

textile and leather industry

food industry

metal mixing

chemical industries

metal products

ceramic and anti- meltingmaterial manufacturingmetal extraction

pulp and paper industry

wood industry

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world. It is important to bind climate polices/obligations to each party’s interests in order to guarantee their

efficiency and effectiveness, and that parties are not only searching for a trap exit to climate change while

ignoring interior issues that could cause disruption to their wheels of production to them. The suggestion is

that policies need to address each of the parties in different area for them to be able to achieve the required

economic development and at the same time maintain standard rules for the climate target.

THE BASE OF COOPERATION BETWEEN EU AND NA 3.2

It has been proven that there exists a close relationship between policy and environment policy on one

hand and the relationship between quality of lifestyle, health and scientific and technological progress on the

other (Lallas, 2001). From these relations, the political role begins, where it is assumed to have an efficient

role in reducing or preventing the effects of major factors that threaten the environment, human health and

the quality of life. The idea of linking political support and financial aid or “adaptation fund” to third world

or developing countries by certain conditions related to reducing greenhouse effects and pollution could

mitigate the negative impact on the environment and could be a means of the political and economic

cooperation among countries aimed at declining the response to climate change (United Nation, 1998).

Moreover, “Many Countries are expected in the 21st century to expand their use of energy from the sun and

other renewable energy source to change the state of living conditions there” (Brown, 2002, p13). They

don’t need it for the sake of changing their lifestyles or for climate change, but also in order to address the

expected and dangerous problems from climate change that would definitely affect their economic situations

and per capita incomes if they continue with the same energy scenario.

The World Bank shares one of these views. According to one of its studies, it sees the region as a

potential market to accommodate “80,000 jobs in construction services and manufacturing by producing

between five and seven gigawatts of electricity” (Friedman, 2011). Walters, the World Bank Manager for

Energy and Transport in the Middle East and North Africa (MENA) region said, “As the megawatts continue

to scale up in the MENA region, eventually you'll have an export industry. Then you're creating permanent

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jobs. You have a whole Research and Development (R&D) side. That's the potential we're seeing”

(Friedman, 2011). Toukan, Jordan's Minister of Energy and Mineral Resources, also supports this kind of

cooperation, by likening it to the idea of “building the seeds of science and technology" (Friedman, 2011).

Similarly, Professor Amin, Dean of Engineering at Egypt's Helwan University, suggests creating a,“EU-

MENA Solar Energy Center of Excellence to exchange research and blueprint of priorities that benefit both

European and North African countries such as Egypt, which boasts the world's first solar thermal power

plant and has attracted billions in solar and wind development in the past decade” (Friedman, 2011). This

means that between EU and Sahara countries, there are common interests in the fields of economics, politics

and the natural environment and as Battaglini, Lilliestam, and Knies (2009) assert: renewable energy is “the

truly sustainable solution” to achieve both targets.

3.2.1 THE APPEARANCE OF INTERNATIONAL AGREEMENT GATHERING EU AND NA

The Barcelona Declaration, which was adopted by the Euro-Mediterranean Conference in November

1995, confirmed the importance of comprehensive solidarity in cooperation between Europe & North Africa

and agreed “to establish a comprehensive partnership among the participants of the Euro-Mediterranean

partnership through strengthened political dialogue on a regular basis, the development of economic and

financial cooperation and greater emphasis on the social, cultural and human dimension, these being the

three aspects of the Euro-Mediterranean partnership” (EEAS, 1995). As a direct consequence of this kind of

agreement, the Union for the Mediterranean was created by 43 Euro-Mediterranean Heads of State and

Government in Paris on 13 July 2008 (UFM, 2008) in order to establish a healthy and solid trade area

partnership based on peace, political dialog and stability between Europe and Mediterranean countries. Also

the Mediterranean Solar Plan (MSP) was established in order to improve energy efficiency in the area, where

it was supposed to achieve 20 GW of renewable energy by 2020 in the region and work on encouraging the

new business and investment in that field (Komendantova, Patt and Williges, 2011). The following statistics

show how this partnership is going in a positive direction even in light of recent changeable events (Fig4) .

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Fig 4. EU-Euro-Mediterranean partnership "trade in goods" statistics

Source: European Commission, Trade, Policy, Countries and regions, Euro-Mediterranean partnership

3.2.2 EU POLICY ENERGY STRATEGY TOWARDS FOREIGN RELATIONS

The history of energy throughout the ages has proven its impact on foreign policy and international

relations, as energy is the main factor of mobility on earth (Brown, 2005). This may be the main indicator for

the future role that clean energy will play in foreign policy among the countries (Brown, 2005) such as “the

consequence of the location, development, and utilization of energy sources in the basis that drives the

science of energy” (Brown 2005, p 5). However, even the appearance of the solar thermal obligation in Israel

as a kind of response to the Energy crisis in 1980; it took two decades to re-adopt the same idea during 1999

in Barcelona, which was enforced in 2000 (ESTIF, 2007). However, during 1980-1990, energy prices were

not high and the problem of climate change was outside the circle of attention (ESTIF, 2007). History of fuel

oil production has proven the above theory to be correct. Oil production increased from “65.2 to 71.9 million

barrels per day between 1990 and 1999, with the Middle East being the largest oil producer, followed by

Western Europe” (Brown, 2005, p 11). Oil availability and pricing have been profoundly affected by past

crises that have occurred in the largest energy-exporting region of the world. These historical events include,

among others, the 1973 “Arab Embargo”, the Iran-Iraq war of 1980 and the Gulf War of 1990. This proves

the central role played by politics in the Middle East and how significant they can be to the field of energy

(Amineh, 2007).

Energy security is playing an important role to the EU, where countries of the EU may be looking for

support from outside, using policy tools to secure themselves and have a kind of prevention (Correlje and

http://ec.europa.eu/trade/policy/countries-and-regions/regions/euro-mediterranean-partnership/

http://ec.europa.eu/trade/policy/countries-and-regions/

http://ec.europa.eu/trade/policy

http://ec.europa.eu/trade/

http://ec.europa.eu/index_en.htm

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Van der Linde, 2006). Besides, accelerating in the development of renewable energy became essential in

order to achieve their decarbonisation targets according to the IPCC agreement (IPCC, 2008). Both targets

need to find a way in order to achieve their plans; otherwise more complications and delays may arise. Fig

(5) shows the future energy plan. The renewable energy market has become wider and it has opened a new

energy finance, especially for the clean energy sector, with an average 59 billion dollars in 2005, where the

investors became more interested particularly after the policies that supported their business in Europe

(Mendonca, 2009). Moreover, investment on a large scale became an important option where the CSP

projects became wider, expanding and more prevalent in many countries, in order to achieve more than 15%

of the electricity (International Energy Agency, 2010). Despite all of this expansion in the EU,

Komendantova, Patt and Williges (2011) see that the United States went a long way in this field beginning 20

years ago in California with a vast territory rich in solar scans. While Europe suffered from a lack of these

two advantages, the space and the sun radical (komendantova, Patt and Williges, 2011) were already plentiful

in their close neighbour countries in NA. That’s why Correlje and Van der Linde suggest that Energy policy

has to be an integral part of EU foreign policy and have an active role in foreign relations, security and

political relations with other countries. Through more flexible relationships with other countries such as

Africa and Russia, Europe can guarantee support and energy security (Correlje and Van der Linde, 2006)

The following figure projects how the map of energy resources is changing and gives an indication of

the future, which will not depend on petroleum as before.

21

Fig 5. The changing of the energy resources’ map

Source: EIA AE02012

3.2.2.1 International Political Initiative

Wirth, Gray and Podesta (2003) agree that the key point to achieve the required target lies in

international political initiative with developing countries: “Political Coalition”. They also relate the advent

of globalization, terrorism and widening social differences to global energy concerns. This kind of initiative,

attached to clear and strict objectives, can tip the scales and be the cause of change in relations. Enemies of

the present can be allies in the future through converting the energy conflict to mutual energy interest and

turn ambitious long-term agendas into reality. They suggest using global consensus about fixing the threats

caused from climate change by using talent, expertise and technological innovations to mobilize new, long-

term, strategic approaches for energy policy. This will achieve economic growth and poverty alleviation in

many poor regions in developing countries lacking electrical services. Another thing that must be fixed is the

mismanagement of power distribution, which contributes to increasing the ration of poverty and inequality in

society. Another important point discussed by the same book is how to make the automotive and oil

industries accept new strategies and new technologies for reducing emissions. Governments in each country

have an essential role in this conversion, by creating a transition period of 10 to 15 years for industries to

adapt new systems. Later, this new technology can encourage new investments, using the new technology to

increase productivity, reduce emissions and create new vacancies. The authors assert, “The automotive and

22

oil industries objective is not to prop up dictators in the Middle East or to sully the natural world, it is to

provide a return to their shareholders; making fuels, cars, trucks, and buses that are clean and profitable,

thus is something to agree on” (Wirth, Gray and Podesta, 2003, p 148).

3.2.2.2 Investment Perspective in NA: Egypt case

Large-scale investment in NA, and in Egypt specifically, became necessary according to the

agreements and other reasons mentioned above. Where investment outside Europe may seem like an

advantage from a policymaker’s perspective, it could also raise investors’ concerns for several reasons,

including problems surrounding the area and also the weakness of the technology available. Hermann, a

member of Germany's parliament and head of the European Association for Renewable Energy, said in his

criticism of the Desertec foundation, “Sahara power for northern Europe is a mirage". According to him, the

initiative to use solar and wind energy sources in MENA to provide the EU with 15% of renewable energy

and sufficiently clean energy for the sake of the climate and reliability is a mirage with no possibility of

success; he believes that this vision is a waste of money and effort without interest because of its huge cost

(Hermann Scheer, 2009). High costs and problems regarding the region could be reasons behind the

weakness of investment of EU Foreign Direct Investment (FDI), which represents only 15% of investment

concentrated in Egypt, Libya and Algeria (Komendantova, Patt and Williges, 2011). However, the cost of

carbon dioxide is 20 Euros per ton, while the cost of constructing new power stations in Europe, without

administrative expenses, ranges between “EUR 0.055 and 0.075 per kWh (Olkiluoto 3, nuclear) and EUR

0.045 – 0.055 per kWh (Neurath 2 and 3, lignite), depending on interest rate and economic lifetime (AFP,

2008; Ernst & Young, 2006; RWE, 2009), while the costs of new nuclear power stations ranging between

EUR 0.085 – 0.145 per kWh (Cooper, 2009)” (Battaglini, Lilliestam, and Knies, 2009, p290, 292, 293). In

Addition, the population in Europe, the Middle East and North Africa (EUMENA) is expected to increase by

45% by 2050, accompanied by an increase in power demand to more than 8000 TWH. The largest population

increase is expected to be in Turkey and Egypt, creating the highest demand for electricity there. These

countries as well as Saudi Arabia, Jordan and Syria will represent 33% of the EUMENA total “as much as

23

the four largest EU economies Germany, France, UK and Italy together” (Dii, 2012). By integrating power

systems within EUMENA, the region may succeed in supplying Europe 20% of its electricity need and

avoiding climate risk. Consequently, the high power demand in Egypt and the ME could lead to less

exportation of electricity in order to meet their domestic requirements. However, MENA can “contribute to a

50% CO2 reduction” (Dii, 2012). Moreover, “Desert power helps improve the competitiveness of the

EUMENA power system by making the achievement of ambitious CO2 reduction goals more economic. The

competitive advantage of EUMENA-wide power system results from a total of 1110TWh of annual power

exchange, thereof 1087TWh from MENA to Europe and 23TWh from Europe to MENA3. Thus, the trade

balance amounts to 1064TWh of annual net exports from MENA to Europe. The Connected Scenario saves

€33bn. per year in system cost. For the approx. 1110TWh of annual power exchange between MENA and

Europe, this amounts to approx. 30€/MWh (Dii, 2012, p 5, 10).

Battaglini, Lilliestam, and Knies (2009) also suggest combining the centralized and decentralized

renewable options. The centralized one depends on the High Volt Direct Current (HVDC) transmission

technology system to minimize losses, and the decentralized one depends on multitudes of scattered

generation sources. They termed this need for energy in Europe and other places as the “SuperSmart Grid

(SSG)”. The same paper shows that the high cost of this technology will not be a problem in the near future.

The average cost of this technology is about “EUR 0.25 per kWh in Spain and some EUR 0.15 per kWh in

southern USA and in the desert of North Africa” (Battaglini, Lilliestam, and Knies, 2009). These prices may

be reduced with the increased use of this technology because “costs are reduced through learning by doing”

(Battalini, Lillestam, and Knies, 2009).

24

Fig 6. System Cost development per KW in percent of 2010 cost estimate

Source: Dii (2012)

Therefore, facing, dealing and addressing investors’ concerns related to investing on a large scale

using CSP technology is necessary and crucial in order to cure the imbalance that is caused by high costs,

climate changes and the increase in the population.

The economic concept to high risk means more profit, but the risk is already known and the key to

dealing with it is somehow clear. In the NA case, the risk can be more dangerous and unclear, representing

the real barrier towards the project in NA and Egypt with its recent status, as the expected profit to that high

risk may not be achieved if there is no clear view to that kind of risks and how to deal with them. Mendonca

(2009) discussed in his paper the advantages of the feed in the tariff system and how it helps in minimizing

the investors’ cost and economic risks especially in the beginning; Spain is a real practical example to this

system (Mendonca, 2009). Later, the study will handle the advantages and disadvantages of feed in tariffs.

Unfortunately, the feed in tariffs may lead to decreasing the economic risk, but the political risk and

the unstable situation in NA and in Egypt, especially after the recent events, may lead to obstructing

everything. Al Khattab (2011) declares, “The recent growth in diplomatic, civil and military conflicts

presents evolving challenges for international business. These risks create new sources of country risk”.

Komendantova, Patt and Williges (2011) present a survey with officials in FDI about their concerns in the

25

region, where their concerns mostly revolve around the weakness of the government and the bureaucracy, the

spread of corruption, theft and nepotism, and that there is no specific destination to facilitating the tasks. Also

the ignorance of people towards the importance of these kinds of projects makes it easy to neglect and not act

towards reviving these projects (Komendantova, Patt and Williges, 2011). In the European Union and others,

there is a significant degree of awareness of cultural and industrial progress and their culture has been able to

understand the dangers of heat emissions and environmental pollution with the support of their governments

and the people in addressing this risk. It is important to make a right and solid base from the beginning by

convincing and teaching governments how to adopt people’s behaviors towards a sustainable life in order to

have them accept the idea of sustainability, and also because public opinion represents a form of pressure on

governments towards supporting sustainable projects (Blackstone, 2013).

The previous section referred to FDI in NA, which is considered very weak. However, according to

the World Investment and Political Risk Report in 2013, FDI is expected to invest at higher rates in the

coming years, since “After plummeting in 2011 from an earlier peak in 2008, flows into the MENA region

rebounded by 43 percent in 2012 to reach $19 billion, reflecting underlying investor durability even in the

face of political risk. The rebound was particularly strong in Egypt, which had been adversely affected by a

deteriorating economy, an uncertain political outlook, and significant downside risks. FDI flows there

reached nearly $3 billion in 2012, having registered net divestments in the previous year” (WIPR, 2013,

p.16). Hence, FDI increased in region, especially in Egypt despite its security and political circumstances.

This potentially shows that there are advantages of investment and profitability that make them attractive

even in the face of risks in the region.

The Multilateral Investment Guarantee Agency (MIGA) - Economic Intelligence Unit (EIU) Political

Risk Survey from World Bank Group shows that due to the high rates of political and economic risk, the

Arab Spring conflict and the instability in the region and especially in Egypt, has led to an increase in the role

of the Political Risk Insurance (PRI) industry with “New insurance by members of the Berne Union” by 33%

in 2012 and similar growth in 2013. Yet, the role of FDI is supported by MIGA guarantees, which protects

investments against political risks. Also, the bureaucracy and corruption in developing countries increased

26

and “in 2006-2012 were nearly double what they were in 2000-2005, despite the global financial crisis,

resultant economic recession, the Arab Spring, and renewed political uncertainty in many countries” (WIPR,

2013, p12). Not only FDI was affected, but the Export Credit Agencies (ECAS) also became very important

to the investment community and particularly in the recent period. Even the Islamic Corporation for the

Insurance of Investment and Export Credit (ICIEC) adapted its system in order to match the new situation

(WIPR, 2013).

3.2.3 SUMMARY

The energy policy role in oil history shows how the international relationship can be flexible and

changeable according to the situation and direction, which may also play an important role in identifying how

we want the future international relationship between the parties of the cooperation to be in accordance with

the current interests of both sides. Where energy security is still the main concern for all sides, and this kind

of agreement is proof, everything revolves around the main axis of energy, climate change and its related

problems. Also, an increase in FDI’s role in the NA region regardless of the negative economic and political

situation is reassuring that the region already enjoys international attention. In addition, increasing all these

movements in order to support business in the region indicates that investors see the possibilities of success,

even with the political and economic circumstances. The new trend of insurance association work on

adapting with the investors’ concerns, which takes into consideration the supply and demand needs, also

helps mitigate their fears towards political risks. All of these indicators show the possibility of the success of

the idea and that this success is sought by all parties.

THE ROLE OF SOLAR ENERGY OBLIGATION 3.3

The solar thermal industry in Europe was never as important as it is now (ESTIF, 2007). The interest in

alternative energy has increased with the recent mounting environmental problems, creating the so-called

“political environment” (ESTIF, 2007, p. 9). The same document shows that the main reasons for speeding

27

up solar obligations were support by local governments, regardless of their political affiliation and the new

trend of imposing solar commitments in the development of new architectural structures (ESTIF, 2007). In

addition, the Industry, Research and Energy Committee (ITRE) adopted an amendment on July 9th, 2007,

calling for a type of cram to all member states to use a certain percentage of renewable energy as a source for

heating consumption, and to be mandatory in new buildings construction (ESTIF, 2007). This is obvious in

the following statement, “The Commission to speed up the widespread adoption in all Member States of best

practice regulations making it compulsory, at least in the case of major renovation of buildings and new

buildings, for a minimum proportion of the heating requirement to be met from renewable sources as has

already been implemented in a growing number of regions and municipalities” (ESTIF, 2007, p. 10). It

seems that the renewable energy policy debate became essential in the European agenda; “if European would

cover 50% of its hot water consumption with solar, the savings would be roughly 12 mtoe (multiplies tonne

of oil equivalent) per year, or 1% of the EU‟s final energy consumption. This is equivalent to the total

consumption for space and water heating of almost 10 millions households” (ESTIF, 2007, p. 13). According

to Eurostat (2010), the real share to renewable energy consumption represented 12.5% in 2010 compared to

8.5% in 2005. This means 60% of Europe’s total target for 2020 has been achieved. Renewable energy

represented 14.3% in 2010, and the total heat consumption was 19.6% of electricity consumption and 4.7%

of fuel transport consumption (European Environment Agency, 2013). The following figure shows the share

of renewable energy’s consumption in EU.

28

Fig 7. The share of Renewable energy’s consumption

Source: European Environmental Agency (2013), Eurostat, Statistics of the European Union (Eurostat)

3.3.1 FEED IN TARIFF POLICY SYSTEM

For the previous reasons, it was logical that some policies appear to serve renewable energy targets

and help achieve the planned program towards the climate. Recently solar energy and other renewable energy

types have become very important sources of energy in many European countries, where the appearance of

feed in the tariff policy system leads to avoiding some obstacles faced by investors that may hind the

required plans. Applying the feed in tariff policy system creates incentives for the deployment of renewable

energy. The policy of feed-in tariffs operates as a kind of incentive to encourage the new generation of

industries and investors to rely on renewable energy resources. This policy works on imposing an obligation

on energy companies to urge them to buy renewable power at a pre-determined price set by the government.

29

Meanwhile, the government provides suitable compensation for those companies for the additional cost. That

way, it can be a tool to let investors re-organize their energy resources in order to get the maximum benefits

(Karekezi and Muzee, 2009). In spite of the importance of the idea of incentives, industries may end up

seeking new techniques. Mcfeely and Eakin (2013) suggest following a certain technique called “Plug n

Play” as the Universal Serial Bus (USB). This technique gives a multiple options for consumers and works

on increasing sales. By applying the same technique in the PV industry field, the cost can be reduced. This

can happen if the consumer of electricity customizes his demand, then the PV industry can give simple and

easy designs and law installation costs. This combination can lead to more profitability and a higher quality,

such as the example when “SolarTech enlisted a module standards team from the December 2012 workshop

participants to identify a definition path for 60- and 72-cell crystalline silicon solar module standards. The

committee analyzed several factors with the goal to define a proposal best serving the entire industry.

Module performance can be impacted by tight inter-cell dimensional tolerances, and concretively large

inter-cell dimensions reduce footprint efficiency” (Mcfeely and Eakin, 2013). As there is no time to be more

reactive in this field, the customers begin to change the whole failing modules system, but not as one of a

group since it would be useless (Mcfeely and Eakin, 2013).

Zhang (2013) finds the feed in tariff system has become the most common and most widely used, in

order to encourage the deployment of renewable energy globally and make renewable energy compete with

fossil fuels in the context of cost. Table 1 shows the Renewable energy consumption in EU. In 2012, there

were 65 countries that choose the feed-in tariff system, in order to contribute to the dissemination of

Renewable Energy. Despite the instability of its cost effectiveness, these countries succeeded to issue 75% of

global solar photovoltaic and 45 % of global wind capacity (Zhang, 2013).

In spite of the importance of this system, there are some obstacles that can hinder the success of this

policy, especially in developing countries. The unclear procedures and non-distribution of responsibilities

and roles in their proper places can lead to more cost and long administration work time to begin with. This is

in addition to poor knowledge of renewable energy technology and how it can make a difference in quality of

life. These kinds of obstacles can make the feed in tariff policy useless and can be insufficiently effective in

30

achieving its objectives (WFC, 2013). Also, Zhang (2013) pointed out that feed-in tariff (FITs) policies

cannot be totally relied on as the only way to deploy renewable energy. The system is supposed to submit an

adequate incentive matching with the demanded volume of renewable generation. Paying too much can lead

to weak investment performance, when it depends only on more support. This high support represented by

energy consumers may cause counterproductive responses towards development, especially in developing

countries, when the energy consumer allocates a large proportion of his/her income to energy and potential

with the possibility of higher tariffs (Zhang, 2013). However, Weis and Anderson (2010) see the FIT

guarantees profits to the renewable electricity supplier and also guarantees an opportunity to make an impact

in the country in the transitional phase; it is also seen as a main tool of globally sustaining renewable energy.

Germany is one of the most successful countries to have implemented this system, where its target was

transmitting 15% of its energy to renewable Energy and employing 300,000 people in this field and up until

2010, they had succeeded. The province of Ontario in North America is another successful application of this

tariff, where “Clear Sky advisors have estimated Ontario’s FIT will create 70,000 solar jobs at a cost of one

Tim Horton’s donut per month” (Weis and Anderson, 2010). This is in addition to many of countries that

have taken positive steps towards legislation of the Feed in Tariffs (Weis and Anderson, 2010). The same

author attributes the success of this system to some essential reasons, such as that it is easy for anyone to be

in the Feed in tariff program, which works on encouraging people to produce and work in renewable energy,

so people became a part of the transformation stage. The tariff works on reducing the costs of renewable

energy sources and consumers share any incremental costs; hence, the system depends on long-term

contracts, which leads to a kind of stability in the market. These reasons contribute to deploying the TIF

program, which leads to deploying the Renewable Energy (Weis and Anderson, 2010).

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Table 1. Share of renewable in gross inland energy consumption, 2010

Source: Eurostat (online data codes:nrg_100a,nrg_1071a and nrg_1072a)

3.3.2 QUOTA MODELS AND CLEAN DEVELOPMENT MECHANISM

Also the “quota models” considers another way to reduce the high costs related to investing in

renewable energy technology. This method is not dependant on a fixed tariff as the feed in tariff policy

system, but rather the market plays the main role in settling the price. According to Pegels (2009), this

method is able to reduce the cost of the technology. However, the price is determined through the market,

which means the existence of high risks of the future price may lead to negative affect “in development of

such earlier –stage technology” (Pegels, 2009, p. 16). However, the advantages of the quota model over the

feed-in tariff system support the technologies used in renewable energy and also easily expand the grid in

case of an increase in the development of renewable energy sources (Lang, Mutschler, 2013).

32

There is the Clear Development Mechanism method (CDM) provided by the Kyoto Protocol in order

to help decrease the carbon effect. It works on transferring the technology related to clean development

including hardware and software elements from developed countries to developing countries, as its main

target is to decrease the “abatement costs” (Dechezlepretre, Glachant, Meniere, 2007, p. 2). Regarding those

methods and up until May 2007, there were 644 projects registered under that system, the paper refers to the

study presented by Haites (2006) who approved that the technology transfers to only a third of 860 projects.

Next figure shows the status of CDM towards the projects that fall under that CDM system (Dechezlepretre,

Glachant, Meniere, 2007).

Nature of

technology

transfer

No. of

projects

% of

projects

% of annual

emission

reduction

Average reduction

per project (kt

CO2eq/yr)

Transfer 279 43% 84% 403

Equipment 57 9% 6% 133

Knowledge 101 15% 14% 185

Equipment

+knowledge

121 19% 64% 714

No transfer 365 57% 16% 59

Total 644 100% 100% 208

Table 2. Technology transfer’s status under CDM

Source: Dechezlepretre, Glachant, Meniere, 2007.

Pegels (2007) finds that CDM provides a chance to create more financial sources in developing

countries that could help in solving the funds problem. According to Pegels’ (2007) point, the CDM achieved

widespread success in China and India, but failed in a country like South Africa, since the performance and

experience deficiencies may not cope with CDM regulations. However, the Designated National Authority

(DNA) in South Africa is trying hard to enhance CDM methods by establishing “capacity –building

33

workshop” (Pegels, 2009, p. 20). Also, Karakosta and Psarras (2011) discussed the effects of CDM projects

in Egypt and how they could be a simple tool to switch from coal to natural gas and lead to “power

generation in oil/gas exporting country in which Egypt is included”; in Egypt, energy efficiency can be

considerable through “energy efficiency intervention and process modernisation in most countries of the

region” (Karakosta and Psarras, 2001, p. 829). CDM is considered a flexible tool which different countries

can adapt their targets and needs according to and work towards sustainable energy projects. Even with these

advantages, CDM projects represent only 161 projects in Africa of 6147 globalized. Egypt was home to 15

projects until 2011. Indeed, the reasons for this small number may be the lack of interest by major countries

and international companies to focus on this technique and mechanism, in spite of evidence of its

effectiveness and the possibility of it succeeding in developing countries (Karakosta and Psarras, 2013).

However, the Kyoto Protocol, the convention on climate change and its target at reducing emissions through

a set of obligations, has seen its effects on the EU for the previous year. The greenhouse emissions went

down from 2010 to 2011 by 3.3% in EU-27 and 4.5% in EU-15, where the highest countries were Finland,

Belgium and Denmark (EEA, 2011). The overall reduction decreased by 8% from 2008 to 2013 in EU-15

(EEA, 2013).

Fig 8. The GHG Total Emissions for 1990 to 2011

Source: National emissions reported to the UNFCCC and to the EU GHG Monitoring Mechanism provided

by United Nations Framework Convention on Climate Change (UNFCCC) 1990-2011.

http://www.eea.europa.eu/data-and-maps/data/national-emissions-reported-to-the-unfccc-and-to-the-eu-greenhouse-gas-monitoring-mechanism-7

34

On a different note, at the start of 2002 and with the high and increasing economic growth rates in

countries like China, India and other developing countries, more demand for fossil fuels made greenhouse

emissions to increase by 9% in China and 6% in India in 2011. While the utilization of renewable energy

resources has increased rapidly in recent years as a reaction to the climate change, this wasn’t the case

before. According to Olivier, Janssens- Maenhout and Peters (2012), it took 12 years from 1993 to 2004 to

increase them from 0.5% to 1%, in contrast to only 6 years from then to reach 2.1% in 2011, representing

only 0.8 billion tonnes from emissions in 2011. Also, United States has contributed to the increase in

emissions by 0.4% in 2011 (Olivier, Janssens-Maenhout and Peters, 2012)

Developing countries, excluding China and India, have increased their emissions by 2% in 2011, but

this increase is considered better than the huge increase in 2010 of 7%, due to the economic recovery

program and the global recession in 2009 (Olivier, Janssens-Maenhout and Peters, 2012). However, the

same study gave an average of cumulated CO2 from 2002 until 2011 of 420 billion tonnes and predicted that

if greenhouse emissions increased by the same rate, the cumulative total will exceed the current total by a

great deal in the next two decades (Olivier, Janssens-Maenhout and Peters, 2012).

However, attempts to reduce internal administrative obstacles, including the work of the enactment

solar obligation to enhance the internal use of solar thermal energy, were considered insufficient to reach the

EU’s ambitious target of supplying 20% of Europe’s needs with renewable energy by 2020. These efforts

also failed to cover the possible uses of solar energy in the industrial field or to solve issues of oil

dependence and climate change (EREC, 2011).

EGYPT’S POTENTIALITY AS A HOST COUNTRY3.4

This study focuses on sustainable and clean solar energy for Egypt and the European Union through

mutual cooperation. The geographic location of Egypt within the global Sun Belt qualifies it to become one

of the biggest exporters of solar energy worldwide, because it is advantageous with solar energy. Countries

that enjoy high solar irradiation can be boosters to countries that enjoy less of it, as is clear in Figure 1.

35

So, there is profit from the Geographic Synergies advantages. It’s important to distinguish the

countries that already have solar irradiation advantage, in order to compensate countries that have a shortage

of this kind of resources since “Efficiency is consistently available across the country, so states with fewer

renewable can exploit efficiency opportunities to compensate” (ACEEE, 2007, p. IV).

In Egypt, the incident solar radiation global directed and diffused on a horizontal surface during

January 1990 till December 2010 (Lat. 30105N and Long.31115’E) (Khalil and Shaffie, 2013).

Unfortunately, the measurement tools for solar radiation are inaccurate in developing countries, so the

measurement depends more on meteorological data and horizontal solar intensity. El-Sebaii and Trabea

(2002) conducted their study in four locations in Egypt (Matruh, Al-Arish, Rafah and Aswan) to make sure

that any location in Egypt can be measured using correlations to get the diffuse radiation in long terms

performance. Both studies showed that Egypt is a potential country for Solar Energy project due to its

location and its solar radiation, with 2900-3200 hours of sunshine (Comsan, 2010), emphasizing that “The

Mediterranean basin countries possess good wind energy potential, while Solar energy potential seems to be

extremely wise and well distributed” (Karakosta and Psarras, 2013). However, the turnout on projects related

to solar energy is very weak due to the weakness of possibilities and the government's inability, where the

only solar energy project using CSP technology in Egypt is Kuraymat with an overall capacity of 140 MW

“120 MW combined cycle and 20 MW solar input” (NREL, 2013). According to the Egyptian Electricity

Holding Company’s annual report for 2011/2012 by the Ministry of Electricity and Energy (MOEE), the

peak load reached 23470 MW in 2010/2011 and 25705 MW in 2011/2012 (MOEE, 2011/2012). The annual

core inflation rate quickened to 6.9 percent in September 2013 from 6.6 percent in August 2013, while the

annual electricity, fuel and utilities (EFU) inflation rate increased to 2.1% from 1.6% (Ministry of Finance

report, 2013), meaning that the amount of electricity production expected from Kuraymat project will not

succeed to cover except a small percentage of the interior needs of electricity, especially with population

growth expected to reach 110 million by 2031 and 128 million by 2051 (President Hosni Mubarak on Egypt's

Population, 2008). The use of solar energy will increase maps and geographical and temporal distribution of

the surface of the sun, which has become increasingly important in order to raise the size of the surface as a

36

source of energy (Shaltout and Hassen, 1990). The shortage and weakness in local support can give a motive

to enhance and fast the cooperation with EU on the Egyptian government side.

Location Latitude(N) Longitude(E) Elevation (M)

Matruh 31 ° 21′ 27 ° 13′ 38

Al-Arish 31 ° 07′ 33 ° 45′ 32.0

Rafah 31 ° 13′ 34 ° 12′ 73.0

Aswan 23 ° 58′ 32 ° 47′ 191.7

Table 3. The selected Locations

Source: El-Sebaii and Trabea 2002

It’s clear that Egypt is very rich with natural energy resources and it does not abbreviate on just solar

radiation, with the raise in gas production evidence of how Egypt enjoys a variety of natural energy wealth.

Suding (2011) declares, “Egyptian power generation is characterised by a prevalence of natural gas, the

absence of coal, as well as rather low generation losses due to significant hydro-power and a substantial

capacity of efficient combined by cycle natural gas plants” ( Suding, 2011).

The wind resources also have a good potential, with wind capacity production raised from 1133 GWh

in 2009/2010 to 1485 in 2010/2011 with a variance 31.1% (MOEE, 2010/2011). The New Renewable Energy

Authority (NREA) has already achieved 547 MW of wind farm capacity and 140 MW from a solar thermal

power plant in 2011 (MOEE, 2010/2011).

Moreover, the Egyptian Electricity Holding Company (EEHC) occupies a center of excellence in the

export of clean energy (EETC) and NREA; they already have a plan to achieve ambitious targets of 20% RE

generation by 2020 (MOEE, 2010/2011). According to Suding (2011), their plan will need at least 1000 MW

of solar power, which means at least 20 plants’ capacity; this will need huge financial and technical support

where Egypt is already lacking in these requirements (Suding, 2011). The Egyptian government owns the

natural energy resources that can make the country occupy a centre of excellence in export the clean energy,

but they lack the financial and technical support, so they are “effectively mobilizing private investment under

37

the new modalities, starting construction in other areas of Egypt and strengthening the transmission system”

(Suding, 2011, p. 4435).

Another advantage related to economic cost is that Egypt is considered one of the countries with

privileges in law investment cost, where law land costs and labour costs and wages (ITIDA, 2010) will

enhance, attract and motivate investors to the area.

3.4.1 EGYPT'S ECONOMIC CHALLENGES AS A COOPERATION MOTIVE

The study handled the investor’s perspective to challenges, obstacles and the expected problems in

case investing in Egypt. But in this part, it will discuss the domestic barriers and challenges from Egypt’s

perspective. These barriers and challenges may represent the motives towards joint cooperation with the

countries of the European Union, despite the weakness of its government and the deterioration of their

political status.

Since the Arab spring, Egypt has suffered from a critical economic situation accompanied by unstable

policies in the region as well as a lack of water and irrigation, as a result of population growth and climate

change threats to water and food security (Brown, Hammill and Mcleman, 2007). The conflict between

Egypt and the Nile Basin countries, especially after the recent Egypt-Ethiopia crisis on the construction of the

Ethioia Renaissance Dam on the Blue Nile also presents a real threat to security in Egypt. The threats of

floods and drought problems, as well as any potential decrease to Egypt’s water share could lead to

decreasing the proportion allotted per capita in water and electricity generated by the High Dam (Kameri

Mbote, 2007). A historical agreement in 1929 between Egypt and Britain, when Ethiopia was under British

occupation, prevents the construction of any dam affecting the amount of water flowing to Egypt or without

the permission of Egypt (Khazem, 2013). Recently, some countries of the Nile Basin countries have objected

to this Convention, which was conducted under colonization and demanded re-broadcast in terms of shares

allocated to each country, where the share of Egypt and Sudan in accordance with this convention is 90% of

the total share of the Nile water and only 10% to the other Basin Nile countries (Khazem, 2013). This

conflict might affect Egypt's share of Nile water negatively, despite the confirmation of Ethiopian Prime

38

Minister Desalegn that the dam has no impact on the water share reaching Egypt and Sudan. Amani Ismail,

Chief of Fisheries, has confirmed that the construction of the dam may cause a loss of about 18 million cubic

of the total water that reaches Egypt and Sudan, as well as a 25-30% decrease in electricity generation

produced through the High Dam (Gulhane, 2013). Decreasing Egypt's share of Nile water while increasing

population growth (which will happen in the largest proportion in less developed countries among the poorest

areas) may lead to an increase in the desertification problem (United Nation, 2011). Moreover, this will lead

to growing unemployment rates, increasing prices, and an increasing inflation rate that would create a real

disaster if there is no alternative solution, where a real disaster may occur in Egypt (Howell and Allan, 1994).

Water shortage in NA can be solved through solar energy technology implementation in the Sahara region,

and this way the water shortage problem can be a motive to speed up international cooperation in that area.

According to Lamei, Van der Zaag and Von Munch (2008), the idea of implanting solar energy technology

on a large scale in the Sahara area should be supported as there is new technology beginning to be applied in

the region called Reverse Osmosis (RO), which depends on fossil in order to work and after the increase in

fossil prices and the Kyoto Protocol regulations towards mitigating GHG emissions in 1999, solar energy

became the alternative for a region enjoying solar radiation. RO began in Egypt on a small scale “up to

5MW; 10000-15000 m3/d product water capacity” (Lamei, Van der Zaag and Von Munch, 2008). This

technology, if applied on a large scale using CSP technology in the Sahara region, could solve a part of water

shortage that faces the increasing population. These can be real drivers that motivate Egypt to change its

energy mix in order to achieve more interior economic development and avoid predicted disasters in case the

current situation does not change.

At the same time, Egypt cannot ignore a lot of “Bedouin tribes” who have lived in the Sahara for

thousands of years. The lives and rights of desert people have to be taken into consideration when

establishing any joint agreement, to decrease the risks of terrorist attacks and ensure reliable cooperation

(Battaglini, Lilliestam, and Knies, 2009).

39

3.4.2 THE BEGINNING OF SOLAR ENERGY IN EGYPT

There is an optimistic view of the situation, where the real beginning of solar energy’s utilization in

Egypt was in 1910, when it was decided to make “practical, industrial scale, solar engines using solar

thermal parabolic collectors” (Comsan, 2010, p. 1). These were located in southern Cairo to produce steam

that was transformed to water for irrigation. That project made Egypt one the first countries to utilize solar

energy. In 1986, the National Authority for Renewable Energy (NREA) was founded to support renewable

energy technology. In 2007, the Supreme Council for Energy was established to work on attracting new

investments in that field with the aim of making solar energy in Egypt account for 20% of total electricity

demand by 2027. The idea of using solar energy for electricity generation and water supply can help Egypt

face its shortage in both fields. This would coincide with the rapidly increasing population in a country

considered to be one of the fastest growing populations in the world; according to the Cairo Demographic

Centre, by 2031, Egypt’s population is expected to reach 110 million and 128 million by 2051. This number

is not commensurate with its current energy (Comsan, 2010). The next table gives an indication of Egypt’s

population and electric power.

Year 2007 2012 2017 2022 2027

Population(million) 78.3 85.2 92.1 98.8 105.1

Per Capita installed power (MW/c) 0.28 0.34 0.41 0.48 0.55

Total (GW) 21.9 29.0 37.8 47.1 57.7

Installed power annual growth rate (%) 4.4 5.8 5.4 4.5 4.0

Year 2032 2037 2042 2047 2052

Population(million) 111.1 116.5 121.2 125.3 128.5

Per Capita installed power (MW/c) 0.63 0.72 0.82 0.92 1.02

Total (GW) 70.0 84.0 100 115 132

Installed power annual growth rate (%) 4.0 3.7 3.5 2.8 2.7

40

Table 4. Egypt’s population and electric power indicators (2007-2052) Source: Comsan (2010) - Population in Egypt. National Population Conference, Cairo, Egypt, June 2008.

3.4.3 THE ENERGY POLICY STRATEGY IN EGYPT

The appearance of an energy policy strategy in Egypt was in 2007 by National Democratic Party

(NDP) in order to meet the national demand of energy for the next 15 years and stating, “Under existing

plans, Egypt hopes to produce up to 20 % of its electricity from renewable energy by 2020 while also

developing a nuclear power program (EIA, 2012)” (Raslan, 2013). It included important supporting points

that were supposed to serve national security and work on increasing clean energy resources to meet the

country’s needs while maintaining the volume of oil at a certain point with no extra raise (Raslan, 2013). In

Suding’s (2011) view, it was a positive and important step towards sustainability, especially if needs were

planned to be met from renewable energy sources. However, the policy ignored the energy efficiency plan

and did not relate the effect of energy consumption of fuel on the environment, climate change and pollution.

This indicates that this point is still far from being on the government's agenda and the people remain

unaware of the extent and seriousness of the situation which has negatively affected their lifestyles, health

and economic standard (Suding, 2011). Raslan (2013) sees a declination in transmission losses in the

National Unified Power System from 6.56% in 1998/1999 to 3.8% in 2007/2008, but it’s not enough to cope

with future demand. There is a possibility to cope with future demand if the Government plans to increase its

commitment to infrastructure investment with a minimum of $45bn. According to international investment,

EFG Hermes’ report states that the “capacity of 2000-3000 MW is required – approximately 10% of the

installed capacity” in order to improve the efficiency & meet the increase in national demand (Raslan, 2013).

The geographical position of Egypt and its richness in natural resources may force governments and global

policies to address the imbalance in the existing administration and take a step towards exploiting the wealth

of Egypt and towards joint cooperation between countries in order to achieve gains for both parties. There is

a successful model that shows how joint cooperation and addressing the imbalance would lead to further

gains, with an example of natural gas production. Natural gas has become an important resource for Egypt’s

41

future energy because of both previous discoveries and the potential ones, as “Proven reserves stand at 65

trillion cubic feet (tcf) in 2004 up from 55 tcf in 2002 and 40 tcf in 2000, with probable reserves estimated at

120 tcf”(Algarhi, 2005). It is expected that discoveries in the coming years will reach 3 trillion by 2025

because of cooperation and mutual benefits with international companies and FDI in this field, which

represent technology, capital and financial investment experience while Egypt represents the source of

energy (Suding, 2011).

On the other hand, and according to Rashad (2006), the economic, environment and social factors are

the main ones for sustainable development. She noted the efforts undertaken by the Egyptian Ministry of

Electricity and Energy in order to achieve and ensure energy efficiency and effectiveness combined with the

quality of life. However, this cannot happen without the exploitation of new sources of renewable energy.

Regarding the same paper, she emphasizes that this development cannot take place unless there is focus on

some of the important axes, which are “individual development, social system, government, infrastructure,

economic system and resources and environment” (Rashad, 2006, p. 23). The next table shows this relation.

Table 5. The six major axes and its relationship to each other.

Source: Rashad S., Atomic Energy Authority

Individual Development Development

Social System

Government System

Economic System

Environment Resource System

Infrastructure system

42

INTERNATIONAL COOPERATION COULD PROMOTE SAFETY/CERTAINTY3.5

While the world is being subjected to a new energy crisis that may be the worst ever, according to

Williams and Alhajji (2003), there is a limit in global energy excess capacity, and “Strategic Petroleum

Reserves” (SPR) could reach their lowest level since 1973 and 1979. This means that the situation is worse

than previous decades when the global economic level was not as large as today. The energy crisis and oil

dependency is growing day after day. This growth leads to rising international energy prices and increases

threats to economic and national security (Williams and Alhajji, 2003). There is another fear that solar

energy resources from outside the EU will create the same oil dependency scenario, where “Building solar

power plants in politically unstable countries opens you to the same kind of dependency as the situation with

oil” (Asbeck, 2009).

The disruptions in oil supplies from Venezuela due to a political crisis as well as wars in the Gulf show

that any secure source is only a temporary one and is subject to change with any political updates, since

“Change in politics is faster than the change in the life of an oil field from exploration to depletion”

(Williams and Alhajji, 2003 p 5). Even with the presence of the Organization of Petroleum Exporting

Countries (OPEC), the intergovernmental organization for stability and control loses control when prices are

rising due to its few members who have little excess energy capacity (Williams and Alhajji, 2003). However,

by reducing oil dependency, the effect on national security may decrease in return. This can happen by

investing in sources with no or with very few carbons, benefitting several areas: reducing dependency on oil,

pollution, and opening a new field to a new technology that may benefit its supplier (Beddor, Chen, Deleon,

Park and Weiss, 2009). Also, Battaglini, Lilliestam, and Knies suggest three points to guarantee safety and

certainty: variety in resources, flexibility in power systems, and decentralized large shares for renewable

energy throughout Europe’s grid. North Africa is regarded as one of these sources of diversification, which

lowers the level of oil dependency, and establishes a stable long-term relationship with the EU that would

enhance the benefits in the power sector for both sides. The fear of renewing the idea of colonialism from

43

developed countries or the exploitation of exporting countries to achieve a particular interest will make

working on stability within the relationship not an easy task. Despite these difficulties, a country like Norway

has succeeded in becoming a security source by separating exported oil or gas for its personal benefit. At the

same time, reasons that cause security sources to become insecure ones should not be overlooked, which

happens when one of the parties ignores the other’s requirements.

In addition, some projects are already beginning to take place in the renewable energy field, like the

Morocco Dessert Project, for the sake of energy strategy and targeting energy efficiency from renewable

energy (Moroccan project of solar energy, 2009). Also, in Tunisia, the project TU Nur is further developing

the export of solar energy from the Sahara to Europe using CSP technology, proving “the mirage no longer

exists” (Till and Kevin, 2013). Other meetings aim at reshaping the form of cooperation between the EU and

Mediterranean Countries (MC), such as the Paris Summit of 2008 (Sarkozy, Barroso, Solana, 2008). These

various organizations and global agreements represent another kind of challenge in order to unite and achieve

common goals. Also, the geographical location to Algeria made Algeria one of important recourses to Solar

Energy, because the “Solar potential of about 170 000 TWh / year, is 4000 times the current electricity

generation of Algeria” (Guendour, 2012, p10). Hence, Algeria has issued its renewable energy program till

2030 for the sake of sustainable energy and more economic development. It aims to generate 22,000 MW

using PV and CSP technology, located as follows: 12,000 MW for local consumption and 10,000 MW for

export (Zafar, 2013).

Fig 9. The expected Megawatt by using the CSP and PV

010002000300040005000600070008000

2011 2015 20202025 2030

CSP

0

500

1000

1500

2000

2500

3000

PV

44

Source: Societe Algerienne De L'electricite Et Du Gaz and Guendour, 2012.

This project is considered one of the most important projects in the region. In spite of the unstable

situation in the region, the Algerian government insists on the success of the project and is working to resolve

all the obstacles that could impede it, providing all the required facilities, securities, technologies and experts

that for the project to move forward. This is in addition to working on increasing public awareness about the

concept of renewable energy, a green economy and sustainable development. Furthermore, Algeria is part of

the Desertec project to provide Europe with 15% of its electricity needs by 2050 (Zafar, 2013).

Regions Coastal highlands Sahara

Area (%) 4 10 86

Average duration of sunshine

(hours / year)

2650 3000 3500

Average energy received

(kWh/m2/year)

1700 1900 2650

Table 6. The Solar Potential by region/per year in Algeria

Source: Societe Algerienne De L'electricite Et Du Gaz and Guendour, 2012.

In Egypt, some positive steps have already been taken towards solar water heating, where a large

percentage of the hotels especially on the coasts of the Red Sea and the southern Mediterranean depend on

that technology to face water supply shortages. Also, the Egyptian Ministry of Electricity and Energy

(MOEE) has adopted a project to generate electricity using the Solar Combined Cycle (ISCC) innovation,

which “is the integration of steam generated by solar energy into a combined cycle power plant, which will

require a larger steam turbine to generate electrical energy from the additional solar-generated steam”

(Comsan, 2010, p. 6). There is a strong trend aimed at exploiting the Egyptian Sahara using CSP technology

to generate solar energy. The idea of making the “Mediterranean Ring Project” (or transmission grid) to link

45

North Africa, Spain, Turkey and Europe through Greece could lead to more efficiency and increase energy

security (Comsan, 2010).

Most of these positive steps may refer to the importance of Sustainable Energy to developing countries’

futures. Despite the obstacles and challenges that face the weaker parties, namely developing countries

especially in NA, in terms of political instability and deterioration of their economic situations, these

countries insist on exceeding and overcoming most of these difficulties. Previous models are examples of

this; they are already supported by international experience and cooperation with multinational companies,

which were proven successful and continuous and have overcome most difficulties.

4 CONCLUSION

This study is based on reviewing the literature, including theories, relevant experiences, articles,

scientific opinions, textbooks and journal articles that concern the strategies and guidelines regarding energy

efficiency and renewable energy. Also, public opinion and the average reader of some press documents may

be important to take into account, where his support, his countenance and his social responsibilities at some

point in the project will represent a financial aid. They will demonstrate how this project for remapping of

energy can provide a new concept for future energy, and can also change the shape of relations between

Europe and Mediterranean countries by challenging obstacles and objections with scientific solution.

The cooperation between Egypt and the EU will have some common and shared interests. Europe

represents the capital investment, the scientists and experts, while Egypt represents the solar recourse, land

capital investment and a country with job vacancies, especially if it enjoys low labor cost advantage;

according to the Global Competitiveness Report of the World Economic Forum 2009/2010, Egypt was at 70

level up from 81 in 2008/2009 due to the upgrading of Egypt's infrastructure in all categories and the positive

developments on the labor market efficiently. The cost of doing business in Egypt is much lower than

Eastern Europe, when compared to India (ITIDA, 2010).

46

A clear and concrete energy policy plan addresses the reality of the region and its problems, while at the

same time achieves the basic objectives of these policies; this is the key to the potential of a successful

cooperation between the Europe Union and Egypt because it depends on addressing several challenges,

which are mainly political issues. If the law is directed at fixing the country’s domestic economic problems

and working to reduce pollution and climate variables, there will be completion to energy efficiency and the

required sustainable energy development may be achieved.

The domestic barriers hindering the project could in reality boost it. Indeed, a country like Egypt may

rely on such projects if willing to change its reality with regard to the deterioration of economic situation,

living standards and pollution’s adverse effects, in addition to decreasing the number of people below the

poverty line. If the Egyptian government succeeds in organizing and managing that kind of projects, the solar

radiation in Egypt may help to solve economic problems.

Furthermore, policymakers and investors would have a good opportunity to achieve political and

financial gains after working to mitigate political and economic risks by global institutions and international

insurance companies; it would achieve much of the gains in case of focusing on the region. Experience has

shown and reflected, for example, in some of the programs provided by the World Bank the success of the

idea, where the adapted and modified programs may decrease the defect and mitigate the current risk and

barriers.

Also, Europe and North Africa have the chance to simultaneously succeed without any negative impacts

on each other and without reducing each other’s fair share. However, political factors are a double-edged

sword. They can play a key role in international initiatives between developed and developing countries and

help in creating cooperation regarding renewable energy. However, because there are always at least two

opinions for every important issue, politics can also hinder these kinds of initiatives. Terrorism, pressure

from government intervention, unstable political situations and struggles for power are the fuel used to thwart

these kinds of initiatives. The entire production of local renewable energy for the Europe Union may be

enough to satisfy its current needs. On the long run, though, the rising demand, on-going economic

development, and a growing population will cause the entire supply to fall short of demand. Of course, fossil

47

fuels are not the ideal solution anymore because of their expected higher prices and increasing shortage, and,

more importantly, their effect on global warming. Large scale cooperation between Europe and Egypt to

produce solar energy for their energy needs could be one of the most positive solutions in solving their

energy problems while decreasing greenhouse emissions. If this cooperation is attached to the common

interests and goals of both parties, there will be material gain and much progress, guaranteeing more

development and economic growth.

The study tried to concentrate on the numerous international laws that are issued to protect the

environment and reduce greenhouse gas emissions, but these laws may be superficial and useless for some

countries, especially developing countries. The outlook to solving environmental problems is still seen as a

partial problem for some countries and communities that don’t have a globalized view, and whose only aim

is limiting the problem for a few short run economic development plans in order to achieve quick gains,

rather than providing a long-term solution. Even economic problems are strongly related to climate changes,

like water shortages, contamination of drinking water and the spread of disease; however, looking for radical

solution would already cost much to a country like Egypt.

According to the Intergovernmental Panel on Climate Change, the EU must reduce their global

emissions before 2015 by no less than 50% of today’s emissions by 2050 in order to achieve global climate

security (IPCC, 2008). This new strategic approach to energy must be followed if they plan to achieve their

target. Also, Egypt should begin its clean and clear energy policy and work on decreasing its carbon dioxide

proportion. From here, the recommendations for the future, the idea revealed itself, where I assumed that

both targets may not be achieved unless there is cooperation on both sides.

The analysis tries to reach the key engine, the real motives and indicators that affect the success or

failure of these relations. There are two axes that need to be resolved if we are to realize the effective results.

The first axis is investors’ concerns in NA investment that are centred around the following points: the

economic risk related to the high cost and shortage of technology and the policy risk that includes instability,

bureaucracy and the weakness of interior government, where studies have shown that the fear of the risk of

terrorism comes at a later stage after investors’ environment concerns. The second axis is the host country’s

48

perspectives centred in the idea of re-colonialism, the lack and ineffectiveness of the interior energy policy

and consumer demand patterns and economic performance. I tried to show the interior problems faced by

European countries in investing in renewable energy and how these problems are beneficial to the proposed

partnership and vice versa. This means it will be the original nucleus for that cooperation. The main obstacle

is the political situation and all of its contents, which may result in spoiling the idea, but could be eliminated

if we assume that the major international institutions will strengthen their efforts in the project in region by

addressing the proposals to reduce political risk developments, for example, the MIGA program and

increasing the role of the Political Risk Insurance (PRI) industry presented by the World Bank and other

institutions; this is what I tried to prove.

In addition, the socio-economics and awareness of climate change problems are already vulnerable, but if

the Egyptian government together with international institution worked on increasing this kind of awareness,

it would succeed in achieving financial sharing from society, where the high cost of technology and the

infrastructure and risks that accompany it would considered some of the main obstacles. In addition, the

policies related to cost, like the CDM program and others, would play an important role in decreasing the

cost, if applied in a good way. Moreover, the potential to decrease the cost and risk is high if more

investment goes into this field to reach a sustainable energy at the end. Also, I assumed a scenario where

society will play an important role in supporting the financing problem in case of a comprehensive awareness

campaign for people of developing countries. In addition, the role that the government needs to prove to its

people and to the international level that it is capable of protecting and serving a project of that volume.

One option includes no cooperation and is limited to only domestic production, with some laws that limit

or restrict the increase in greenhouse gas emissions, therefore causing the inability to cover the deficit, while

increasing pollution, climate changes and natural disasters. The other option involving cooperation will

mitigate business, which would inspire economic growth and increase GDP. Comparing the costs of these

two assumptions concludes that the initiative costs of cooperation far outweigh the costs associated with the

lack of cooperation. The costs involved with perpetuating sustainable energy resources will lead to

decreasing the threats causing climate change, which is better than increasing costs that would be required to

49

fix damages of climate change. The EU would have to lend a helping hand to NA in order to exceed the

traditional phase of converting their energy sources into renewable ones. In this case, NA would make a

fully financial, economic contribution and the EU would be successful in achieving its target and beating

climate change problems worldwide. At the end, the overall benefits will be for all parties. It’s time for the

emergence of a new technology era involving renewable energy resources. If nations are not willing to profit

from each other and take a real step towards cooperation in large scale, their political and economic conflicts

will lead to real catastrophes that would equally damage people everywhere.

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Thesis - Re-mapping Solar Energy

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