Green energy could save Egypt’s economy

Egypt is going through a transitional period, which might be a unique opportunity to move toward sustainable development and adopt an inclusive green economy strategy to achieve social equity and protect the environment.

al-monitor Wind turbines, which generate renewable energy, are seen on the Zafarana Wind Farm, near Ain Sokhna port in Suez, 140 kilometers (87 miles) east of Cairo, July 6, 2012.  Photo by REUTERS/Amr Abdallah Dalsh.

Topics covered

sustainability, green energy, employment, egypt, economy, development, business

May 8, 2015

Egypt faces significant economic, social and environmental challenges, especially in the period of transformation currently taking place. Its financial reserves have fallen from $36 billion in December 2010 to $16.5 billion in December 2013. This amount covers less than three months of imports, putting the country in a critical situation. Real gross domestic product growth is now estimated at 2.2%, while it was about 4.7% in 2008. Furthermore, the unemployment rate was estimated at about 13% at the end of 2012, meaning 3.5 million people are searching for jobs. It is likely that this figure has risen further during the past months.

The challenges facing the Egyptian economy cannot be adequately addressed by following the traditional development model that doesn’t take into account the social and environmental dimensions in policy- and decision-making. Shortages in water, food and energy are evidence of the mismanagement of natural resources, which is coupled with increasing levels of pollution, a depletion of natural resources and a degradation of lands and the ecosystem.

The transitional period taking place in Egypt provides a unique opportunity to move toward a sustainable development path. Through “greening” the economy, alongside the adoption of a participatory approach that takes into account the interests of society, solutions will become available to address the current challenges. This will create new jobs, stimulate and diversify the economy, enhance competitiveness and promote exports, while achieving greater social justice through integrating the poor into economic activities.

During the African Ministerial Conference on the Environment, hosted by Cairo in March 2015, the Egyptian “Green Economy Scoping Study” was presented. This study focused on alarming economic and environmental trends, such as the drop in the per capita share of water by more than 30% by 2025, the 36% increase in the production of solid waste since 2000 and the 3.78% annual increase in the depletion of natural resources. It showed that it was possible to limit these trends and reverse them through interventions in strategic policies that would accelerate sustainable development. If Egypt shifted to the path of a green economy, it could achieve annual savings of more than $1.3 billion in the agriculture sector and $1.1 billion in the water sector, in addition to lowering carbon dioxide emissions by 13% and reducing water and energy consumption by 40% and 30%, respectively.

Commenting on the study, Achim Steiner, the executive director of the United Nations Environment Program (UNEP), said, “Challenges such as Egypt’s rapidly growing population — which could reach 100 million by 2020 — coupled with an ecological footprint almost three times its available biocapacity, according to the Arab Forum for Environment and Development, are opportunities to implement an inclusive green economy strategy that can revitalize and diversify the economy and achieve social equity while also conserving the environment and improving health and human welfare.” He pointed to the available ingredients for such a transformation, in particular the resilient banking sector in Egypt, the abundance of labor and entrepreneurial skills, and the active public and private sectors.

The study, prepared by the UNEP at the request of the Egyptian Environmental Affairs Agency and the Egyptian Ministry of Environment, suggests interventions and investment options, shows expected benefits and describes policy approaches that can be adopted for “greening” four priority sectors (agriculture, water, energy and waste).

Sustainable agriculture and adequate irrigation

The agriculture sector currently contributes only about 14% of Egypt’s GDP, compared to 30% during the 1970s. Decades of faulty practices led to a huge loss in agricultural biodiversity, land erosion and loss of soil fertility. About 35% of Egyptian soil suffers from a high degree of salinity.

The green interventions that have been proposed to reverse these negative trends include investing in organic farming, changing cropping patterns and shifting to modern irrigation systems. Furthermore, directing investments toward rural areas will reduce migration to cities and the consequent pressure on infrastructure and social services. This, in turn, will contribute to enhancing equity and social cohesion, and improve distribution of wealth and opportunities, particularly among poor and marginalized groups.

The study found that the conversion of 20% of the total agricultural land, i.e., 1.44 million feddan (a feddan is equal to 4,200 square meters or 0.42 hectares), from conventional to sustainable and organic cultivation, could result in a savings of about 700,000 tons of chemical fertilizers annually at a value of $130 million. In addition, the study noted that the potential for producing compost from agricultural residues could provide more than 22 million tons of organic waste annually, producing fertilizer worth $1.2 billion. Moreover, producing organic fertilizer from 500,000 tons of rice hulls would reduce the amount of carbon emissions by 32,000 tons annually.

Reducing the area cultivated for rice and sugar cane — or using early maturing varieties of these crops — could lead to water savings valued between $500 million-$900 million by 2017.

Demand for water in Egypt is increasing at an alarming pace, and the annual per capita share of water is expected to decrease to 600 cubic meters by 2025, then to 350 cubic meters by 2050, after it was previously 950 cubic meters in 2004. The global average is 6,000 cubic meters per capita annually. Thus, pressure is growing on this scarce natural resource with continued population growth, urban expansion, and increased agricultural and industrial activities.

Proposed green interventions to reverse this trend include investing in non-conventional water resources development, such as desalination of seawater and using treated wastewater, and improving the efficiency of water usage at the national level.

It is estimated that investing in equipment and practices concerning drip irrigation in the agricultural sector could provide water savings of at least 40%, i.e., about 23 billion cubic meters annually. This could be translated into the production of 1.4 million tons of corn annually, valued at $260 million.

It's estimated that investing in water-saving faucets and other household devices could result in water savings ranging from 10-20%, equivalent to 1.4 billion cubic meter of water savings annually. Other benefits of water efficiency approaches include increasing land productivity and crop yields by 20-30%. Efficiency in the use and allocation of water resulting from improved governance and regulatory frameworks is estimated to result in a 10% savings in water consumption, equivalent to $877 million annually.

Renewable energy and efficient use

Since 2007, Egypt has experienced a gap between energy supply and demand, and it's expected to continue growing under the business-as-usual scenario. Public expenditure on energy subsidies has reached unprecedented levels, at about $100 billion in 2012, representing 73% of all subsidies and about 21% of Egypt’s budget, according to the African Development Bank. Oil and coal provide 40% of the energy supply, while natural gas’ contribution stands at 56%. Meanwhile, renewable energy sources — with the exception of hydro-energy — provide about 2.4%.

The proposed green interventions in the "Green Economy Scoping Study" include large investments in renewable energy sources, such as infrastructure for solar and wind energy, in order to increase its share in the total energy mix. The interventions also included investment in energy-saving equipment and appliances in homes, institutions and economic sectors, investment in human resources development, as well as research, development, technologies, practices and procedures concerning saving energy.

Investment in renewable energy is a driver for job creation, with an estimated 75,000 new job opportunities provided through design, manufacturing, installation, operational services and sales related to solar and wind systems. Investment in solar photovoltaic electricity production gives rise to higher employment rates, with between seven and 11 jobs per megawatt for a plant with average capacity, compared to 0.27 to 0.95 jobs per megawatt in a coal burning plant and 0.25 to 0.95 in a natural gas plant.

Published in conjunction with the “Environment and Development” magazine, May-June 2015 issue.

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