Carbon Market in the Middle East

Middle East is highly susceptible to climate change, on account of its water scarcity, high dependence on climate-sensitive agriculture, concentration of population and economic activity in urban coastal zones, and the presence of conflict-affected areas. Moreover, the region is one of the biggest contributors to greenhouse gas emissions on account of its thriving oil and gas industry.

The world’s dependence on Middle East energy resources has caused the region to have some of the largest carbon footprints per capita worldwide. Not surprisingly, the carbon emissions from UAE are approximately 55 tons per capita, which is more than double the US per capita footprint of 22 tons per year. The MENA region is now gearing up to meet the challenge of global warming, as with the rapid growth of the carbon market. During the last few years, many MENA countries, like UAE, Qatar, Egypt and Saudi Arabia have unveiled multi-billion dollar investment plans in the cleantech sector to portray a ‘green’ image.

There is an urgent need to foster sustainable energy systems, diversify energy sources, and implement energy efficiency measures. The clean development mechanism (CDM), under the Kyoto Protocol, is one of the most important tools to support renewable energy and energy efficiency initiatives in the MENA countries. Some MENA countries have already launched ambitious sustainable energy programs while others are beginning to recognize the need to adopt improved standards of energy efficiency.

The UAE, cognizant of its role as a major contributor to climate change, has launched several ambitious governmental initiatives, including UAE embassy legislation, aimed at reducing emissions by approximately 40 percent. Masdar, a $15 billion future energy company, will leverage the funds to produce a clean energy portfolio, which will then invest in clean energy technology across the Middle East and North African region. Egypt is the regional CDM leader with twelve projects in the UNFCCC pipeline and many more in the conceptualization phase.

Middle East is an attractive carbon market as it is rich in renewable energy resources and has a robust oil and gas industry. Surprisingly, very few CDM projects are taking place in MENA countries with only 22 CDM projects have been registered to date. The region accounts for only 1.5 percent of global CDM projects and only two percent of emission reduction credits.

The two main challenges facing many of these projects are: weak capacity in most MENA countries for identifying, developing and implementing carbon finance projects and securing underlying finance. Currently, there are several CDM projects in progress in Egypt, Jordan, Bahrain, Morocco, Syria and Tunisia. Many companies and consulting firms have begun to explore this now fast-developing field.

The Al-Shaheen project is the first of its kind in the region and third CDM project in the petroleum industry worldwide. The Al-Shaheen oilfield has flared the associated gas since the oilfield began operations in 1994. Prior to the project activity, the facilities used 125 tons per day (tpd) of associated gas for power and heat generation, and the remaining 4,100 tpd was flared. Under the current project, total gas production after the completion of the project activity is 5,000 tpd with 2,800-3,400 tpd to be exported to Qatar Petroleum (QP); 680 tpd for on-site consumption, and only 900 tpd still to be flared. The project activity will reduce GHG emissions by approximately 2.5 million tCO2 per year and approximately 17 million tCO2 during the initial seven-year crediting period.

Potential CDM projects that can be implemented in the region may come from varied areas like sustainable energy, energy efficiency, waste management, landfill gas capture, industrial processes, biogas technology and carbon flaring. For example, the energy efficiency CDM projects in the oil and gas industry, can save millions of dollars and reduce tons of CO2 emissions. In addition, renewable energy, particularly solar and wind, holds great potential for the region, similar to biomass in Asia.

Bioenergy Resources in MENA Countries

The Middle East and North Africa (MENA) region offers almost 45 percent of the world’s total energy potential from all renewable sources that can generate more than three times the world’s total power demand. Apart from solar and wind, MENA also has abundant bioenergy energy resources which have remained unexplored to a great extent.

biomass_resources

Around the MENA region, pollution of the air and water from municipal, industrial and agricultural operations continues to grow.  The technological advancements in the biomass energy and waste-to-energy industry, coupled with the tremendous regional potential, promises to usher in a new era of energy as well as environmental security for the region.

The major biomass producing countries in MENA are Saudi Arabia, Egypt, Yemen, Iraq, Syria and Jordan. Traditionally, biomass energy has been widely used in rural areas for domestic purposes in the MENA region, especially in Egypt, Yemen and Jordan. Since most of the region is arid or semi-arid, the major bioenergy resources are municipal solid wastes, agricultural residues and organic industrial wastes.

Municipal solid wastes represent the best source of biomass in Middle East countries. Bahrain, Saudi Arabia, UAE, Qatar and Kuwait rank in the top-ten worldwide in terms of per capita solid waste generation. The gross urban waste generation quantity from Middle East countries is estimated at more than 150 million tons annually.

Food waste is the third-largest component of generated waste by weight which mostly ends up rotting in landfill and releasing greenhouse gases into the atmosphere. The mushrooming of hotels, restaurants, fast-food joints and cafeterias in the region has resulted in the generation of huge quantities of food wastes.

In Middle East countries, huge quantity of sewage sludge is produced on daily basis which presents a serious problem due to its high treatment costs and risk to environment and human health. On an average, the rate of wastewater generation is 80-200 litres per person each day and sewage output is rising by 25 percent every year. According to estimates from the Drainage and Irrigation Department of Dubai Municipality, sewage generation in the Dubai increased from 50,000 m3 per day in 1981 to 400,000 m3 per day in 2006.

The food processing industry in MENA produces a large number of organic residues and by-products that can be used as biomass energy sources. In recent decades, the fast-growing food and beverage processing industry has remarkably increased in importance in major countries of the region. Since the early 1990s, the increased agricultural output stimulated an increase in fruit and vegetable canning as well as juice, beverage, and oil processing in countries like Egypt, Syria, Lebanon and Saudi Arabia.

The MENA countries have strong animal population. The livestock sector, in particular sheep, goats and camels, plays an important role in the national economy of respective countries. Many millions of live ruminants are imported each year from around the world. In addition, the region has witnessed very rapid growth in the poultry sector. The biogas potential of animal manure can be harnessed both at small- and community-scale.

Date Palm Wastes as a Biomass Resource

Date palm is one of the principal agricultural products in the arid and semi-arid region of the world, especially Middle East and North Africa (MENA) region. There are more than 120 million date palm trees worldwide yielding several million tons of dates per year, apart from secondary products including palm midribs, leaves, stems, fronds and coir. The Arab world has more than 84 million date palm trees with the majority in Egypt, Iraq, Saudi Arabia, Iran, Algeria, Morocco, Tunisia and United Arab Emirates.

date-wastes

Date palm biomass is found in large quantities across the Middle East

Egypt is the world’s largest date producer with annual production of 1.47 million tons of dates in 2012 which accounted for almost one-fifth of global production. Saudi Arabia has more than 23 millions date palm trees, which produce about 1 million tons of dates per year.

Biomass Potential of Date Palm Wastes

Date palm trees produce huge amount of agricultural wastes in the form of dry leaves, stems, pits, seeds etc. A typical date tree can generate as much as 20 kilograms of dry leaves per annum while date pits account for almost 10 percent of date fruits. Some studies have reported that Saudi Arabia alone generates more than 200,000 tons of date palm biomass each year.

Date palm is considered a renewable natural resource because it can be replaced in a relatively short period of time. It takes 4 to 8 years for date palms to bear fruit after planting, and 7 to 10 years to produce viable yields for commercial harvest. Usually date palm wastes are burned in farms or disposed in landfills which cause environmental pollution in dates-producing nations. In countries like Iraq and Egypt, a small portion of palm biomass in used in making animal feed.

The major constituents of date palm biomass are cellulose, hemicelluloses and lignin. In addition, date palm has high volatile solids content and low moisture content. These factors make date biomass an excellent waste-to-energy resource in the MENA region.

Technology Options for Date Palm Biomass Utilization

A wide range of thermal and biochemical technologies exists to tap the energy stored in date palm biomass to useful forms of energy. The low moisture content in date palm wastes makes it well-suited to thermochemical conversion technologies like combustion, gasification and pyrolysis which may yield steam, syngas, bio oil etc.

On the other hand, the high volatile solids content in date palm biomass indicates its potential towards biogas production in anaerobic digestion plants, possibly by codigestion with sewage sludge, animal wastes and/and food wastes. The cellulosic content in date palm wastes can be transformed into biofuel (bioethanol) by making use of the fermentation process.

The highly organic nature of date palm waste makes it highly suitable for compost production which can be used to replace chemical fertilizers in date palm plantations. Thus, abundance of date palm trees in the MENA and the Mediterranean region, can catalyze the development of biomass and biofuels sector in the region.

Energy from Biomass Wastes in MENA

The high volatility in oil prices in the recent past and the resulting turbulence in energy markets has compelled many MENA countries, especially the non-oil producers, to look for alternate sources of energy, for both economic and environmental reasons. The significance of renewable energy has been increasing rapidly worldwide due to its potential to mitigate climate change, to foster sustainable development in poor communities, and augment energy security and supply.

The MENA region is well-poised for biomass waste-to-energy development, with its rich feedstock base in the form of municipal solid wastes, crop residues and agro-industrial wastes. The high rate of population growth, urbanization and economic expansion in the Middle East is not only accelerating consumption rates but also accelerating the generation of a wide variety of waste.

Bahrain, Saudi Arabia, UAE, Qatar and Kuwait rank in the top-ten worldwide in terms of per capita waste generation. The gross urban waste generation quantity from Arab countries is estimated at more than 80 million tons annually. Open dumping is the most prevalent mode of municipal solid waste disposal in most countries.

rubbish-salmiya-kuwait

Many Middle East nations lack legislative framework and regulations to deal with urban wastes.

Biomass wastes-to-energy technologies hold the potential to create renewable energy from biomass waste in the MENA region. Besides recovery of substantial energy, these technologies can lead to a substantial reduction in the overall waste quantities requiring final disposal, which can be better managed for safe disposal in a controlled manner. Energy from biomass wastes can contribute substantially to GHG mitigation in the Middle East through both reductions of fossil carbon emissions and long-term storage of carbon in biomass wastes.

Biomass waste-to-energy systems options offer significant, cost-effective and perpetual opportunities for greenhouse gas emission reductions. Additional benefits offered are employment creation in rural areas, reduction of a country’s dependency on imported energy carriers (and the related improvement of the balance of trade), better waste control, and potentially benign effects with regard to biodiversity, desertification, recreational value, etc.

In summary, waste-to-energy can significantly contribute to sustainable development both in developed and less developed countries. Waste-to-energy is not only a solution to reduce the volume of waste that is and provide a supplemental energy source, but also yields a number of social benefits that cannot easily be quantified.

Biomass wastes in MENA can be efficiently converted into energy and fuels by biochemical and thermal conversion technologies, such as anaerobic digestion, gasification and pyrolysis. Waste-to-energy technologies hold the potential to create renewable energy from waste matter.

The implementation of waste-to-energy technologies as a method for safe disposal of solid and liquid biomass wastes, and as an attractive option to generate heat, power and fuels, can significantly reduce environmental impacts of wastes in the MENA region. In fact, energy recovery from MSW is rapidly gaining worldwide recognition as the fourth ‘R’ in sustainable waste management system – Reuse, Reduce, Recycle and Recover.

A transition from conventional waste management system to one based on sustainable practices is necessary to address environmental concerns and to foster sustainable development in the region.

Renewables Market in MENA

MENA region has an attractive market for renewables due to abundant availability of solar and wind resources. According to a recent IRENA report, the region is anticipating renewable energy investment of $35 billion per year by 2020. Recently, the MENA region has received some of the lowest renewable energy prices awarded globally for solar PV and wind energy.

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Regional Developments

Among MENA countries, Morocco has emerged as a role model for the entire region. The government’s target of 2GW of solar and 2GW of wind power by 2020 is progressing smoothly with the commissioning of Nour-1 Solar project. Jordan and Egypt are also making steady progress in renewable energy sector.

As far as GCC is concerned, the UAE has also shown serious commitment to develop solar energy. The 100MW Shams CSP plant has been operational since 2014 in Abu Dhabi while 13MW Phase I of Dubai’s solar park was completed in 2013. In Saudi Arabia, the newly launched Vision 2030 document has put forward a strong regulatory and investment framework to develop Saudi clean energy sector which should catalyse renewable energy development in the country.

Renewables – A boon for MENA

Renewable energy has multiple advantages for MENA in the form of energy security, improved air quality, reduced GHG emissions, employment opportunities, apart from augmenting water and food security.

The business case for renewable energy proliferation in MENA is strengthened by plentiful availability of natural energy resources and tumbling solar PV technology costs which are leading to record low renewable power generation costs. The recent auction for the Mohammed Bin Rashid Al Maktoum Solar Park 2 in Dubai yielded prices as low as 5.85 US cents per kWh which is one of the lowest worldwide.

Impact of Falling Costs

The falling costs will have a significant positive impact in the developing world where tens of millions of people still lack access to cheap and reliable supply of energy. Reducing costs will help MENA, especially GCC, to meet its target of steady transition towards renewable energy and thus reducing dependence on fossil fuels for power generation and seawater desalination.

The slump in renewable energy tariffs will also encourage utility companies in emerging markets to include more renewable energy in transmission and meet the targets set by respective countries. However, it should also be noted that there have been several instances where the actual renewable energy production failed to take place because of low bids.

Emerging Trends

Off-grid renewable energy technologies have tremendous potential to popularize clean energy among remote and marginalized communities across the world. Access to clean, reliable and relatively cheap energy from renewable resources, especially solar power, will usher in a new era in developing countries. Off-grid (or standalone) renewable power systems are already making a meaningful difference in the lives of millions of people across the developing world.

In recent years, Morocco has made remarkably swift progress in renewable energy sector.

In recent years, Morocco has made remarkably swift progress in renewable energy sector.

Advancements in battery energy storage have pushed this particular sector into media as well as public spotlight. With big industry names like Tesla and Nissan leading from the front, energy storage technologies are expected to make great contribution in transition to green grid powered by intermittent energy sources like solar PV, CSP, wind and biomass.

Concentrated solar power (CSP) has the potential to transform seawater desalination industry, one of the largest energy consumers in the Middle East. CSP offers an attractive option to power industrial-scale desalination plants that require both high temperature fluids and electricity.  CSP can provide stable energy supply for continuous operation of desalination plants, based on thermal or membrane processes. Leading CSP technology companies are already taking a keen interest in Middle East CSP market and rapid developments are expected in the coming years.

Key Hurdles to Overcome

Lack of strong regulatory framework, low renewable energy tariffs and weak off-take mechanisms are some of the issues confronting renewable energy projects in MENA. Regulatory framework in the GCC is in early stages and marred by heavy subsidy for oil and gas. The largest barrier to growth of solar sector in MENA has been the lack of renewable energy policy framework, legislations, institutional support, feed-in-tariffs and grid access.

The power sector in MENA is, by and large, dominated by state utilities which discourage entrepreneurs and Independent Power Producers (IPPs) to enter the local markets. Lack of open and transparent market conditions in MENA are acting as deterrent for investors, technology companies and project developers.

Among regional countries, Jordan and Morocco have the most advanced legal infrastructure in place to support renewable energy projects, followed by Saudi Arabia and the UAE.

Tips for New Entrants

MENA solar market is complex due to different electricity market structure and myriad challenges in each country. Different countries have different motivations for renewable energy. Solar companies who want to foray in MENA market must give special attention to land access, grid access, transparent licensing schemes, high-quality meteorological data, creditworthy customers, long-term off-take contracts, soiling of PV panels and related issues.

Bioenergy in the Middle East

The Middle East region offers tremendous renewable energy potential in the form of solar, wind and bioenergy which has remained unexplored to a great extent. The major biomass producing Middle East countries are Egypt, Algeria, Yemen, Iraq, Syria and Jordan. Traditionally, biomass energy has been widely used in rural areas for domestic purposes in the Middle East. Since most of the region is arid/semi-arid, the biomass energy potential is mainly contributed by municipal solid wastes, agricultural residues and agro-industrial wastes.

MENA_Bioenergy

Municipal solid wastes represent the best resources for  bioenergy in the Middle East. The high rate of population growth, urbanization and economic expansion in the region is not only accelerating consumption rates but also accelerating the generation of municipal waste. Bahrain, Saudi Arabia, UAE, Qatar and Kuwait rank in the top-ten worldwide in terms of per capita solid waste generation. The gross urban waste generation quantity from Middle East countries is estimated at more than 150 million tons annually.

In Middle East countries, huge quantity of sewage sludge is produced on daily basis which presents a serious problem due to its high treatment costs and risk to environment and human health. On an average, the rate of wastewater generation is 80-200 litres per person each day and sewage output is rising by 25 percent every year. According to estimates from the Drainage and Irrigation Department of Dubai Municipality, sewage generation in the Dubai increased from 50,000 m3 per day in 1981 to 400,000 m3 per day in 2006.

The food processing industry in Middle East produces a large number of organic residues and by-products that can be used as source of bioenergy. In recent decades, the fast-growing food and beverage processing industry has remarkably increased in importance in major countries of the Middle East.

Since the early 1990s, the increased agricultural output stimulated an increase in fruit and vegetable canning as well as juice, beverage, and oil processing in countries like Egypt, Syria, Lebanon and Saudi Arabia. There are many technologically-advanced dairy products, bakery and oil processing plants in the region.

date-wastes

Date palm biomass is found in large quantities across the Middle East

Agriculture plays an important role in the economies of most of the countries in the Middle East.  The contribution of the agricultural sector to the overall economy varies significantly among countries in the region, ranging, for example, from about 3.2 percent in Saudi Arabia to 13.4 percent in Egypt. Cotton, dates, olives, wheat are some of the prominent crops in the Middle East

Large quantities of crop residues are produced annually in the region, and are vastly underutilised. Current farming practice is usually to plough these residues back into the soil, or they are burnt, left to decompose, or grazed by cattle. These residues could be processed into liquid and solid biomass fuels or thermochemically processed to produce electricity and heat in rural areas.

Energy crops, such as Jatropha, can be successfully grown in arid regions for biodiesel production. Infact, Jatropha is already grown at limited scale in some Middle East countries and tremendous potential exists for its commercial exploitation.

The Middle Eastern countries have strong animal population. The livestock sector, in particular sheep, goats and camels, plays an important role in the national economy of the Middle East countries. Many millions of live ruminants are imported into the Middle Eastern countries each year from around the world. In addition, the region has witnessed very rapid growth in the poultry sector. The biogas potential of animal manure can be harnessed both at small- and community-scale.