Abstract
While the recent political transition in Egypt has delayed much-needed policy reforms, our paper suggests that under certain conditions, fostering the national renewable energy strategy may be a promising way of giving an ailing economy an urgently needed impetus. Based on the literature and results of a renewable-energy focused computable general equilibrium model, we recommend that Egypt supports the generation of wind power. While some energy may be exported to generate foreign exchange, a substantial part of the newly produced energy should be sold domestically to ease existing supply constraints and to avoid Dutch disease effects. In addition, and in order to maximize the benefits of renewable energy sources, the renewable energy strategy should be accompanied by a (further) reduction of energy subsidies. Finally, lessons from other countries suggest that sound institutions; appropriate, clear and lasting regulations; careful technology transfer; and cross-ministerial coordination are important for success.
Highlights
The global debate on renewable energies often revolves around reducing carbon dioxide (CO2)emissions as one option to mitigate climate change
The renewables simulations reflect the case, where foreign direct investment (FDI) and land are allocated to the renewables sectors according to Egypt’s renewable energy strategy
Investments in renewable energy can be beneficial for economic growth, employment, and the poor
Summary
The global debate on renewable energies often revolves around reducing carbon dioxide (CO2). The energy-related global carbon emissions are largely driven by the increasing volume derived from within developing countries, including many Arab countries [1,3]. The early and broad diffusion of RET would slow down the increase of global carbon emission and allow economies to “leapfrog” over the use of conventional energy resources like oil, coal, or gas toward production technologies reliant on more climate-friendly power [9,10]. One of the reasons for developing RET is the hope that it will help promote economic growth and job creation This is important since recent political events have slowed down economic growth prospects and increased unemployment and poverty [15,16].
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