Energy transition and increased renewables could be threatening overall stability of the MENA and African countries. New long-term strategies are needed to mitigate effects on both sides
The Western world is going at present on a collision course with fossil fuels. The COP21/Paris Agreements have changed the historical focus on oil and gas related energy production. European countries, followed by the USA and others, have set up a climate related strategy, trying to counter global warming, while also addressing the growing dependency on instable energy exporting regions. COP21, after years of international diplomatic hassle and infighting, now seems to be bring a more stable, energy import independent future for Western countries. At least, if not looking at the growing interdependency of national systems, as wind and solar will also be part of an international regime. Some proponents have been pushing for an energy independency of the EU or USA based on the assessments that national economies have become too dependent on energy imports from the Middle East, Russia or Africa. A more secure and sustainable energy future is part of the current strategy.
The ongoing chaos in the Middle East (Syria, Saudi Arabia, Iraq, Libya and Egypt), combined with growing instability in Russia (Crimea/Baltic/Ukraine) or Nigeria, are being used to support a fast track in energy transition. Stability seems to be the term to be used by most, security the underlying issue. Still, the growing energy transition is also causing increased instability in the rest of the world. The impact of the energy transition on economies outside of the OECD regions is still under assessed. The world, aka Western leaders and the public, could be heading for a situation that is more instable than ever before. The current negative effects of the so-called Arab Spring, combined with lower oil and gas prices, are underestimated or not looked upon at all. The national economies of large parts of the MENA and African countries is being hit very hard by the impact of Western energy transition plans and projects. A fast track energy transition will cause a regional chaos of unknown levels and impact which will be supra-regional.
The last two years we have witnessed the results of low oil and gas revenues for the MENA and African countries. Overall revenues of Saudi Arabia, Iraq, Russia, Iran, Algeria, Venezuela and Nigeria, have disappeared. Even developed economies, such as the UK, Norway, Canada or the Netherlands, have been hit by lower revenues. In most oil and gas producing countries large-scale economic changes or financial injections were needed to counter the negative effects of lower fossil prices, while addressing at the same time the need to pay-off its respective power players to keep stability in place. At present, the need for changes are clear. MENA countries have been partly countering the negative effects by using the Sovereign Wealth Funds. Saudi Arabia, UAE and Kuwait have been able to do this still without a total breakdown of their financial systems. Nigeria, Iran or Nigeria are showing a totally different picture. Their financial coffers are reaching empty. At the same time, the effects of a drawdown of SWFs in MENA has had also a negative repercussion for European and US stock exchanges, as stocks and bonds have been sold in major volumes. Nigeria, Venezuela, Egypt or Libya, have however not this possibility. Their economies are have been hit hard, budget shortages are currently not being paid. In a normal economic cycle, all producers would not have been hit hard in future, as oil and gas prices would be rising again, bringing in larger revenues in the mid- and long term. However, Western energy transition strategies have uprooted the market, putting immense pressure on future revenues of energy exporting countries.
The overall impact of the ongoing energy transition in the West should not be underestimated. Not only the demand for fossil fuels could be hampered, but at same time total supply of energy worldwide is expected to increase. The majority of energy exporting countries is however not able to adjust to and/or change their domestic economies on the short- to mid-term. At present, the only viable option to generate revenues are largely confined to oil, gas or energy products. The latter group of countries, all in the vicinity of the European Union, are facing increased youth unemployment, mismanagement of their economies and regional or local instability. In stark contrast to some articles or analysis written, these debilitating factors are not being constrained by investing in solar or wind energy projects in Saudi Arabia or Nigeria. A total revamp and change of the local economies will be needed to counter the negative effects of lower fossil revenues and to change and support societal changes. At present, largely caused by the extreme high emphasis on energy transition in developed countries, time is not being given to developing countries to adjust to the situation.
Security experts have been warning the last years that there is an increased risk of instability in the Arab and African region if the energy transition is put in place too quickly. At present, the West, and especially NW-European countries such as the Netherlands, Germany and Scandinavia, are only focused on the positive effects of an energy transition, a green economy, lower CO2 emissions and a bio-based economy are the terms that politicians and NGOs are dreaming of, while no attention is being given to the current and mid-term negative effects on developing countries. There is still attention for the negative effects of global warming for Africa and other parts of the world, but this is taking place in a much more slower pace than expected and predicted. A full-scale implosion of the national economies of large parts of the Arab world, Africa and part of South America (Venezuela and Brazil leading), could however take place within the next 5-10 years.
The World Economic Forum (WEF) has already warned in a report, ‘Global Agenda on the Future of Oil & Gas, written by authors such as Amy Myers Jaffee (University of California) and former Shell-CEO Jeroen van der Veer, that a transition could result in global chaos. An orderly transition is not expected, as also Nick Butler in an FT Column stated. Both parties warned that an orderly transition is out of the question, total chaos could be a fact of life in the Arab World, Africa and Russia. Increased political and economic instability will occur leading to potentially large scaled military confrontations.
If the West, the Dutch ofcourse leading the whole endeavor with a pointing finger raised to the perceived fossil culprits, wants to set up a sustainable and more green society, it should take into account the possible negative repercussions and destabilizing effects of these measures and strategies. However, if we continue the current road taken, moving forward without seeing changes around, the possible result will be disastrous for part of our society. An existential crisis will occur in the rest of the world, based on low income generation capabilities and increased instable governments, leading to insecurity and outright conflict inside of MENA and Africa, threatening in the short term even the European societies. Mass immigration will be fact of life, this time a larger volume than the several million Syrians (and others) that are currently flocking our shores.
The economic and financial implosion of countries such as Egypt, Algeria, Nigeria and Saudi Arabia, will be a direct threat to our Southern European Soft belly. The effects of the Arab Winter are already not able to be countered in reality. New instability and violence will have to be confronted by Western military and politicians, both not equipped to deal with such a magnitude of crisis and human waves. Part of the solution to all could be a more gradual and slower pace of the energy transition, in which we are supporting the rest of the world to implement a long-term feasible and sustainable economic transition. Societal change should be on the second level, not straight away the main target. Political views and strategies should be dealing first with economics and domestic stability, not regime change or democracy.
If however we continue with the current approach, our Green Knights in shining armor will be confronted very soon by heavily armed Black Knights. This time not due to religious conflicts, but due to a Western one-sidedness that causes implosions of the economic-social structure of the Arab and Sub-Saharan regions. We will need to find a modus-operando in which our energy transition is NOT confronting or constraining ongoing economic transition plans in the Arab world in particular. It is time to coordinate, leaving room for economic plans, such as Saudi Deputy Crown Prince Mohammed Bin Salman’s Saudi 2030 Strategy, to materialize and be implemented. Greening of our economies should NOT mean that the rest of world is being thrown off a cliff. Current developments show that energy TRANSITION should be slow and sustainable, as there is a need to mitigate and counter possible conflicts and economic instability or even outright poverty. If this is not being taken as part of the whole constellation, stringent and very expensive military measures will need to be taken to counter the expected increased conflicts and fights on our own borders very soon.