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    28-Jun-2022

Jordan’s energy security - By Hamzeh S. Al-Alayani, Jordan News

 

 

The acceleration of economic development and rising living standards have made energy security a top priority for policymakers worldwide.
 
Securing energy is particularly challenging for Jordan, which suffers from a scarcity of natural resources, and lives in a region rife with instability and conflicts.
 
 
 
Notwithstanding reform efforts to reduce dependence on imports, and some progress in diversifying the energy sources, energy security remains critical: the country imports around 94 percent of its energy, which represents approximately 10 percent of GDP. The growing domestic demand, which increases at a yearly rate of 3 percent, further adds to the pressure to come up with a strategy for a more sustainable energy sector.
 
Jordan’s Economic Modernization Vision (2033) sets ambitious targets, including investment in renewable energy, reducing energy consumption via increasing energy efficiency, and agreements with other countries. Creating an enabling environment should go hand in hand with the involvement of all key stakeholders from energy and related sectors, to move on to the implementation phase in creating jobs and cementing sustainable growth.
 
Global energy investment is on course to jump by more than 8 percent in 2022 and hit $2.4 trillion, with a notable clean energy investment exceeding $1.4 trillion this year and accounting for almost three-quarters of the growth in overall energy investment, according to the International Energy Agency.
The total energy bill for consumers in 2022 looks set to exceed $10 trillion for the first time.
Renewable energy growth is poised to accelerate in 2022 as concern for climate change and support for environmental, social, and governance considerations grow. Demand for cleaner energy sources from most market segments accelerates. At the same time, the US’ plan to fully decarbonize the US economy is helping spur activity in the renewable sector that will likely drive further growth and open new avenues for renewable energy growth.
 
The current inflation, a sustained surge in oil and gas prices, and geopolitical tensions related to the Russia-Ukraine war are rising. These factors have created a hugely challenging environment for businesses, governments, and consumers. The energy sector is no different. Almost half of the additional $200 billion in capital investment in 2022 is likely to be eaten up by higher costs rather than additional energy supply capacity or savings. Furthermore, the prices of solar panels and wind turbine technologies crucial to the energy transition have grown by between 10 percent and 20 percent since 2020, with continuing supply chain disruption amid logistics-related cost pressures after a decline. The total energy bill for consumers in 2022 looks set to exceed $10 trillion for the first time.
 
It is necessary to reflect both energy demand and supply in a synergic manner to ensure the transition to a sustainable energy sector.
 
The circular economy is critical to a sustainable growth of the energy sector, as it reduces waste, increases resource security, and provides additional financial value and sustainability credentials.
 
Furthermore, focus should be put on improving energy efficiency and optimizing energy demand management, starting with transportation (which alone is responsible for almost half of the total energy consumption), the water sector, and households. The energy sector will transform by adopting an environmentally sustainable and economically viable energy system in the Kingdom by developing hands-on, business-driven projects.
 
Going forward, the private sector and the government should collaborate to explore new avenues against a backdrop of potentially supportive policies from an administration focused on combatting climate change in energy and industry, which includes investment in wind, solar, battery, and EV supply chains; green hydrogen; long-duration energy storage; transmission; preventing energy waste; circular economy in fertilizers and agriculture, and other sectors critical to renewable energy growth.
 
The industry will likely benefit as fresh capital becomes available, the transmission process is streamlined, and new technologies are commercialized.
 
 
The writer is a board member of a Jordanian public-sector government investments management company and a regular commentator on regional energy and industrial matters.
 

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