Policy & Regulations
One of the key challenges facing the clean energy sector in the MENA region is that one of the key drivers for investment and development is stable, consistent legislation. This is largely absent across the region although there are signs of progress;
- Policy remains the single most important driver for clean energy investments.
- There are a number of different support mechanisms which can be used to bridge this revenue gap. These include renewable energy portfolios, tax incentives, auctions and tenders, feed-in tariffs, green certificates and carbon project credits. No single policy framework is inherently better than the rest as long as the risk and economics are properly understood.
- No country in the region has a clear policy base comparable to more developed markets. However, a large proportion of the expected capacity will be commissioned via a combination of auctions and tenders, and renewable energy targets. Currently these targets are the only clear indication as to each country’s intent
- The countries which currently appear to be the most promising are (in no order): Morocco, Tunisia, Egypt, the United Arab Emirates and Saudi Arabia. The relatively nascent state of the region’s industry means that countries not on this list could easily catch up in terms of installed capacity were they to introduce the correct strategies.
- There are a number of drivers for clean energy investment in the region. The key drivers (although to varying degrees) are increasing energy demand; energy security; the export value of hydrocarbon stocks; concerns over carbon footprint and pollution levels.
What is Policy and Regulation?
To understand policy and regulation as it applies to the clean energy sector we recommend information provided by REN 21, the Renewable Energy Policy Network.
On their website they provide explanations for policy mechanisms such as:
- Regulatory Policies – Feed-in Tariff, Utility Quota Obligation, Net Metering, Obligation and Mandate and Tradeable Renewable Energy Certificates (RECs)
- Fiscal Incentives - capital subsidy, grant or rebate, tax incentives or energy production payments
- Public Financing – Public investment, loans or grants, public competitive bidding
When looking for policy to attract investment in clean energy technologies the following are the typical types of policies that might be trialed by a country or city:
- CO2 Emissions Reduction targets
- Targets for Share of Renewable Energy
- Targets for Share of Renewable or low carbon Electricity
- Targets of Installed Capacity of Clean Energy Technology
- Targets for Government Own-Use Purchases of Renewable Energy
- Targets for Share of Buildings with Renewable Energy and Energy Efficiency
- Urban Planning Rules
- Building Codes and Permits
- Tax Credits and Exemptions
- Electric Utility Policies
- Subsidies, Grants and Loan
- Government Funds and Investments
To understand which countries and cities around the world are implementing these types of mechanism see the REN 21 Renewable 2011 Global Status Report.
To see a more in-depth overview of the application of policies to one country, see theDSIRE website which comprehensively captures all policies being implemented in every State in the USA.
What do you expect to see in a government that is serious in pursuing clean energy?
Derived from the experience of many countries around the world, these are the signals the private sector looks for from governments that are interested in pursuing a clean energy agenda:
- A national energy strategy that includes clean energy as an integral part of meeting domestic supply requirements.
- A dedicated body responsible for delivering on this national energy strategy, particularly the development of clean energy options.
- Policies that encourage the private sector to invest in the clean energy sector and regulations to ensure that the private sector develops sustainably and responsibly.
- An industry development framework that looks to develop capability and capacity through research and development, commercialization, market development and market maturity.
- Leadership from government in educating their communities in sustainability, including clean energy and energy efficiency.