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The grand energy transition: Eastern Mediterranean, North Africa and Europe

Rome, 29/11/2017 - 30/11/2017, International Workshop

The Eastern Mediterranean region is undergoing a profound transformation as regards the energy sector, in the context of a changing energy landscape in terms of demand, supply and available technologies. The MENA region as a whole is fast becoming a major energy importer, just as the US has already become a major exporter – and possibly a “swing producer” directly affecting world energy prices.  Inevitably, various geopolitical considerations come into play along the path to a new equilibrium.

Natural gas has a key role in the ongoing transition toward a different energy mix for many of the world’s economies, and may have a long-term role even once renewable sources are more widely adopted. Indeed, virtually all analysts and experts envisage a long term dependence on gas and oil for the world economy, despite the growing competitiveness of renewables.

In any case, there is a strong trend toward diversification, both of sources and of suppliers – in the gas sector, Europe is becoming relatively less dependent on Russian supplies – which will increase the level of energy security. Euro-Mediterranean partnerships will be an essential component of this process, but more effective governance and a reliable regulatory framework are needed in this respect, for renewables even more than for fossil sources.

Technological innovation is a major driver of change in the whole sector. Bringing greener energy to the market, while improving access overall, requires smarter infrastructure and more flexible storage and distribution.

The wider Mediterranean should not be seen as a closed region of course, as any form of self-sufficiency would be illusory while great opportunities are emerging on a global scale, particularly through stronger links between Asia, the Gulf, North Africa, and Europe. China is leading the way in connecting these areas, but a lot needs to be done to create adequate hubs and infrastructure.

At the same time, the sub-regional level is very important for specific projects, which need to be carefully tailored to make the best use of local comparative advantages.

On a global level connectivity is exploding, and driving a surge in electricity demand – with the ubiquitous challenge of charging mobile devices and keeping businesses and services active on a 24/7 basis. In electricity, it is again China that is now pushing the technological and business boundaries, especially with innovation in battery technologies which could massively affect distribution and consumption.

Also, other resources and sectors should be analyzed in close connection with the energy routes, such as water availability and use as well as non-energy infrastructure – for instance maritime trade routes and ports, or telecommunication backbones. Vast commercial networks indeed require all of these assets in combination.

The evolution of the energy sector cannot be fully understood without an appreciation of wider dynamics, especially the transnational phenomenon of social change currently underway in the MENA region – driven largely by demographics and widespread communications technologies, creating an interconnected generation of young citizens – which will have major political consequences. Despite the very serious social and security problems – partly specific, partly region-wide – there is certainly room for optimism.

At the governmental level, there is growing potential for political networking and new arrangements to manage the fundamental changes in both energy supply and demand: investment flows, exploration and marketing, human capital, industrial development especially in infrastructure. Each of these areas require a new framework, not just to meet the geopolitical challenges but to maximize the opportunities.