Low oil prices, a steep rise in investments in renewables, the Paris climate accord and significant emissions reductions: the world energy scenario, particularly in the Mediterranean region, is entering a new era. The permanent volatility of oil prices will not have a different or less decisive future impact on economic and business scenarios. At the same time, the crisis does not exist for renewables: even with oil prices low – and contrary to some fears – investments are on the rise. Indeed, 2015 was the best year at global level for the influx of money into renewable energy plants and projects, which confirms once again the lack of any real relationship between low oil prices and investments in green energy.
Over the short run, talk will continue to be of shrinking fossil fuel prices. Carbon and petroleum will remain low, and gas, already not very profitable, will settle at minimal levels given the predictable rise in supply. Investments in alternative energy sources, which offer spectacular savings, will continue to grow. The sector is already gaining a strong competitive edge, especially in the Mediterranean region, with MENA countries showing major potential and highly ambitious targets. If green energy has stepped up the pace in Europe, in the Mediterranean it has already reached levels on a par with the Old Continent, with short-term predictions of a potential “overtake”.
From the geopolitical point of view, increased investment in renewable energy presupposes a well-defined legislative framework and stable institutional conditions, as illustrated by Morocco’s success-story, where investments increased following a series of reforms aimed at modernization. The same did not happen in Algeria, a country rich in raw materials that, however, has not launched reforms and therefore has not been able to benefit from the advantages offered by the new trend. Not to mention Libya, where political insecurity and instability are discouraging investors.
The crisis in the Mediterranean region, now as in the past, goes well beyond the tensions over the price of oil. The fact remains however that, in order to ensure greater stability, it is, in any case, necessary for Europe and the Mediterranean to have common objectives when it comes to energy. First, the regional electrical power market, of which the link between Tunisia and Italy is a good example, needs bolstering; secondly, it is essential to encourage renewable sources and energy efficiency, and in this Italy claims a certain amount of success thus far and can continue to make a major contribution. Regarding the strategic energy mix, ENI’s recent discovery of a massive gas field in Egypt must not be forgotten.
The unstable geopolitical terrain of this perennially conflicted region is primarily traceable to both a crisis in the Arab state and to age-old borders imposed from without. Furthermore, the Sunni and Shia rivalry, in addition to being a religious division, is a perennial vying of regional powers for control. Finally, the United States disengagement plays a strong role, with the Mediterranean no longer being viewed as strategic to American interests. It is certainly no accident that Russia has come bursting back onto the scene precisely in the midst of all this. Since the Obama doctrine has expressed a hope in European leadership in the Mediterranean, a prominent role is owed to Italy, which must have political and strategic vision to best meet the challenge.
