Fitch Solutions has disclosed a growing concern regarding energy transition risks in the Middle East and North Africa over the coming years. The regional average score on the energy transition index is expected to rise from 59 points in 2025 to 62.8 points by 2035, amid ongoing pressures to achieve economic stability and sustainability.
Egypt ranks third on the list of countries most exposed to energy transition risks, having recorded 85.1 points on the index. Iran tops the list with 89.1 points, followed by Lebanon with 88.2 points, according to the agency's report.
Details of the Event
The energy transition index measures over 80 global markets based on four main axes: economic stability, exposure, resilience, and sustainability. Scores on the index range from zero to 100 points, with 100 representing the highest level of risk.
The reasons behind the high risk score in Egypt are attributed to pressures from rising food and fuel import costs, leading to increased inflation rates. In contrast, some Gulf economies appear relatively less exposed, with Qatar scoring 32.7 points and the UAE 36.5 points on the index.
Background & Context
In the medium term, Fitch Solutions indicates that regional electricity interconnection projects, such as the interconnection between Egypt and Saudi Arabia, will contribute to improving the efficiency of electrical networks. However, the resilience index is expected to remain relatively stable at 64.7 points by 2035.
Innovation indicators reveal an additional gap in the transition pathway, with the hydrogen and carbon capture index projected to be around 84.7 points in 2026, reflecting the limited adoption of these technologies at present.
Impact & Consequences
The agency anticipates that Saudi Arabia, Egypt, and Oman will begin producing green hydrogen by 2035, but the likelihood of achieving the announced goals remains uncertain. In this context, government targets related to renewable energy are seen as a crucial step to support the growth of electrical capacities in the region.
The renewable energy plans include a project pipeline totaling 202 gigawatts, with expectations to add 148 gigawatts between 2026 and 2035. Saudi Arabia leads these additions with a total of 41.8 gigawatts, followed by Egypt with 35.6 gigawatts, and then the UAE with additions reaching 15.4 gigawatts.
Regional Significance
This report serves as evidence of the challenges faced by Arab countries in the realm of energy transition, necessitating integrated efforts to achieve sustainability. Arab nations must enhance regional cooperation and develop effective strategies to address the risks associated with the energy transition.
In conclusion, it is clear that Egypt faces significant challenges in the energy transition sector, requiring an effective response from both the government and the private sector to ensure the achievement of sustainable development goals.