Powering the Future of MENA – Energy Transition Country Profiles: Review of Data and Literature

The Middle East and North Africa (MENA) region stands at a critical crossroads in its energy transition. As home to between 48.3% and 58% of the world’s oil reserves and over 43% of global gas reserves, MENA countries have long depended on fossil fuel exports for economic stability. However, with increasing global commitments to decarbonization, declining oil and gas demand, and mounting climate change vulnerabilities, the region must rapidly adapt. Despite policy commitments to renewable energy (RE), the region’s RE share remains critically low, contributing only 0.4% to the total primary energy mix, with non-hydro renewables making up just 6% of total energy generation. Many MENA economies have not fully leveraged their fossil fuel wealth to develop diversified, resilient economies. Instead, they remain rentier states, highly dependent on external markets for revenue. Energy demand across MENA is rising at an annual rate of 1.9%, creating an urgent need to expand renewable energy infrastructure to meet future consumption needs sustainably.

A key driver of the energy transition in MENA is the role of micro, small, and medium-sized enterprises (MSMEs), which make up 90% of businesses in several countries and play a significant role in economic activity, employment, and innovation. MSMEs can be instrumental in advancing RE adoption, particularly in decentralized energy systems such as solar microgrids, energy efficiency technologies, and distributed power generation. Their contributions extend beyond economic benefits, as they help reduce dependence on fossil fuels, lower carbon emissions, and create sustainable employment opportunities. However, despite their potential, MSMEs in MENA face substantial barriers, including limited access to climate finance, regulatory inefficiencies, and inadequate infrastructure. Without targeted policies and financial mechanisms to support them, their role in the transition will remain constrained.

The study finds that the MENA region faces significant challenges in its energy transition, including an over-reliance on fossil fuels, inadequate grid infrastructure, high regulatory and financial barriers, and growing electricity demand, particularly for space cooling and desalination. However, it also identifies opportunities for transformation, such as the region’s abundant solar and wind resources, declining costs of RE technologies, and increasing international support for green investments. While some countries, such as the UAE, Egypt, and Morocco, have demonstrated leadership in RE development, others lag behind due to political instability, weak governance, or financial constraints.