These past few months, Tunisia has been forced to face the inherent vulnerability of its energy sector due to external shocks in the energy market. In 2021, the energy sector accounted for 32.2 percent of the country’s total trade deficit. In 2022, the proportion of foreign exchange spent on energy exports is expected to rise further, with a $1 rise in the barrel price of hydrocarbons costing the government some 140 million dinars ($48 million). To try to counter this and its effects on inflation, in April 2022, the government raised fuel prices by around 5 percent for the third time this year, placing mounting pressure on ordinary Tunisians’ purses at a time when food and electricity prices are also on the rise.
Against this background of Tunisia’s “almost entire [reliance] on fossil fuels to meet its domestic energy needs,” this article surveys the country’s low-carbon energy transition and its potential to diversify away from fossil fuels and offer a sustainable, low-cost solution to energy needs.
Low-carbon transition refers to the move from a fossil fuels-based energy system toward renewable energy sources, such as solar, wind, tidal and lithium-ion batteries. This demands an adaptation of energy systems—production, transportation, storage, and consumption—as well as common sense understandings of energy and its use. This will not necessarily be a smooth or linear process, as many of the region’s vulnerable communities will need social protection and direct assistance. In such ways, the energy transition also becomes a social, economic, and political transition.
Tunisia’s energy transition
In 2009, Tunisian authorities published the first Tunisian Solar Plan, a roadmap for energy transition and the scaling up of the country’s renewable energy capacity. The plan resolved to source 30 percent of the country’s electricity from renewables by 2030; in comparison, Algeria has set the goal of 27 percent by 2030, Libya 10 percent by 2025, and Morocco 52 percent by 2030.
However, the Natural Resource Governance Institute noted in a 2020 report that government officials had expressed concern that the 30 percent target was no longer achievable within that timeframe, citing the effects of the pandemic on renewable projects. In 2021, the International Renewable Energy Agency, working alongside Tunisian government officials, produced a report that listed a series of actions that would help Tunisia scale up its renewable energy capacity. These included, among others, simplifying procurement procedures for power grid development, establishing an independent electric power authority, and involving local banks in the development of renewable energy applications.
Morocco: Model or competitor?
In recent years, Morocco has been lauded for its phasing out of fossil fuels and success in attracting solar energy investment. The country’s government has pursued an “all-of-government” approach that, among other actions, links investment in infrastructure, a clear regulatory framework for foreign investors, and the phasing out of fossil fuel subsidies. Morocco is both a possible model for Tunisia’s energy transition and a North African competitor with the potential to attract investors away from Tunisia. Its more fully developed links with European enterprises and African countries makes it particularly attractive to foreign investors.
Morocco, then, illustrates how political will and collaborative thinking between government ministries and private and public actors—at both the domestic and international level—can facilitate a successful energy transition. In Tunisia, it is crucial that the government creates the conditions for such linkages and relationships to grow. To give just one example specific to the Tunisian context, dialogue must include the Tunisian General Labor Union, which has previously resisted solar projects on the grounds that they represent a threat to the livelihood of workers in the Tunisian Company of Electricity and Gas, which it represents. Tellingly, there are signs that Tunisian firms are now looking to relocate their operations to Morocco to take advantage of its relative economic and political stability compared to Tunisia.
Tunisia’s national energy system and international investment
Countries that have invested domestically in low-carbon energy technologies, such as Morocco, are now looking to export those technologies and know-how to countries like Tunisia, that are behind the transition curve. This trend will structure political and economic power in the region in the short- to medium-term.
In March 2022, the Tunisian government announced the approval of solar energy projects in the south of the country (Tataouine, Tozeur, Sidi Bouzid, Kairouan, and Gafsa), designed to service Tunisia’s domestic energy needs. The state awarded contracts to several groups: the Norwegian company Scatec Solar, the French-Moroccan company Nareva, and a consortium between the Chinese company TBEA Xinjiang New Energy and the UAE-based Amea Power. These projects are expected to enable a 6 percent reduction in natural gas imports. Combined, the government expects these projects to create 200 direct jobs and 2,000 indirect jobs in some of the country’s most marginalized governorates.
The TBEA-Amea power consortium represents a growing trend in renewables concessions. Chinese contractors have increasingly viewed the MENA as a site for green engagement and have been involved in major solar projects in Morocco, Egypt, Saudi Arabia, and Oman. In a sign of China’s ambitions in the sector, a group led by state power firm China Three Gorges Corporation is buying Alcazar Energy Partners, a Dubai-based wind and solar developer. In the MENA region itself, Amea Power had previously signed a power purchasing agreement with the Egyptian Electricity Transmission Company and has other projects under construction in Jordan. Meanwhile, Nareva is a subsidiary of the holding company Al-Mada, which is largely owned by the Moroccan royal family; this demonstrates the Moroccan state’s desire to export its energy expertise and develop pan-African green energy projects.
Both Nareva and the TBEA-Amea agreements are revealing for what they demonstrate about South-South investment and the economic linkages that are beginning to shape energy transitions in the Global South.
Energy transitions and the importance of the local
While national projects are important sources of clean energy that will notably reduce Tunisia’s reliance on gas and oil imports, they may be at the expense of local energy schemes and forms of community empowerment. Community-centered low-carbon energy policy helps ensure that an energy transition is just and equitable, benefiting those who are most vulnerable to climate change.
There is a growing number of organizations that work in the renewable energy sector in Tunisia that can play an even bigger role in helping the sector’s transition. These include both international NGOs and domestic associations such as the New Generation for Development and Environment in Tataouine, Earth Hour Tunisia Association in Tunis, and the Tunisia Energy Society.
Alongside Tunisia’s national energy policy are encouraging signs that the country will promote local energy generation. In 2015, Law 2015-12 established a regulatory and institutional framework for the promotion of investment in independent renewable energy projects and local self-generation projects. The law opens the door to local projects designed for the self-consumption of renewable energy, the sale of energy to the Tunisian Company of Electricity and Gas, or energy export. There are encouraging signs that this legislation is beginning to bear fruit, with the launch of a pilot scheme in Tozeur to install 4000 PV panels on households with low energy consumption. The goal of the project is to eventually help 800,000 Tunisian households save up to 41 million dinars ($13,51 million).
Tunisians tie the lack of economic opportunities and development in the southern regions to the country’s monopoly on the energy sector and lack of diversity in energy resources. Citizens have tried to put pressure on the government to manage these resources more equitably, alleviate poverty, and create a sustainable economy. For instance, in recent years, the Islands of Kerkennah and the governorate of Tataouine have both witnessed protests against regional marginalization and the exploitation of the country’s natural resources by multinational companies.
Despite the industry’s exploitative resource extraction practices in the southern governorate of Tataouine, many young people aspire to work in multinational petroleum companies operating in the desert, attracted by the industry’s good wages and reliable employment. However, studies indicate that the oil reserves in the region appear to be depleting. Fewer companies have invested in fossil fuel extraction in recent years, the government has discontinued research licenses, and companies have oriented themselves toward alternative energies, natural gas, and biofuels. Tataouine, which enjoys about 300 sunny days a year, is well placed to become a center of renewable energies, provided that incentives and facilities are offered to investors, especially owners of small and medium-sized companies, to harness the region’s natural resources. Rather than reproducing the forms of resource expropriation and extraction that defined the petroleum industry in the region, the low-carbon transition must be locally focused, turning Tataouine into a model low-carbon city where new technologies benefit local communities through reliable energy sources, jobs and development.
The policies needed to move forward
The Tunisian national energy context is marked by an increase in energy demand and a strong dependence on external energy sources. The transition to renewable energies still faces numerous obstacles, including high initial investment costs compared to conventional energy sources, lack of experience and know-how, and little reliable information about available renewable energy resources and their potential economic benefits. Four policies, if applied, could increase the likelihood of Tunisia reaching its 2030 energy transition target of 30 percent of renewables and do so in a way that benefits the population, particularly residents of the marginalized south:
- Further strengthen Tunisia’s legislative framework for renewables, with clear links between operators, contractors, energy suppliers, and government agencies.
- Establish multinational renewable energy trading partners in both Sub-Saharan Africa and the Middle East so that Tunisia can become a key renewable energy hub on the Mediterranean.
- Combine renewable energy investment with job creation in Tunisia’s marginalized south and interior to ensure that the country’s energy transfer also offers economic and social dignity for Tunisians. To ensure widespread job creation, this must occur at a number of levels, including establishing new green energy engineering degrees, providing opportunities for retraining and apprenticeships, and orienting Tunisia’s constitutional commitment to positive discrimination of economic development in its marginalized regions toward green energy development.
- Promote projects that are locally focused and supply affordable, renewable energy to households. To encourage such projects, the government might subsidize loans for small companies operating in marginalized regions and simplifying the processes for accessing loans.
Achref Chibani is a Nonresident Fellow at TIMEP focusing on climate change in the Middle East and North Africa region.