Subsidy removal, regional trade and CO2 mitigation in the electricity sector in the Middle East and North Africa region

Govinda R. Timilsina and Ilka Fabiana Deluque Curiel

Energy Policy, 2023, vol. 177, issue C

Abstract: This study analyzes the impacts on the power sector in the Middle East and North Africa region of three policies: removal of fuel subsidies, enhanced cross-border electricity trade, and a cap on carbon dioxide emissions. The analysis uses a power system planning model that minimizes the total electricity supply cost over 2018–2035 by satisfying specified technical, economic, environmental, and policy constraints. The study shows that the region would save between US$26.3 billion and US$27.5 billion, measured in 2018 prices, by removing subsidies to natural gas used for power generation. Cross-border electricity trade would save US$83.6 billion to US$90.9 billion. The two policies together would yield a reduction of 10 percent in cumulative power-sector CO2 emissions in the region, with a net cost savings of US$111 billion. If a carbon emission-constraining policy is considered to achieve the same level of emissions reduction, the power supply costs will increase by US$97 billion. The study also reveals that the removal of fossil fuel subsidies and expanded cross-border electricity trade significantly complement each other and also to achieve climate change mitigation targets in the MENA region.

Keywords: Regional electricity trade; Fuel subsidies; Power-sector CO2 reduction; Middle East and North Africa; Electricity planning model (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:177:y:2023:i:c:s0301421523001428

DOI: 10.1016/j.enpol.2023.113557

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