Harnessing the sun and wind for economic development?

Renewable energy may be a promising way of giving a much needed boost to the Egyptian economy. This paper by Perrihan Al-Riffai, Julian Blohmke, Clemens Breisinger and Manfred Wiebelt, presented at the ERF 20th annual conferenceHarnessing the Sun and Wind for Economic Development? An Economy Wide Assessment for Egypt’ explores the possibility of generating wind power in deserts, and highlights the benefits of using renewable energy sources.

For Egypt, where existing capacity is insufficient to meet export and domestic demand, wind power brings a number of potential benefits over conventional energy sources. It is  more ‘climate friendly’ than fossil fuels and evidence suggests that more jobs are created in solar and wind technology than conventional power technology. The country’s current capacity is met by a mix of 88% oil and gas and 12% renewable energy, but four fifths of the latter source is hydropower and all major sites have been exploited already. The paper argues that wind provides a good alternative source.

“Within six hours, deserts receive more energy from the sun than humankind consumes within a year”, Dr. Gerhard Knies, Co-founder and former chairman of the Supervisory Board of the DESERTEC Foundation

But can wind be exported?
Once wind is harnessed, can it be traded for economic gain? Wind power is more competitive than other types of renewable fuel because its production doesn’t require heavy support from the government. If the resulting energy is destined for export, then Egypt needs to make sure that all trade agreements supporting exports are well in place.

The authors argue that in order for a renewable strategy to be effective, it should be export-led and accompanied by a reduction of energy subsidies. They conclude that, although renewable energy investments have positive growth and employment effects, their impact on the poor is rather modest. Thus, if poverty reduction is the main policy goal, other policies that support broader based growth and targeted social safety policies are more appropriate tools.  

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