The challenge to conserve

Egypt is embarking on an ambitious plan to rationalise the use of its energy resources. Sherine Nasr investigates
There is no doubt that energy consumption in Egypt is growing steadily as the country's ambitious economic development plans are implemented. Equally clear, however, is that the goals of preserving the country's natural resources, making Egyptian manufactured goods competitive globally while at the same time trying to reduce carbon dioxide emissions, have created an urgent need for the adoption of strategies to ensure that energy is used more efficiently.
The Organisation for Energy Planning (OEP) predicted last year that by 2016/2017 the demand for crude oil will double while annual production will be reduced by half. "Unless Egypt adopts initiatives to improve efficiency, the country's supply of natural resources as well as its economic development will be threatened," said Adel Ibrahim of the OEP.
During 2000, the Energy Efficiency Council (EEC) was formed to foster cooperation among various organisations to promote energy-efficient practices in Egypt. Among the 14 public and private sector organisations represented on the council are the ministries of electricity and transport, the Egyptian General Petroleum Corporation (EGPC), the New and Renewable Energy Authority (NREA) and the OEP.
However, this council, which brings together the main national organisations involved in the generation, distribution and use of energy resources in Egypt, has, so far, failed to take any effective steps towards applying efficiency standards in different fields.
"We meet on a voluntary basis and none of our recommendations are binding," said Ibrahim Abdel-Gelil, executive director of the Egyptian Environmental Affairs Agency (EEAA), which is represented on the EEC. Only a presidential decree could give the council's recommendations legal force. "Unfortunately, such is not the case now," said Abdel-Gelil.
The council, however, has developed a framework for a national energy efficiency strategy (NEES). Implementing this involves policy- makers, investor associations and financial institutions. Towards this end USAID contributed approximately $3 million under the Egyptian Environmental Policy Programme (EEPP). During the second phase of the programme, which will last for 18-month period ending September 2002, the EEC is to begin implementing this national strategy, explained Emad Hassan, executive director of the Egyptian Energy Service Business Association (EESBA), which is a member of the EEC.
With the establishment of the EEC and extension of financial support by an international donor, the question arises as to why so little has been done to implement the strategy. Part of the answer lies in the lack of coordination among the constituent members of the EEC. "Each of the entities in the energy sector in Egypt works as though it were an island unto itself. They all have information on energy production, consumption and distribution in Egypt. The challenge remains as to how this information can be shared among these entities in a manner that benefits them all," said an oil expert who preferred to remain anonymous.
Economic exigencies, however, will ultimately force Egypt to take a more proactive stance towards the energy efficiency issue. According to the latest report issued by the OEP, total electricity consumption for 1998/1999 reached 56.6 billion kilowatts per hour.
Oil and natural gas contribute 78 per cent of Egypt's total generation of electricity (28 per cent comes from petroleum products and 50 per cent from natural gas), while the rest is generated by the High Dam. "This means that the majority of electricity is produced by non-renewable resources. This is an alarming fact," commented Hassan. Should Egypt fail to adopt a plan to economise on its use of energy, growth will decline and development plans will need to be postponed.
Hussein Abdallah, an oil expert, formerly of the OEP, suggests that even though Egypt's current consumption is high, it has an astounding potential to economise on its use of energy. In his study titled "The National Economy and Improving Energy Efficiency Standards," Abdallah suggests that if the Egyptian economy grows by 7 per cent annually until 2017 -- the target growth rate set by the government -- then, on the basis of current demand, energy consumption will increase by an average of 9 per cent annually.
"To carry out development plans [through 2017] Egypt requirments of oil and natural gas are estimated by approximately 1,770 million tons of oil equivalent," said Abdallah. Should energy efficiency policies be adopted, the same growth rate could be achieved with approximately 1,175 million tons of oil equivalent, he suggested. Abdallah added, "This means that some 600 million tons of oil could be conserved, thus saving $110 billion if the barrel is sold for an average of $25."
Such projections suggest that Egypt has the potential for the development of a huge market for energy-efficient services and equipment. Ma'moun El-Saqqa, owner of a private sector energy service company, said, "Imagine how many new jobs and projects could be created if only half of this sum were invested in such services and equipment," he commented.
Moreover, the environmental impact of reducing energy consumption can hardly be overlooked. "Every megawatt per hour of electricity saved is equivalent to reducing 460 kilogrammes of carbon dioxide emissions," said El-Saqqa.
Although energy conservation is a new concept in Egypt, many energy-efficiency technologies are available locally. Energy-efficient fluorescent lights, washing machines, air conditioners and motors have been available on the market for years. However, it was only in 1998, that the first Energy Service Company (ESCO) entered the market.
"It is not easy to convince a factory owner to spend LE100,000 on energy saving equipment to cut down his electricity bill," said El-Saqqa. He added that energy-efficiency measures offer investors a rate of return that can exceed 25 per cent within a short period. "Returns on the investment in equipment can occur within three years time, and the savings can be used to generate profits after that," said El-Saqqa.
Instead of importing ready-made equipment, Egyptian ESCOs seek to establish joint ventures with foreign partners to obtain know-how.
In addition to the lack of coordination among different agencies, problems obstructing the implementation of energy conserving measures include financing equipment and a low level of awareness about the potentials of such equipment. "We still have a long way to go," said El-Saqqa.
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