Egypt is currently facing significant challenges, including rapid population growth and a rising demand for energy. To meet its long-term development goals, the country’s energy sector must expand its production capacity to keep up with growing needs. Energy, particularly electricity and fossil fuels, plays a central role in Egypt's economy, contributing significantly to sectors like manufacturing and tourism, which together account for about 25% of GDP. In essence, energy is the backbone that drives economic progress in the nation.
In 2011, Egypt generated 147 billion kWh of electricity, of which 131 billion was consumed, while 16 billion was lost during transmission and distribution. Natural gas supplied 75% of the electricity, followed by petroleum at 14%, hydropower from the Aswan Dam at 9.7%, and just 1.2% from wind and solar sources. This highlights the heavy reliance on traditional energy sources and the need for diversification.
By 2010, Egypt had become the second-largest natural gas producer in Africa, behind only Algeria, and ranked 12th globally, producing 2.2 trillion cubic feet of gas and consuming 1.6 trillion. By 2012, Egypt’s reserves were estimated at 78 trillion cubic feet, with most discoveries concentrated along the Mediterranean coast and in the Western Sahara. These findings indicate that Egypt’s oil and gas industry is becoming more technologically advanced and capable.
However, Egypt’s decision to export natural gas while using oil for power generation has proven to be economically unwise. Liquefied natural gas (LNG) production and transportation are costly, and exports to Europe and the U.S. have not yielded substantial benefits. For instance, Egypt sells gas to Israel at prices lower than the market rate, and exports to neighboring countries like Jordan, Syria, and Lebanon remain ongoing. This pattern continues today, raising concerns about the efficiency of the current policy.
Clearly, Egypt’s natural gas strategy needs to evolve. With increasing domestic demand, prioritizing local consumption over exports is essential. Natural gas is a cleaner and more efficient fuel compared to oil, especially when it comes to power generation. Replacing oil-based electricity with natural gas can boost production capacity and reduce costs. Additionally, integrating renewable energy sources like solar and wind will help ensure a more sustainable and resilient energy mix.
Egypt’s oil policy also requires rethinking. While the country has large reserves—around 4.4 billion barrels as of 2012—its production has not kept pace with rising consumption. From 2003 to 2011, oil use surged by 40%, making Egypt a net importer. Although new discoveries may increase output, reducing dependency on imported fuels is crucial. Promoting biofuels alongside natural gas could help conserve oil resources and support long-term sustainability.
Nuclear energy remains an untapped potential in Egypt. The government has revived plans to build a nuclear power plant on the northwest coast, aiming for completion by 2019. While this is encouraging for supporters, critics argue that Egypt lacks sufficient water resources and faces challenges in managing nuclear waste. Given the country’s energy shortages, the debate over nuclear power continues, with risks and benefits still under scrutiny.
Hydropower has long been a reliable source of electricity in Egypt, thanks to the Aswan Dam. However, tensions with downstream countries over water rights remain a challenge. Efficient water management and diplomatic solutions are needed to sustain this vital resource.
Solar energy stands out as one of the most promising renewable options. Egypt’s first large-scale solar power station in Kuraymat is part of the “Desert Solar†initiative led by Germany. A strong, forward-looking policy can further boost the solar industry, helping Egypt transition toward a cleaner, more diversified energy future.
With a critical energy shortage, developing a balanced and sustainable energy strategy is essential for Egypt’s economic growth. Encouraging clean energy, optimizing supply chains, and improving efficiency are key steps. Only through these efforts can Egypt secure a stable and prosperous future.
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