Jordan scrambles to avoid energy crisis amid regional turmoil

#InsideJordan

An energy crisis has been a long time coming for Jordan, which for decades has relied heavily on fossil fuels from Iraq, Egypt, and the Gulf

Egyptian police stand guard following an attack on an gas pipeline, cutting supplies to Jordan (AFP)
Elizabeth Whitman's picture
Last update: 
Thursday 12 February 2015 18:00 UTC
Shares:
63

AMMAN, Jordan - As the sun rose on 27 April, 2011, orange and white-hot flames burst and soared 20 meters into the sky from a gas pipeline in Egypt's northern Sinai. An armed gang had attacked the pipeline, which exploded, leaving flames spurting as gas burned.

Officials were forced to close the pipeline, shutting down the gas supply to Egypt's northern neighbours. The attack was the second in a month in the same area, according to the BBC, and was among the first of nearly two dozen pipeline attacks that have occurred in the region since February 2011. This year, the pipeline has been attacked at least four times.

For Jordan, these attacks spell disaster in another form. When the pipeline is closed, Jordan is left without natural gas that supplies 80 percent of its energy needs. Violence in Iraq over the past decade has similarly choked a once-steady flow of oil.

Tides may be changing for this heavily dependent country, if it can develop domestic sources of energy. But skeptics wonder whether Jordan can deliver such progress on the ambitious timeframe it has laid out. Topping their list of concerns are a lack of transparency, inconsistent legislation, and poor infrastructure.

Today, Jordan imports about 96 percent of its energy needs, spending 5 billion Jordanian dinars ($7.1 billion) each year to do so -  up to 20 percent of the country's GDP. In recognition of the dire need to change that balance, Jordan crafted a National Energy Strategy, last updated in 2007. The plan envisions 39 percent of energy being drawn from domestic sources by 2020, including wind and solar (10 percent of the total energy supply), oil shale (14 percent), and nuclear power (6 percent).

In past decades, as Jordan basked in the supply of inexpensive fossil fuels from the Gulf, Iraq and Egypt, it failed to develop domestic sources of energy. Now, pushed to its limits financially, the country is scrambling to assemble home-grown alternatives, for which it actually holds vast potential.

But governmental bureaucracy has bogged down these efforts; only in the first half of 2014 has developing domestic sources of energy appeared to accelerate. "Progress on renewable energies maybe should have been quicker in previous years," said Robin Mills, an expert on Middle East energy strategy. Still, "that does seem to be moving ahead."

Untapped potential

In 1979, Jordan's Royal Scientific Society installed a wind-powered water pump at one of its buildings in the port city of Aqaba. As similar projects followed, such as another wind-powered water pump station that has operated in the southern mountains of Tafileh since 1987, Jordan became an unexpected pioneer, of sorts, in wind energy. Despite such forays into wind power, renewables were not seriously considered a robust source of energy for Jordan, until now.

Bright and clear is a typical weather forecast in Jordan, where the sun shines over 300 days a year and solar irradiance is one of the highest in the world, ranging from four to seven kilowatt hours per square meter. By the end of March, Jordan had signed 12 agreements for solar power plants aimed at being operational in 2015.

Wind speeds, meanwhile, range from 7-11 metres per second, and in November 2013, the Jordan Wind Project Company (JWPC) signed an agreement to construct the 117-megawatt Tafila Wind Farm. Supposed to be fully operational by 2015, it will be the Middle East's first utility-scale wind energy plant.

Jordan also possess the world's fourth largest reserves of oil shale, estimated at 40 billion tonnes. Oil shale, which is different from shale oil, can be heated to produce oil, either in situ (below ground) or after extraction. Many local groups consider oil shale and renewables the best options to bring Jordan closer to energy independence.

But even with the past year's blossoming of energy-related agreements, Malek Kabariti, Jordan's minister of energy from March to August 2013, did not believe that the country was on track to fulfill quotas in the energy strategy, especially since moving from agreeing on a project to actually carrying it out is not always a smooth path.

Jordan's negotiations with Eesti Energy, an Estonian oil shale company, for instance, began in 2008. "Since then, six ministers of energy have shifted," said Abu Dayyeh, ‎president of the Society of Energy Conservation and Sustainable Environment in Jordan. "Every time a new minister comes in, the Estonians start again."

Jordan signed a concession agreement with Eesti in 2010, allowing the company four years to study Jordan's oil shale reserves and decide whether to proceed with developing them.

Finally, in June 2014, the government awarded a license to an international consortium, including Eesti, to build a 430-megawatt oil shale plant expected to be operational by 2017. According to Estonia's Minister of Finance, Jürgen Ligi, they were six rocky years of negotiations.

Overhauling the energy sector

"The crisis of energy in Jordan is a management crisis," said Ayoub Abu Dayyeh. Although Jordan offers tax and customs incentives for companies and individuals to use renewable energy, critics say that at the same time, the government is undermining those incentives.

In 2011, Jordan passed the Renewable Energy Law, which set regulations on net-metering, connecting renewable energy projects to the grid, and so forth. According to Kabariti, the law took 16 years to pass, yet somehow regulations are subject to change without notice.

At the end of 2012, for instance, the government announced feed-in tariffs for households and companies to sell electricity produced from their own renewable sources to the government. A year later, the government suddenly announced it would change the tariff.

"There's a huge problem in the legislation for renewable energy," said Safa Jayoussi, Arab regional manager for Greenpeace Mediterranean. The confusion over the tariff "affected a lot of projects," she added. "We need to have a fixed feed-in tariff price."

According to Jordan's tiered electricity pricing, the more electricity a single customer consumes, the higher the price per kilowatt hour. Now that consumers have the option of selling renewable energy to the government, the government has begun losing income from higher-paying customers, Abu Dayyeh explained. "So now the government is trying to change the law."

"Laws and bylaws should not be subject to short-term changes," declared Akif Smeirat, managing director of the local energy efficiency company Kawkabuna. "Any investor would like to see a stable policy."

Similarly, as individuals and businesses look to install solar and wind power generators, Jayoussi added, the process needs to be straightforward. Kabariti said that he tried, as minister, to implement a "one-stop shop" that would "avoid all the red tape and complicated government procedures" for those trying to install small-scale renewable energy sources. He was blocked, he said, by more government regulations and the prime minister at the time.

Kabariti also regarded electricity subsidies, which last year amounted to over 1.3 billion JD ($1.83 billion), as a major problem in Jordan's energy crisis. Through NEPCO, the government sells electricity to consumers at an average (rates vary according to usage and sector) of 88 fils ($.12) per kilowatt hour -- about half the cost of production[SR1] .

"No decision maker wants to take the tough decision of removing subsidies," Kabariti noted. Jordan's finance minister has sworn to end subsidies for electricity by 2017, though in a country where government turnover happens at least annually, it is difficult to envision how a current minister can enforce the lifting of subsidies three years in the future.

Indeed, governmental transparency and corruption are major obstacles to energy reform, and nowhere have they played a bigger role than in the debate over nuclear power.

The nuclear debacle

Highly controversial, Jordan's nuclear programme got its start in 2007, with the establishment of the Jordan Atomic Energy Commission. In 2012, Jordan's parliament voted to suspend the programme, shortly after its Energy Committee said JAEC had misled Jordan's people and government about the project's costs.

Despite the parliament's vote, plans for nuclear energy marched forward. In May, the Jordan Uranium Mining Company announced plans to build a uranium extraction plant  -  central Jordan is said to contain 36,389 metric tonnes of uranium oxide, and in June, Jordan announced that the Russian-owned Rosatom would build two reactors, the first by 2021 and the second by 2025, with Jordan covering 51 percent of the $10 billion cost.

The JAEC posits nuclear power as the solution for energy independence for Jordan. Part of its argument is that Jordan can easily mine uranium (even though it would have be exported for enrichment). Yet in 2012, the French company, AREVA departed after four years in Jordan upon finding uranium deposits to be at a lower grade than what is usually commercially viable.

"There's a lot of misleading information," said Greenpeace's Jayoussi, adding that Greenpeace considers a nuclear power plant financially unfeasible.

"Nuclear energy is completely dependent on foreign companies," added Abu Dayyeh, "Enriched uranium is dependent on foreign companies. There is nothing indigenous, nothing national, nothing strategic about it."

A lack of water and Jordan's location in the midst of warring countries were other concerns, Jayoussi said. And, as plans for the reactors have proceeded, the government has neither involved local communities in decision-making nor has it presented a promised environmental impact assessment. "There is no transparency from the government," she said.

As long as Jordan continues "complicating and delaying things" overall, it is merely "obstructing any progress in the energy sector," Kabariti said. "I don't know by now why we don't have three oil shale power plants running. I don't know why we don't have hundreds of wind farms and photovoltaics."