Saturday, December 13, 2008

On The MedU Solar Plan

For your reading pleasure, a paper I wrote for a grad class this semester (Politics and Conflict in the Middle East) that goes a bit outside my normal subject material. I explore the political/economic/social feasibility of the Mediterranean Union's plan to drop down a bunch of solar thermal plants in the Middle East/ North Africa (MENA) region. The idea would have 4 potential benefits:

1) Help the EU meet its carbon reduction goals for 2020 and 2050.
2) Reduce European dependence on Russian gas and oil; The EU favors North African politics to Russian.
3) Develop the economies of North African countries.
4) Kick-start solar thermal economy by introducing economy of scale, allowing it to become competitive with fossil fuels. This would allow countries with lots of desert to start producing competitive electricity, and hedge energy needs from oil (which is volatile in price, vulnerable in transport to pirates and the like) to something more stable.

I'm not planning on publishing it, so the paper is accessible here. It is still copyrighted, and all rights are reserved. Some notes are below.

There are some serious issues with the plan, including the fact that it predicts that oil prices will stay the same or go up--if there is a sudden increase in electrical supply, then the price of oil is likely to drop--simple economics. China and India will happily slurp up this cheap oil to power their own economies, and then the EU's hopes of reducing carbon emissions might be undercut. Instead, this project is simply likely to subsidize India and China's industrial development on the backs of European taxpayers. At least it's not me.

Nonetheless, other goals are likely to be met. Europeans will indeed hedge their dependence from Russia and towards North Africa. The economy of scale is likely to allow wealthy nations like the US (with lots of desert of its own) to build its own solar thermal industry, and the EU and US can then supply to areas like the Arabian Penninsula, India, and Mexico. Finally, as long as trade deals are carefully sculpted by the EU, North African countries will likely benefit from the foreign investment. If the trade deals are poorly or sloppily formed, then solar power could become a "new oil"--a cheap source of revenue for tinpot dictators or ineffectual republics that encourages inefficiency, bureaucracy, and central planning. The trade deals will be the most important part.
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