Now is the time to unlock the Kurdistan Region’s green energy potential

As we approach the 2023 United Nations Climate Change Conference (COP28) next week in Dubai, it is advisable for the leaders of the Kurdistan Regional Government (KRG) to contemplate a strategic shift towards renewable energy. 

The KRG must actively pursue a pragmatic resolution with Baghdad to address the ongoing challenges in the oil sector resulting from the prohibition of oil exports. Simultaneously, it is in the Region's strategic interest to pivot towards internationally appealing alternative energy sources.

The primary goals of the United Nations Framework Convention on Climate Change (UNFCCC) focus on expediting the energy transition and minimizing emissions before 2030 to mitigate global warming. Despite commendable achievements that have come out of the oil and heavy industries, such as cement and steel manufacturing, in the Kurdistan Region, there have been noticeable CO2 emissions. Although efforts have been made to reduce emissions, such as the use of natural gas in power stations and the Ministry of Natural Resources' mandate for oil producer companies to end flaring and reuse associated gas, the electricity sector remains a substantial contributor to emissions. Approximately half of the electricity production relies on highly polluting local generators using diesel and fuel oil. It is imperative to explore new avenues of renewable energy, with a particular emphasis on green hydrogen, as a judicious and strategic policy.

Green hydrogen, produced through electrolysis using renewable electricity from sources like solar or wind, offers a promising alternative for the Kurdistan Region and Iraq. Given the region's favorable weather conditions, with up to 300 sunny days annually, green hydrogen production could be a viable and potentially transformative endeavor. Traditional oil-producing countries in the region, such as Saudi Arabia, the United Arab Emirates (UAE), and Oman, have already invested significantly in green hydrogen. Saudi Arabia, for instance, has allocated a substantial $8.4 billion to this initiative, while the UAE has earmarked $54 billion for renewable energies, a significant portion of which is dedicated to green hydrogen development.

Despite fiscal constraints faced by the KRG, arising from challenges in its relations with Baghdad and the cessation of oil exports leading to substantial revenue losses, there exists an opportunity to foster private sector involvement. The KRG can incentivize private investment in green projects by offering legal guarantees and providing land for the development of solar projects, considering their spatial requirements.

Green hydrogen projects can also attract financial support from the United States and other G20 countries, aligning with the goals outlined in the Paris Climate Accords and commitments made by wealthier nations to contribute at least $100 billion annually for climate mitigation and adaptation in developing countries. Green hydrogen not only holds the potential to address electricity supply deficits, but also stands to generate millions or even billions of dollars in revenue through carbon credits.

The Kurdistan Region faces a critical electricity shortage of 3,000 MWh, while Iraq contends with a deficit of 10,000 MWh. Despite theoretical commitments to diversify electricity sources, tangible investments in alternatives remain limited. In Iraq, only one significant solar project with a capacity of 1,000 MWh, led by TotalEnergy, has been confirmed. In the Kurdistan Region, only a 25 MWh solar energy project has received approval, with another 100 MWh solar project proposed. These planned projects fall short of the country's solar energy potential, representing only a fraction of the total demand.

A report by the Green Hydrogen Capital Fund, based in Erbil, underscores the economic competitiveness of generating 1,000 MWh of electricity using green hydrogen compared to conventional fuel and natural gas. Generating 1,000 MWh of electricity through a combination of solar and green hydrogen could annually bring in over $200 million, factoring in carbon credit income.

The COP28 conference, scheduled for November 30 to December 12, promises excitement for the global energy landscape, as there is expected to be an unveiling of rules, regulations, and standards for green hydrogen. This pivotal moment should catalyze substantial global investments in green hydrogen and lay the groundwork for collaborative, multilateral projects in this emerging energy frontier.

Omer Ahmed is the editor-in-chief of Rudaw Media Network's Economy Desk.

The views expressed in this article are those of the author and do not necessarily reflect the position of Rudaw.