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Kurdistan is blessed with a wealth of natural resources, oil only being one of them. Photo:Rudaw
Like the rest of the world, Kurdistan is facing a convergence of crises. COVID-19 has brought the economy to a halt, and even if it were to start up again tomorrow, the oil that forms the cornerstone of our economy has become practically worthless.
Recent history offers no shortage of lessons: threats coming from Baghdad and powerful neighbors, who have at various times restricted fuel, oil trade and electricity to the region to exert political influence. Add to that erratic oil price fluctuations, and you have a picture of a region whose energy security has historically been hostage to the geopolitical whims of its neighbours.
What a misfortune it is that with all the beauty that surrounds us in the Kurdistan Region, with its lush green mountains, flat and fertile plains and rivers; it seems that only dark days lie ahead of us. What we need now is some common sense solutions to the economic woes that are plaguing us. Perhaps the answer lies right in front of our eyes.
The solution is for Kurdistan to make a bold investment in renewable energy that will make it a global example of economic recovery. Not only does such a visionary strategy pose major benefits to the health of people and planet, it makes economic sense. Renewable energy is the most cost-effective way to get past not only this oil crash, but also the next one. It can provide electricity, create more employment opportunities, enhance human welfare, and increase incomes.
While oil has always symbolized the Kurdistan Region’s prosperity, it has also symbolized its dependence. Currently, the global oil industry is in its worst crisis since the great depression. The value of oil has plummeted with the debacle over production quotas between Russia and OPEC countries. To make matters worse, the new OPEC+ cut of 9.7 million barrels a day is not expected to be enough to allow the world’s oversupply to drain away — global demand has dropped to its lowest in 25 years.
Though the current crisis only adds urgency, the pressure to go beyond oil and gas started mounting a long time ago. For starters, Kurdistan is not self-sufficient in its energy needs. It’s dependent on neighbours to provide enough energy for without natural gas and hydropower from Turkey and electricity from Iran, Kurdistan cannot keep the lights on. As the KRG’s Electricity Minister Kamal Mohammed Saleh pointed out, the power needs of the Kurdistan Region are 7000MW, but its actual production is half that amount. This huge demand is impossible to be met by poor electricity production.
Kurdistan’s economic struggles are inherently tied to its political entanglements. When the region lost the Kirkuk oil fields to Baghdad after the abortive attempt at gaining its independence through referendum, it only took pulling the strings of oil to get the KRG to bend: Iran banned fuel trade in the region, while Turkey threatened oil flow and imposed a blockade.
According to the Ministry of Planning in Kurdistan Region, new electricity development projects have totaled around five billion dollars. Except for the two hydropower stations in Kurdistan, too little had been done so far in support of the energy transition. Renewable energy could produce a considerable portion of the region’s domestic electricity needs and overcome the electricity shortages. According to a 2017 study that assessed the possibility of applying renewable energy in the Kurdistan Region, “The initial cost of renewable energy building plants cost $1.16 billion, which is almost 20% of that budget and gives 97% to 99% reduction in CO2 emission in the region.”
The Kurdistan Regional Government has made a commitment alongside Baghdad to trim its oil output in accordance with OPEC agreements. This still won’t be enough to ensure economic growth and save Kurdistan’s people from imminent economic shortages. Oil has had its chance to prove itself worthy of our trust in making it the sole driver of prosperity. It’s time to admit that it has failed, and act now to invest in sustainable energy.
Policymakers can and must address the current crisis using the natural resources which are already available. The Kurdistan Region’s unique geographical location gives it favorable conditions to replace fossil fuels with three key, abundant renewable energy sources — wind, solar, and hydropower.
Mountainous areas are ideal for wind turbine developments, since the wind speed is high, regular and reliable there. Mountains in the north part of the region create wind corridors with high wind speeds.
High average sunshine makes it suitable for solar power investment, especially in the south part of Kurdistan Region. For instance, the Garmiyan district can be a great place for this purpose because of its very high light intensity throughout the year, especially in summer, compared to other places in Kurdistan.
By acting quickly to seize the opportunity presented by the crash of oil prices, the government can carry out energy sector reforms to gradually make the shift toward renewable resources. In the immediate term, this can start meeting Kurdistan’s energy demand through domestic production, and in the long term, end its reliance on oil.
Such a shift has transformative potential for the region, but it requires the government of Kurdistan to develop a national strategy that treats energy security not only as an afterthought, but the centerpiece of its long-term planning.
At first glance, this will likely spark panic among the oil companies, policy makers, and private sector interests.
The good news is that we are not alone. An oil company is an energy company, after all — and many of the world’s biggest oil companies have already seen the writing on the wall and started investing in renewable energy. These steps have been small, but they show that there is an economic rationale for preparing for energy transition, and that the energy industry is changing.
The fact that Shell, Equinor, and Total have planned backup frameworks beyond oil shows that even oil giants are not banking completely on oil. Taken together, the world’s top 25 oil companies made a decisive move into renewable energy and invested $3.5 billion in low carbon energy technology in 2018 alone.
To date, the Kurdistan Regional Government has more than 70 oil and gas contracts with international companies. Its strategy has always been to attract the biggest investment in order to achieve economic sustainability. It also has seeded renewable investments in solar energy that have the capacity of producing 25 megawatts of electricity for each station, in Erbil, Sulaimani, and Duhok — if and when they finally become operational.
But policymakers have been blind to what it is they are investing in, and whether they represent the best of intentions for the Kurdish people. The KRG should partner with oil companies that are interested in Kurdistan not only for its oil, but with the prosperity of its people in mind.
Investment in renewable energy must be seen not just as short term investment, but for the long term as well. Ramping up investment in solar energy, wind power, geothermal energy, and hydropower plants to kick start economic growth and environmental and social benefit will take vision and enthusiasm. For that, the government should reach out and listen to talented youth in the energy sector to join in the race to find new solutions that will benefit their people. At the same time, policymakers should incentivize the private sector, and individuals with the means to privately invest in renewable energy, notably solar and wind power. Installing solar panels in people’s homes makes families more energy independent on both a micro and macro level.
With a green new vision, Kurdistan can emerge from this crisis by transforming into a haven for sustainable power that will make it an example of energy independence for the whole world to follow.
Prsha Abubakr Othman is a graduating Energy Engineering student at the American University of Iraq–Sulaimani (AUIS). She is a founder and president of the AUIS Society of Petroleum Engineers and is currently working on a project designed to inspire women to enter STEM. She is a leadership exchange alumni from the U.S Department of State.
Editing by Shawn Carrié, Shahla Omar and Yasmine Mosimann
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