Can climate change be tackled without hindering Egypt’s economic growth?

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With the conclusion of Egypt’s COP27 Summit in Sharm El Sheikh, much has been discussed about the historic deal struck on the ‘loss and damage’ fund, which- when in effect- sees developed nations compensate developing countries $100 billion per year for the damage and economic losses caused by climate change.

Hailed as a big win for developing nations, the deal, however, did not include any new agreements on curbing fossil fuels or reducing greenhouse gas emissions.

But for Egypt, it was a success. “The work that we have managed to do here in the past two weeks, and the results we have together achieved, are a testament to our collective will, as a community of nations, to voice a clear message that rings loudly today here in this room and around the world: that multilateral diplomacy still works,” said COP President Sameh Shoukry, Egypt’s foreign minister, at the end of the summit.

Egypt’s economy was hit hard in the last two years, after weathering the impacts of the pandemic and the recent Russia Ukraine war, leading it to struggle with inflationary pressures, currency devaluation and a ballooning debt. But despite these economic challenges, Egypt remains steadfast in its commitment to climate change.

“As much as skeptics and pessimists thought that climate action would be taking a backseat on the global agenda, we rose to the occasion, upheld our responsibilities, and undertook the important, decisive political decisions that were not easy,” said Shoukry.

And the reason for its commitment is clear-a country like Egypt is highly vulnerable to the effects of climate change, making it necessary to start preparing for it sooner rather than later.

Climate Change and Economic Development

While climate change affects the globe, its impact on Egypt is quite serious. From rising sea levels to droughts and water scarcity, Egypt is at particular risk of suffering from environmental challenges, particularly affecting those in poorer communities.

“The global impact of climate change is expected to be unequal across advanced and developing countries,” says Ahmed El Sayed, associate professor of economics at the AUC School of Business and director of research at Abdul Latif Jameel Poverty Action Lab (J-PAL MENA). “Even within the same country, the poor are expected to be bearing most of the bill. Egypt is no exception here given that it is one of the countries that are highly vulnerable to climate change. The country faces risks related to water stress, heat waves, dust storms, droughts, rising sea levels, and other adverse effects of climate change. Stronger warming has been already recorded over the past few decades, with an average temperature increase of 0.53 degree Celsius per decade. Without adaptation, several economic sectors will be negatively affected.”

The effects of climate change are already taking place across Egypt, according to Mariam Omar, co-director at Greenish, a foundation that supports sustainable development in Egypt. It can be seen in the Nile Delta, amongst other areas, and if left unaddressed, it could lead to serious repercussions for the country.

“If you don’t address the impact of climate change in areas such as Kafr El Sheikh and Alexandria for example, where the land is slowly sinking, you will not have land to grow crops on,” she says. “Even if you’re able to build seawalls to protect against rising sea levels, it will still affect the salinization of the soil. The soil will be saltier, so again you will reach a point where you will have no good soil for crops.”

Pursuing economic development without addressing climate change is futile, says Omar. Both need to be done in parallel to adapt as much as possible to changing environments. “There is no such thing as economic development or climate change. They are both shared concerns and should be addressed together,” she adds. “The weaker an economy is, the more it will need funds to adapt to environmental challenges.”

Mitigation Efforts

To mitigate the effects of climate change and support the move to a greener and more resilient economy, the Egyptian government recently launched the National Climate Change Strategy, issued the region’s first green bond to finance projects in clean transportation and sustainable water management, and just hosted the COP27 Summit to address climate mitigation, adaptation and finance.

To the summit’s success, the government was able to secure $10.3 worth of climate funding agreements for its flagship Nexus on Water, Food, and Energy (NWFE) program, which aims to drive the country’s green transition in energy, food security, agriculture, and irrigation and water projects.

That’s in addition to the country inking deals for green hydrogen and wind power projects worth $119 billion, according to a recently issued cabinet statement.

Yet despite this progress, Egypt still has a long way to go if it is serious about mitigating the effects of climate change. According to a report from the World Bank, climate change is set to cost Egypt about 2-6 percent of its GDP by 2060, posing a real threat to its long term growth.

Indeed, the road ahead without reform looks bleak. The report states that without increasing agricultural water efficiency, water scarcity will increase net virtual water imports by 15percent by 2030, reaching 45 percent in drought periods. This not only impacts agricultural outputs, but can affect people’s livelihoods and even lead to food security concerns.

“Agriculture for example, which is an important sector of the Egyptian economy contributing nearly one-eighth of the national GDP and employing about 25 percent of the labor force will be severely affected,” says El Sayed, associate professor of economics. “Declines in yields and crop suitability are projected under high temperatures. Fruit and vegetable production, a key component of healthy diets is also vulnerable to climate change. This has implications not only for the economic growth but even more directly for food security.”

The Problem with CO2 Emissions

However, the greatest concern of all seems to be cutting CO2 emissions. Fearing a trade off with economic growth, developing countries may be reluctant to actively reduce their CO2 emission.
So, while the agreement at COP27 recommits to the Paris Agreement goal of limiting global warming to 1.5 degrees Celsius, the final text does not include curbing fossil fuels or limiting greenhouse gas emissions.

To that end, Mahmoud Mohieldin, economist, the UN Climate Change High-Level Champion for Egypt and UN Special Envoy on Financing the 2030 Sustainable Development Agenda recently stated that developed nations need to also reduce their own emissions significantly and pay their fair share in climate finance before pointing the finger at developing nations wanting to use fossil fuels to advance their economies.

Egypt produced 259.3 million tons of CO2 emissions, according to research by Knoema. While emissions have increased in the last 50 years with an annual rate of 15.83 percent, Egypt still produces only 0.6 percent of the world’s CO2 emissions, as stated by Egypt’s Minister of the Environment H.E. Dr. Yasmine Fouad earlier this year.

Nevertheless, there is still much to be done to reduce the country’s carbon footprint. In its updated Nationally Determined Contributions report, Egypt pledges to reduce carbon emissions of three key sectors by 2030: electricity by 33percent, oil and gas by 65 percent, and transportation by 7percent.
Meanwhile, Egypt’s youth are also starting to play an active role in the country’s transition to a greener economy.

Sarah Moussa, Founder of Shamsina, a startup that provides affordable rooftop solar-powered water heaters for lower-income communities, aims to make renewable energy accessible to all communities across Egypt. She believes that small, consistent changes can lead to big results, especially in reducing carbon emissions.

“We’ve seen estimates that suggest that electric household water heating can produce as much as three tons of emissions a year for just a single four-member household—so if you replace that practice with solar water heating, you are essentially cutting those emissions,” says Moussa. “If you multiply that impact by millions of households, we make a notable dent in cutting carbon emissions.”
Echoing her sentiments, Mariam Omar, the co-director of Greenish foundation, adds that everyone has a role to play in the fight against climate change. “Daily choices impact the planet,” she says. “Educate yourself about the health and environmental benefits of your choices. A healthy planet should have healthy people.”

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