A Tale of Two Transitions
A Tale of Two Transitions
Published
2023-03-28
Author(s)
Ahmad, Ali
Bui,Thanh Thi Thanh
Qaradaghi,Mohammed
Mansour,Wael
Bui,Thanh Thi Thanh
Qaradaghi,Mohammed
Mansour,Wael
Abstract
This paper assesses the costs and
benefits of Iraq’s own energy transition from fossil fuel
dependent power sector to one with a significantly higher
share of renewables amid an accelerating global energy
transition. The paper quantifies the returns of Iraq’s
energy transition, its high exposure to the global energy
transition due to the deep role of oil revenues in the
provision of public finances, and the policy tradeoffs
associated with moving towards a greener energy mix. The
analysis finds that all decarbonization pathways of the
electricity sector bring additional growth and productivity
gains compared to maintaining the status-quo, albeit at
different levels of cost effectiveness. However, all
pathways (including existing GoI plans) are fiscally costly
given the required upfront levels of capex and the subsidy.
This cost could prove to be fiscally steep in deep
decarbonization scenarios especially if the transition is
fully financed by the public budget. Consequently, the
success of the energy transition in Iraq will largely depend
on the political context and on the ambition of a GoI-led
reform process that can overcome any socio-political vested
interest. It will also require popular understanding and
support for the urgency of this transition.
Citation
“Ahmad, Ali; Bui,Thanh Thi Thanh; Qaradaghi,Mohammed; Mansour,Wael. 2023. A Tale of Two Transitions: Iraq’s Energy Sector and Macroeconomic Stability in a Climate-Constrained World. © World Bank, Washington DC. http://hdl.handle.net/10986/39608 License: CC BY 3.0 IGO.”