STUDY CLIMATE CHANGE, ENERGY AND ENVIRONMENT ALGERIA 100% RENEWABLE ENERGY Recommendations for a National Strategy of Energy Transition Tewfik Hasni, Redouane Malek and Nazim Zouioueche January 2021 The energy transition to renewable sources responds to various objectives, consi­ dering the economic dimen­ sion, energy efficiency, and ecological responsibility. In addition to solving the crucial problem of energy availability at an acceptable cost, developing renewables is a safer economic growth potential for Algeria, which will thus emerge from its de­ pendence on hydrocarbons. The switch to this new model of energy production will reduce pollution, thus con­ tributing to the global chal­ lenge of the fight against global warming.

CLIMATE CHANGE, ENERGY AND ENVIRONMENT ALGERIA 100% RENEWABLE ENERGY Recommendations for a National Strategy of Energy Transition

 Content 1 INTRODUCTION 4 2 SITUATIONAL 5  AIM FOR 100% RENEWABLE ENERGY IN 6 4 RENEWABLE ENERGIES IN 9  TO ESTABLISHING 100% RENEWABLE ENERGY IN 11  THE 100% RENEWABLE ENERGY STRATEGY IN THE NATIONAL ECONOMIC DEVELOPMENT 12 7 22 Annex 1: Texts on energy control 24 Annex 2: Additional sources of information 26 Bibliography 26 Abreviations 27 List of Graphs 28

 In memoriam We will hardly find comfort for the passing of our friend Nazim Zouioueche, former president of SONATRACH and renowned consulting expert that Mr. Hasni was pleased and honored to accompany during a major part of his career at SONATRACH and in consulting. Nazim left us on 4 November 2020, leaving an outstanding record, which his peers highly appreciate and recognize. He held two engineering degrees(from Supélec and IFP for oil) and played a decisive role in the post-nationalization succession in 1971. He had a brilliant career: engineer at the El Gassi field then in a field department of oil wells, he was Manager of the Hassi Messaoud oil field Operation District, Hassi Messaoud District Manager, Head of Production, Deputy Director General for Hydrocarbons, and finally SONATRACH Chief Executive after leading its representation in Milan. His administrative retirement was not restful. Consulting, technology watch and media were his main occupation, until his last hour. His last contribution to the energy transition study for FES was one week before his death, meaning that he left on his feet, as he had himself hoped. Tewfik Hasni and Redouane Malek

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY 1 INTRODUCTION The Algerian economy is still heavily dependent on hydro­ carbons. The multidimensional crisis facing the world does not spare Algeria. The near future is as highly uncertain as the approaches that countries may adopt to overcome the crisis. It is obvious that there is no universal model out of the crisis. Algeria would need to adopt a global vision for its de­ velopment. It must define its priorities in view of its decreas­ ing financial resources, just as it must also guarantee the four security levels, namely national security, energy securi­ ty, food security and health security. For this study, we will focus on energy security. Local funding resources being at their lowest, there is no other option but to comply with the conditions imposed by financial institutions. Funding will in fact be exclusively dedi­ cated to sustainable development such as the green econo­ my. The social constraints underlying an outdated economic vision, which has eroded the middle classes and sent the poorest classes in unemployment, are no longer accepted. Young people are expressing frustration at the narrowing of their horizons. The political classes in place are being blamed for climate change, giving rise to environmentalists’ political power. For the sake of a smooth transition towards a more sustainable and environmentally responsible development, and especially towards a more hospitable planet, we must radically change our energy sector and adopt the right ap­ proach for a cleaner and fairer future, powered by 100% re­ newable energies. Political actors play a key role in this trans­ formation. Therefore, it is essential for governments, politi­ cians, and all stakeholders to meet and discuss the tools and best practices, which will promote this development. This approach will illustrate the feasibility of the 100% renew­ able energy objective in 2050 in Algeria. The target of 30% renewable energies in energy use by 2030 will have to be met in accordance with our commitments in the Paris Agreement. It will be necessary to set an objective that reflects a com­ mon political vision that should play a central role in the im­ plementation of global, national, and local energy practices and strategies. An ambitious long-term goal reflecting polit­ ical commitment will have to be set. It will allow both inves­ tors and the local population to have a long-term political vi­ sion. It will also provide the different actors involved a bet­ ter understanding of their role in this change and the part they can play in achieving this common goal. 4

Situational analysis 2 SITUATIONAL ANALYSIS In Algeria, as elsewhere in the world, the energy sector is one of the main factors of climate change. The report of the United Nations Economic Commission for Africa and its North Africa office reported in 2011 that Al­ geria has large reserves of oil and natural gas and largely depends on these resources to generate export revenue. The gas and oil sector represents 45.9% of GDP in Algeria. Total hydrocarbon exports accounted for almost 98% of the total export volume for 2007(UNECA 2011). These projects, developed by NEAL, were meant to ­complement the solar energy program, which had started in July 2011 when the first hybrid natural gas-solar power plant in Hassi R’mel was installed. Four thermal power plants were planned for the period 2016-2020 with a stor­ age of a total power of around 1200 MW, then the instal­ lation of 500 MW per year until 2023 and 600 MW per year until 2030. This was all undermined by the Oil lobby. With an export turnover of nearly 56.1 billion US dollars generated in 2010 by Sonatrach, Algeria is the fourth larg­ est exporter of liquefied natural gas(LNG) in the world, the third largest exporter of liquefied petroleum gas(LPG) and the fifth largest exporter of natural gas. In addition, Algeria witnesses an increase in energy consumption linked to economic growth, population growth and in­ creasing energy consumption per capita. Between 2002 and 2011, average energy consumption increased by 5.7% (UNECA 2011). In Algeria, the average annual sunshine is estimated at 3000 hours, with an average sunshine of 6.57 kWh/ m2/ day. With 86% of Saharan desert composing its territory and with its geographical position, Algeria has the most important solar field in the world. If we compared solar power to natural gas, Algeria’s solar potential is equivalent to a volume of 37,000 billion cubic meters per year, more than 8 times the country’s natural gas reserves, with the additional difference that the solar potential is renewable, unlike natural gas(UNECA 2011) The renewable energy development company, New Energy Algeria(NEAL), has launched the first solar-gas hybrid pro­ ject as part of a global solar and wind energy program, combining the two sources with the highest potential in Algeria. For the Hassi R’mel project, a financing request was submitted to the World Bank. It happens that five oth­ er projects in the world had already obtained a concession­ al credit agreement of 50 million dollars. Later, in 2006, a complementary program of three more solar-gas hybrid solar power plants was launched and these plants were twice the size of the original project of Hassi R’Mel. These were three 300 MW power plants in Meghaier(east), Has­ si R’Mel(center) and Naama(west). 5

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY 3 WHY AIM FOR 100% RENEWABLE ENERGY IN ALGERIA? Why aim for 100% renewable energy in Algeria, or why develop renewable energies in Algeria? According to the 2011 UNECA report, Algeria, a central country in North Africa, has since its independence in 1962 and especially after the first oil shock of the 1970s, taken full advantage of the carbon energies(gas and oil) available in its subsoil. These carbon energies have represented until the present 95% of the country’s foreign exchange earnings and more than half its GDP(UNECA 2011). As the country’s economy depends almost exclusively on these energies, it fully suffers the brunt of any drop in the price of these energies on the world market, and directly benefits from any rise. Over time, reserves began to run out, while domestic market needs increased particularly for gas, on which most of electricity production depends. This coincided almost exactly with the advent of shale gas and it turned out that Algeria contained large reserves of this energy in the shales or source rocks, the source rocks that had generated conventional hydrocarbons. We have learned that Algeria has the third largest reserves in the world. We received this information through the Ameri­ can geological authorities probably based on a satellite survey. This was a godsend as this shale gas came at the right time to make up for the decline in conventional gas re­ serves and meet the increasing gas demand, which was highly needed for the double-digit growth in electricity consumption. At the same time, renewable energy use experienced a renewed interest, especially wind power and to a lesser extent solar power, to face the climate dis­ ruption that the planet was suffering, and which signaled a dark future for future generations. It is worth pointing that this climate disruption was almost totally due to an unbridled use of carbon energies. At that time, high world energy prices led to a significant development of shale gas and at the same time of shale oil, particularly in the USA(allowing virtual self-sufficien­ cy in energy when it had been a largely importing coun­ try). Other countries more concerned with curbing climate change have preferred developing the renewables. It also allowed these countries to reduce their energy bills while increasing domestic production(the Paris Conference unanimously recommended limiting global temperature increase to avoid probable future disasters). Algeria, the third largest shale reserve in the world ac­ cording to American geological companies, also proved to be a country that can supply the entire planet with so­ lar electricity or green electricity. With its surface area, Al­ geria can develop both photovoltaic and solar thermal en­ ergy. There are important differences between the two kinds of development. Even if Algeria is ranked third world shale reserve(which remains to be proven by studies and works), it is undoubt­ edly among the top in solar energy. The big difference is that shale gas is a finite reserve while solar is infinite(or at least as long as the sun keeps shining on the planet). It is worth mentioning in this regard that the hydraulic fractur­ ing technique used for shale gas production makes high demands on water resources, in a water-stressed country like Algeria. There is a third climate-friendly source of energy: it is nu­ clear energy, which however suffers from many hazards such as the treatment of nuclear waste. In addition, the Chernobyl incident, following that of Three Mile Island in the United States, severely damaged general opinion on nuclear power, which was severely affected, and almost discredited after the Fukushima incident. For Algeria, the choice was between shale and solar. For a limited period, shale gas as well as oil could perhaps cope with the issue of the declining conventional reserves and the continually increasing internal demand. However, what will become of this demand if the industry, only ac­ counting for a small portion of the GDP, achieves the de­ sired growth? Production must occur at an acceptable cost, allowing the country to reduce its expenses and not to produce at costs approaching or exceeding world pric­ es. If all the indicators are favorable, shale can only be a solu­ tion for a limited time, because like conventional sources, shale gas and oil only offer limited reserves. This is not the case with renewables(as their name suggests), which are mainly solar and wind power for Algeria. The reserves are 6

Why aim for 100% renewable energy in Algeria? endless and as we said above, as long as the sun rises every morning to illuminate the planet, solar energy will be available. The same goes for wind power, which re­ sults from winds that have always blown. The cost of shale has proved prohibitively high, especially during the present crisis we are facing because of the pandemic. Companies with a strong reputation of dura­ bility filed bankruptcy after a few weeks of falling interna­ tional energy prices. At the same time, the kilowatt cost of production from re­ newable sources seriously competes with the kilowatt cost of production from carbon energies(mainly gas). Its cost price is now lower, even with the costs of intermit­ tency included. Indeed, solar and wind power are not per­ manently available(nighttime or windless period); but this disadvantage is already successfully bypassed. In Algeria, available carbon energies will still avoid the intermittency inconvenience in the event of renewables development until storage techniques are completely mastered. In fact, Algeria had initiated a program for renewable en­ ergy development since 2003(UNECA 2011). However, as mentioned in the introduction, the program launched by NEAL, a commercial law company in charge of renewable energy development, with three hybrid power plants of 300 MW each, had earned a positive response by GEF, the climate fund run by the World Bank, which had grant­ ed a concessional credit of 160 million dollars(World Bank 2011). These funds were a useful leverage to finance the entire program. However, the Oil Lobby was sufficiently power­ ful to ensure that the government of the time refuse this funding. Today, however, there is political will. We must therefore be in a process of attracting foreign investors, identifying the obstacles to renewable energy develop­ ment, and supporting the social dimension. MITIGATE THE EFFECTS OF CLIMATE CHANGE In addition, carbon-based energies(particularly oil) seemed unbeatable for transportation, yet we note that for a large part through the car industry, first with the hy­ brid and now the all-electric, the central place of carbon has been highly overrated. We are already talking about carbon-neutral planes. Boats will come next! In summary, due to infinite reserves and to limited and competitive costs, renewables in Algeria are gaining a foothold, with green electricity produced in abundance likely to become exportable. Why not imagine the two shores of the Mediterranean linked soon by cables carry­ ing direct current electricity. Of course, beyond what we have just said, the development of renewable energy in Algeria would surely contribute to mitigate the effects of climate change. Along all other countries, Algeria must contribute to the fight against climate disruption and temperature rise. Because it is infinite, renewable energy will benefit the country and bring a final answer to the issue of lack of en­ ergy security. While carbon energies have largely contrib­ uted to solving the employment problem, renewable en­ ergy will also be an important source of job creation of lit­ tle appreciated jobs, and jobs requiring high-level train­ ing. This dual character will promote local participation and stimulate social development. Finally, in addition to solving the crucial problem of ener­ gy availability at an acceptable cost, the development of renewables will end atmospheric pollution and contribute to improving human health. Assuming that it is necessary to have energy, and with na­ ture’s blessing of finite reserves of energy, and of infinite energy at a competitive cost, with the possibility of ex­ porting both, what would be your choice? Algeria must make the choice of renewable energy. To be part of sustainable development, our priority is to meet the country’s commitments in accordance with COP21 acts. We can only achieve this aim with good gov­ ernance, which is in any case required for reporting. PROMOTE ENERGY SECURITY AND RESILIENCE Energy security aspect is perceived through the lens of the energy consumption model. This consists in ensuring an energy supply to the country, covering all needs until 2050. This model will of course include the rational energy needs of the various economic sectors. By rational, we mean standardized needs ending household waste. It is neces­ sary to include the needs of the new sectors of develop­ ment apart from hydrocarbons as well as demographic growth, which exceeds 2 %. Energy use for Algeria would be 20 % in electricity and therefore 80 % in heat. Energy security therefore implies an adapted energy production. The political decision to reduce the share of thermal use to devote nearly 80 % to electricity in several technological fields is not consistent. In fact, priority is given to photovoltaic power alone. Solar thermal was banned by ministerial decree. There is no more resilience of the energy system with the end of con­ ventional gas. BENEFIT THE LOCAL ECONOMY AND CREATE JOBS Being part of sustainable development allows achieving the main goal, that of the social dimension. Job creation in renewable energy industries is a reality. Technological choices are important. However, the potential for job 7

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY ­creation is not even. It would be a mistake, for example, to believe that manufacturing photovoltaic cells is a solu­ tion. It has been shown that job creation in the photovol­ taic(PV) value chain in fact represents only 18% for cell manufacturing. STIMULATE SOCIAL DEVELOPMENT AND LOCAL PARTICIPATION With more than 2 million km 2 , Algeria is a very large coun­ try. Its natural resources are mainly located in the South, while it is mainly the population of the North, represent­ ing more than 90 %, which benefits. The centralization of economic decision-making has crushed all local initiatives. As part of the development vision, we must now focus on lifting existing administrative constraints, which are the source of corruption. We should think of local develop­ ment in the form of free zones. Good governance will im­ ply a development model of the Block Chain type backed by a cryptocurrency. Administration will be limited to site security. Decisions to invest would be local. However, the technical and economic orientation will be defined be­ forehand, with respect for the sovereignty of the country, and will be part of the priorities of the four security as­ pects mentioned above. REDUCE POLLUTION AND IMPROVE HUMAN HEALTH We must now act responsibly creating services and there­ fore jobs with due regard to environment protection, such as selective sorting, waste treatment and extended recy­ cling. In fact, in terms of recycling substances and materi­ als, in a large country like Algeria, endowed with resourc­ es, organic waste recycling is becoming an unmanageable problem in the North, which requires urgent solving. One can indeed imagine building electric railways from North to South, to carry organic waste from the North to the South by train, and use it for sowing Saharan agriculture land. On the return trip, the train would carry sand, a scarce resource in the North, for construction. Electrifying transport is easy in a country with the great­ est solar potential. The Covid-19 crisis provided the results of a lesser use of internal combustion cars. Building infra­ structure and electric vehicles is within reach of the Alge­ rian workforce. 8

Renewable energies in Algeria 4 RENEWABLE ENERGIES IN ALGERIA We shall begin with a precise assessment of renewable en­ ergies in Algeria. As we had previously mentioned, three other plants of 300 MW each were planned with the Has­ si R’Mel Hybrid Plant, providing a 1050 MW program for the period 2006-2014. If we now look at the report of the UN Commission on the current situation and prospects, we see that it has endorsed the NEAL program submitted to GEF under the World Bank. The plan consisted in building four thermal power plants with a total capacity storage of around 1200 MW, then in­ stalling 500 MW per year until 2023 and 600 MW per year until 2030(UNECA 2011). It was an 8,000 MW program, to be completed in 2020; but everything was blocked. A 22,000 W program was launched in 2011, giving a sizeable share to CSP. In 2014, it was revised to rule out CSP and dedicate 13,000 MW to PV. Since then, and in the last two years, Chinese companies installed around 400 MW of PV and no information is available on the performance of these plants(UNECA 2011). PROMOTE RENEWABLE ENERGY THROUGH RULES AND PRACTICAL MEASURES We must admit that if we had to mention all the institutions created for renewable energy promotion, there would be so many of them, and their number keeps ­increasing. The rationale behind their creation is that only the State can make this happen. Examples of similar experiences in other countries show the opposite, but in Algeria, the only company with a successful project was NEAL, a totally Algerian public-private partner­ ship. Success stories in neighboring countries or elsewhere consisted in duplicating the Algerian company NEAL. As a project development company, NEAL deploys technical and financial engineering, and can hold shares in the project com­ pany in charge of construction, operation, and marketing. In addition, in 2002, several acts addressed renewable ener­ gies, like the electricity law, which gave priority to renewa­ ble energies and defined a development framework. How­ ever, the framework was not implemented. Other laws were passed without going beyond the scope of the original text. Regarding regulatory arrangements, we may add that the Electricity and Gas Law of 2012 gave priority to renewable energies. It had disrupted the electricity market. The stock market, with a market operator, was halted. The law had enabled a feed-in law(law on renewable energy access to the electricity market). This whole process was called into question. A bibliography of related legislative texts is availa­ ble in the annex. The conclusion is that in the absence of demonstrated po­ litical will, no results could be expected. We will discuss the real obstacles to the development of renewable energies below. The most effective measure would have been to end fossil fuel subsidies, which had reached$ 15 billion per year(graph 1). Graph 1 Energy subsidies(Billions$) Electricity Fuel Gas Total Source: Hasni 2014 2012 0.197 0.46 11 11.6 2020 4.352 15.51 20.5 40.3 2030 7.232 20 37 64.2 9 Observations 2013: 3 Billion dollars Imports

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY The above 2012 assessment results from a review of the Fi­ nance Law. Projections were later made by estimating the export price and deducing the domestic market tariff. Gas was estimated at$ 8/ MMBTU for export, with a domestic tariff at$ 0.27/ MMBTU. As far as electricity, the cost price of electricity produced was estimated at 8 DA/ kWh, the price being 4 DA/ kWh. For 2018, the Finance Law estimat­ ed the energy subsidy at$ 15 billion. IMF assessment was similar, nearly 10% of GDP(Hasni 2014). SET UP INSTITUTIONS SUPPORTING RENEWABLE ENERGIES Several institutions were indeed set up without, however, implementing a real renewable energy development policy. Thus, no laws on renewable energies, the environment, etc. were implemented(see annex 1). INVEST IN LARGE RENEWABLE ENERGY PROJECTS The 1050 MW program for the 2006-2014 period and 8000 MW for the 2016-2020 period have gone unheeded, due to a lack of political will, despite the uniqueness of the Algeri­ an energy potential. 10

Obstacles to establishing 100% renewable energy in Algeria 5 OBSTACLES TO ESTABLISHING 100% RENEWABLE ENERGY IN ALGERIA While Algeria had significant financial resources, we found that access to capital and credit was very complicated, not to say impossible for some private investors. Only very large fossil fuel projects benefited from funding. External financing was prohibited on the pretext that it would put the State into debt. We seemed to ignore the fact that the Hassi R’Mel project had followed a call for investors expected to finance the project themselves. In addition, the contractual arrange­ ment design was under Project-Finance, meaning that the project guaranteed itself without State support. Putting the State in debt was not even an option. Investments in renewable energies are long paying off. The latest projects required financial arrangements over a period of thirty-five years to ensure better competitiveness. This is how we are now getting hybrid solar power, CSP+ PV, with storage likely to stabilize at costs of around$ 7 cts/ kWh. The intermittency issue is over. Forecasts for 2021 and 2022 foresee 6 cts$/ KWh and 5 cts$/ KWh. This explains the threat to fossil fuels, whose price had exploded(IRENA 2020a). The major source of obstruction was the oil lobby, which had not anticipated everything. The main obstacle that the oil companies raised consisted in fully subsidizing fossil fu­ els. We have seen above that this could reach 15 billion dollars in one year. The other protective measure that the Algerian oil lobby implemented, in addition to all the ob­ stacles mentioned above, consisted in requiring that re­ newable energy investments be conditional upon local manufacture of equipment. The decisive action to block re­ newable energies was to challenge the law of 2012, which abolished monopolies and disrupted the markets. An Executive Decree by the Ministry of Energy entrusted Sonelgaz alone with renewable energy projects. COP21 commitments were not honored. Externalities, such as en­ vironmental pollution, climate change, health costs, and the impact on energy security were not considered. This obviously created a distortion reflected in comparing re­ newable energy and fossil fuel costs. see, endeavored to remove all advantages gained through the Law of 2012 to curtail renewable energy projects. Let us now move to the absence of strategic vision for nation­ al economic development. The Rentier-State culture even­ tually annihilated any attempt at diversification. The lack of a clear economic strategy, as defined above, prevented grasping that the only option currently accepted by financial institutions and investors is sustainable devel­ opment and the low-carbon green economy. The health crisis has revealed the limits of current economic develop­ ment. The current economic crisis signals the end of an era. The lack of political will and lack of commitment of Sonel­ gaz, in charge of the renewable energy program, com­ bined with conflicts of interest, eventually caused all re­ newable energy programs to fail. Decision-makers are unfamiliar with the field of Energy and have always believed that the energy security of the coun­ try rested exclusively on electricity, while electricity ac­ counts for only about 20 % of energy use. They did not un­ derstand the intermittent nature of PV and wind, which re­ duced the importance of these energy forms in defining the energy consumption pattern. In the strategic vision of economic development, it will become visible that tomor­ row’s world will require a new set of human resources, which remain the determining resource for the success of the implementation program Algeria lacks human resources adapted to the new vision of sustainable economic development. Special higher educa­ tion schools and specialized training institutes for engineers and technicians specializing in fossil fuels or renewable en­ ergies have all been closed. Management training centers, preparing for artificial intelligence through Big Data creation and switching to 5G are lacking. The development of Block Chain concepts backed by crypto currencies could however be a solution to the funding problem. As noted above, fossil fuel subsidies further enhanced the distortion. The legal and regulatory framework, as we can 11

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY 6 EMBEDDING THE 100% RENEWABLE ENERGY STRATEGY IN THE NATIONAL ECONOMIC DEVELOPMENT PLAN We have noted above that one of the decisive obstacles to renewable energy development was the lack of an integra­ tive approach to mobilize most central and local actors and address, among others, the following four aspects: A strong commitment to sustainable development, namely green economy, is required to make a start. It requires structuring the vision of sustainable economic development based on the four security objectives already mentioned It would be desirable to consecrate this development by constitutionalizing it. A clearer idea of ​t​his vision of devel­ opment is available in in the Annex. The subject of interest remains Energy. Only an energy consumption model is like­ ly to identify the energy mix of tomorrow, by the years 2030 and 2050. Of course, the determining factor in this study is sustainability and its impact on climate and the so­ cial aspects. The impact of energy transition on economy is on its way to becoming the real way out of the current crisis. In fact, we can turn a threat into an opportunity. IRENA studies show that the impact on growth would be significant. The impact on GDP alone is estimated at$ 367 per capita. Growth in social welfare would also follow(IRENA 2020d). The 100% renewable energy strategy must be embedded in the national economic development plan. The energy transition can become a key factor for economic develop­ ment and should represent the basis of a national econom­ ic strategy to ensure sustainable long-term prosperity in Al­ geria. To achieve this goal, the following main interven­ tions are necessary. CONSOLIDATING THE DOMESTIC ECONOMY Transition to 100% renewables would induce the develop­ ment of both large-capacity and small decentralized plants, particularly in off-grid areas. Let me remind that the Alge­ rian energy model is quite specific. In fact, more than 90% of the population lives in the north along the coast while all energy production is in Hassi R’Mel and south of Hassi R’Mel. As the energy potential lies in the Sahara, techno­ logical and human capital should no longer be imported. It turns out that the first Algerian potential is solar thermal energy, and it is easier to integrate solar thermal technolo­ gy, widely within our reach. Photovoltaic energy can con­ tribute only 18% of integration in the context of the value chain linked to it, namely 62% for installation and related activities(IRENA 2020c). It will still be necessary to integrate the rest of its value chain. The size of the envisaged projects will require devel­ oping significant human resources. A relatively large re­ quirement would have to be set for a target of 22,000 MW. We should be aiming for 12,000 to 20,000 jobs. Work would start with project management, installation and con­ struction, commissioning, and maintenance, keeping in mind that the target markets are not reduced to local needs. Export markets will certainly be equally important. SUPPORTING RESEARCH AND EDUCATION You must trust innovation. Innovation, as we saw, reduces renewable energy costs. The start-ups-induced increase in performance brought the hybrid solar energy system(ther­ mal+ photovoltaic) to a sufficient degree of competitive­ ness to compete with fossil and nuclear power. We need to disseminate knowledge and technology as much as possi­ ble and encourage field research and international cooper­ ation. This is possible if the Algerian market remains the most important in the world. There will be more on this further below. There are plenty of examples. Needless to remind that research should receive sufficient support. Universities, colleges, and institutes should receive con­ stant support for engineer and technician training. The best approach would be for the legislative framework to prioritize this training and research program for renewable energies as well as education policies. THE ENERGY CONSUMPTION MODEL A definition of an energy consumption model should rely on a concept of overall economic development. The prevail­ ing conception in defining economic development strate­ gies in the world integrates visions that include the scarcity 12

Embedding the 100% renewable energy strategy in the national economic development plan of ­resources, the need to reduce consumption – which is a major source of climate disruption – and the search for eq­ uity in sharing resources and financial means. This approach should lead the States to ensure energy se­ curity, food security and social cohesiveness. Energy secu­ rity is only one parameter. The other main parameters in an energy consumption model would be specific to each country. Thus, for Algeria, the criteria to keep in mind are as follows: – The price corresponds to the comparison of cost of the different energies. – Regarding supply security: energy is so important that users can neither store it, nor withstand an embargo or a supply failure. – Regarding climate change and COP21: countries that have signed the Paris Agreement on climate should meet their commitments. – Energy independence will get priority over electricity use: this point aims to ensure energy security and the best option is energy independence. However, one should not have a reductive vision in the energy op­ tions. Indeed, imposing photovoltaic(PV) as the only option, would penalize the impact of the selected ­system. It is important to note that PV was only useful for electrical use, which represented only 20% of overall energy use. – In terms of sustainability, the best option of energy independence is the one that guarantees long-term energy availability. – Industrial integration is necessary: among the produc­ ing countries, some suffer from high dependence on oil resources. The aim of economic diversification is therefore to develop an industry dedicated to energy. – Alignment with electrical systems( smart grid and transmission and distribution network) should be fa­ vored. ENDING THE ENERGY MIX BY THE YEARS 2030–2050 NEAL, the renewable energy development company in Al­ geria developed an energy consumption model scenario defined above by the seven evaluation parameters. Each model is specific. We argued that the energy security pa­ rameter and its counterpart, namely energy independ­ ence, are the most important ones The following diagram helps understand the specificity of Algeria. The energy consumption model does not fall under the public do­ main. Graph 2 Energy mix in Algeria(2018) Pro O d i u l i p ts ro P d e u t c ro ts liers 20% Gaz de Pé L t P ro G le Liquide 1% Source: CREG 2018 G G a a s z 79% 13

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY Graph 3 Annual energy potential of the different energy sectors (BTEP/year) 40000 40000 35000 30000 25000 20000 15000 10000 5000 0 So T la h i e re rm th al e s r o m la iq r ue Source: Hasni, energy consumption model 80 G N a a z tu n r at l u g r a e s l Graph 4 Comparison of different energy sectors Thermal solar with storage Natural gas 20 Gaz Sh d a e le sc g h a i s ste 50 So S l o a l i a r r e P P V V Shale gas (Without the cost of well aban­ doning) Solar PV (Without storage Without SMART GRID) Nuclear (Without cost of decommissioning Without cost of waste storage) Potential MTEP 40 000 90 20 50 5 COST cts$/kWh 5 to 7 10 18 2.2 10 to 12 Energy independence Yes No No No No Climate mitigation 100% No No 30% 60% Energy security+ 100% No No Limited Very limited Industrial integration 75% 30% 20% 40% 0 Export capacity 37 billion$ 12 billion$ 0 0 0 Source: Hasni 2019 14

Embedding the 100% renewable energy strategy in the national economic development plan PROMOTING SMALL PROJECTS INVOLVING LOCAL COMMUNITIES We did mention Algeria’s specificity with 90% of energy de­ mand in the North and most production in the South. The absence of a smart grid will not allow having a significant decentralized production. Indeed, managing multiple elec­ tricity productions will require an intelligent network man­ agement tool(smart grid), while the demand for heat is the highest, at more than 70%. A simple measure would consist in having regulations requiring that all construction works have thermal insulation according to defined specifications. The installation of solar boilers should be mandatory, and their manufacturing should therefore occur according to the defined technical specifications; and they are already in place in several Mediterranean countries. To achieve a decentralization of electricity production, there can only be renewable energy units of at least 10 MW for an electrical micro-grid, which represents an interesting market for Algerian SMEs. It is true that when electricity and gas are no longer subsidized, the size of the electricity or heat mar­ ket will be much larger and micro grids in the South will be more important. We do not presently need to develop smart grids, but we can start planning for the new cities provided for in the National Land Use Plan, which will need revision to include occupancy of the South so that we stop suffocating in the North. DEFINING THE ENERGY CONSUMPTION MODEL Programs developed for renewable energies did not address the needs. You can see that even by maintaining the 13,000 MW target for photovoltaic energy, we will not be able to meet the needs, which are not assessed according to the non-hydrocarbon economic development program. We cannot support electricity generation with gas turbines, at the expense of export markets. Until 2050, gas will remain the vector of energy transition. To this end, we must limit Sonelgaz’s electricity production to 60 TWh, which is the current level, with a capacity of 20 GW. Solar energy(thermal+ photovoltaic) will easily fill the re­ maining gap. It represents 93 TWh in the table above. We are aware that industrial and agricultural development will engender new energy needs, mainly heat. Our solar poten­ tial will meet such needs. The development program shall be reviewed later. Graph 5 Electricity consumption estimates according CREG(Commission for Electricity and Gas Regulation) 2015 2020 2024 2030 Global electricity consumption 61 % 88 % 112 % 150 % Photovoltaic power 13 000 MW(2030) 0,18 % 16,6 % 17,6 % 23 % Wind power 0 % 0,31 % 0,6 % 0,9 % Hybrid solar thermal-gas flaring 14 000 MW(2030) 0,1 % 12 % 50 % 70 % Combined gas cycle 14 000 MW(2020) Source: CCREG, results according to the Hasni model 61 % 59 % 15 60 % 60 %

Graph 6 Average global energy mix(2050) FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY N N u uc c l l e é a a r ir e e nergy 7% 7% G G a a s z 2 2 3 3 % % Renewable E E N n R ergies 55% 55% Pé O tr i o l a le nd et b b io io fu f e u l el 1 1 5 5 % % Source: CREG 2018 Graph 7 Energy mix in Algeria(2050) G a a s z 2 25 5 % % Prod O u il it p s ro p d é u tr c o ts liers 1 1 0 0% % Source: CREG 2018 Renewable EN E R n ( e s r o g l i a e i s re) (sola 6 r 5 p % ower) 65% 16

Embedding the 100% renewable energy strategy in the national economic development plan ENERGY EXPORT NEEDS TO THE MAGHREB, EUROPE, AND AFRICA Energy export needs to the Maghreb, Europe and Africa will be the subject of debates to be planned during the discus­ sions underway in the context of the extended 5+ 5 Dia­ logue. Of course, we will need to fill the financing gap re­ sulting from hydrocarbons. The assessment of such needs will certainly vary, according to national visions, the oil lob­ bies, and environment defenders; but we can draw a picture of these visions. We will reach this average global energy mix in 2050: The renewable energy development program, for the 2030 period, is compliant with COP21 commitments, and should be in place for the electrical transmission grid: – 2800 MW in photovoltaic energy(PV) – 11 200 MW in solar thermal energy(CSP: parabolic trough and solar tower) – 10 MW in wind energy The World Bank’s gas flaring estimation in Algeria is over 6 billion M3 of flared gas per year. The annual energy potential of Algeria would be: – Oil 50 MTEP/year – Gas 85 MTEP/year – Shale gas 20 MTEP/year – Solar 000 MTEP/year i.e., 40,000 billion M3/year(DLR 2005) THE MAGHREB MARKET The Electricity and Gas Regulatory Commission’s(CREG) es­ timation of electricity needs for Algeria is of 150 TWh in 2030. They should reach 250 TWh in 2050, if restraint and efficiency measures are implemented. Domestic consump­ tion reaches 60% of electricity generation. Such wasteful­ ness threatens the country’s energy security and is likely to cause the depletion of our gas reserves in the short term. It is no longer necessary to use more than 60% of the import­ ed gas for electricity generation. Likewise, European coun­ tries should abide by this rule. In view of the solar thermal potential on the southern shore, it is possible to meet the world’s energy consumption ten­ fold. By 2050, the global energy mix will be 55% electricity. What should happen is meet COP24 commitments and im­ port green electricity available in ample quantity in the South and completely competitive with nuclear and fossil fuels. Indeed, to meet its electricity needs by 2050 only, Algeria would need 250 TWh. For the 2030-2050 phase, 20,000 MW in thermal solar and 2,000 MW in PV should be added. About the other Maghreb countries, you should know that: – Morocco imports 15% of its electricity needs, and im­ ports gas for 19% of its electricity production – Tunisia too has an electricity deficit, which implies large investments since 56% of Tunisian electricity is produced with Algerian gas. – As to Libya, it has a large deficit with a demand of nearly 14 TWh for a 9 TWh production. THE EUROPEAN MARKET Algeria exports nearly 65 billion M3/ year of gas,(People’s Democratic Republic of Algeria, Ministry of Energy 2020). More than 60% is used for electricity generation (SONATRACH 2018). If we succeed to develop the renewa­ ble energy program by 2050, we will then have nearly 30 billion M3/ year that we will have saved by eliminating the gas turbines, which we had initially planned. Our thermal potential is around 170,000 TWh, or 40,000 MTEP/ year. Solar radiation maps for MENA countries were produced by the German Space Agency(DLR 2010). They show that sunshine is indeed the most important energy re­ source in the entire Mediterranean basin. This potential Graph 8 2020–2030 program Projects Phase 1 Hassi R’Mel, Spain, France Hassi R’Mel, Sardinia, Corsica, EU Ain-Amenas, Lybia, Tunisia, Malta Ain-Amenas, Lybia, Tunisia, Malta Source: Hasni 2019 Generation capacity 8,000 MW 8,000 MW 6,000 MW 6,000 MW Transmission capacity 6,000 MW 6,000 MW 6,000MW 6,000 MW Algerian market 6,000 MW EU market 2,000 MW +Morocco Amount of generation invest. 10 9 $ Amount of transmission invest. 10 9 $ Price of electricity 30 2 7cts$/KWh 4 ,000 MW 4,000 MW 30 1,5 7cts$/KWh Malta 2,000 4,000 MW Lybia 1,000 22 Tunisia 3,000 1 7cts$/KWh 4, 000 MW 2,000 MW 18 0,5 6 cts$/KWh 17

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY based on solar radiation is twice as high as in Europe. How­ ever, it is above all the availability of vast desert areas, where solar power plants can be installed, that offers this potential. Europe faces difficulties finding sites for solar power plant installation, which requires large spaces. The case of the solar power plant plan in Larzac(France) clearly demonstrates the difficulties in convincing the populations to accept the installation of such plants. Let us add that the European electricity market in 2050 will represent 4,750 TWh. Acknowledging the limitations of energy dependence, we believe that 40,000 MW import of green electricity in 2050 from the Maghreb is quite possible. Renewable energies, and particularly solar, have indeed reached a high degree of competitiveness except for solar thermal which is still below maturity level. Compared to fossil fuels, solar energy today is highly competitive, despite the dumping due to oil and shale gas. So is nuclear power. The prospect of nuclear power plants sold to the private sector will only increase this competitiveness. European countries will then be able to honor their commitments made at COP21 and 24. The important thing is that because of this competitiveness, renewable energies will no longer require subsidies. Fund­ ing can occur in project finance. It will be the case in the Maghreb. Funding will then be easier to find. The approach we are proposing incorporates an electricity transmission grid, and it will address the divestment in the European network of electricity transmission. The cost of transport will be lower than that of gas. In addition, the proposed direct current network will prevent the current rectification stations from being directly connected to the existing electricity network. There will be no synchroniza­ tion to run, and therefore no risk of blackout. For the Ener­ gy plan, we have the necessary elements to target a few objectives and decide on a portfolio of projects. For Algeria, we must complete the overall objectives of phase 1(2030), or nearly 27,000 MW in renewable energy. We favor hybrid solar systems(thermal and photovoltaic) with flared gas, which will save energy storage. Flared gas will feed the power plants at night. Electricity transmission will be direct current at very high voltage. Our approach integrates investment constraints. The Alge­ rian share cannot exceed 40%. This is the portion of goods and services of the investment that will become Algerian. At the same time, we challenge the previous rule, which limited foreign investment to 49%. Of course, as our pro­ duction capacity for goods and services will develop, we will increase our share of financing. This does not mean that we will increase the Algerian share of the social capital of the future companies. Amendments will go as far as establishing all the techno parks of energy development in the south of the country as Free Zone – Hassi R’Mel will be the first. It alone represents a devel­ opment potential of a hybrid solar power plant of more than 40,000 MW. – Ain Aménas on the Libyan border – Adrar in the southwest of the country. DEFINING THE OVERALL POWER GENERATION PROGRAM IN HYBRID RENEWABLE ENERGIES We must define the overall power generation program in hybrid renewable energies by the years 2030-2050 for the domestic and export market. A reminder of the phases: PHASE 1 For hybrid solar power plants, i.e., solar(thermal+ photo­ voltaic) hybridized with flared gas, there is no thermal stor­ age, and transmission is through HVDC electric cables, in direct current and 850 KV high voltage. Graph 9 2030–2050 Program Projects Phase 1 Generation capacity Transmission capacity Algerian market EU market Amount of generation invest. 10 9 $ Amount of transmission invest. 10 9 $ Price of electricity Adrar, Hassi R’Mel 6,000 MW 6,000 MW 6;000 MW 18 0,5 6 cts$/KWh Hassi R’Mel, Spain, Northern Europe 12,000 MW 12,000 MW 12;000 MW+ 35 Morocco 3 5 cts$/KWh Source: Hasni 2019 18

Embedding the 100% renewable energy strategy in the national economic development plan PHASE 2 Solar power plants get thermal storage. Solar power plants are 80% parabolic solar concentrators(parabolic trough) and 20% PV fields. Storage is through solar towers using a heat transfer fluid accepting temperatures above 600° C. Transmission is through superconductor cables at high temperature. They are at the core of a pipe, which has an intermediate space to carry helium or liquid hydrogen, pro­ viding superconductivity. Pipes are laid along the French Atlantic coast to reach Germany. Of course, it is direct cur­ rent. The pipes also carry hydrogen and helium to the Eu­ ropean market. BUILDING CENTERS TO DISSEMINATE INFORMATION Another important undertaking consists in building centers which disseminate information and break the silence around successful renewable energy experience(particu­ larly on Hassi R’Mel) and in shedding light on our failures. What impedes the development of renewable energies in Algeria is the lack of information from central and local au­ thorities. A veil of silence has shrouded the solar ther­ mal-gas plant of Hassi R’Mel, although it has operated un­ der contract conditions by fulfilling all its obligations since 2011. However, there is no precise assessment on the 400 MW of photovoltaic. It is important to have educational centers around pioneer projects, to enhance their impact and ap­ preciate the potential of 100% renewable energy. Public decision-makers should give priority to citizen education, knowledge sharing and public communication. tal decarbonization of the US economy, the grid would ­require extension because almost everything would run on electricity, and therefore would require many workers. “Millions of miles of new and improved transmission and distribution will be necessary to reach the end user. As far as demand, we will need to electrify our 250 million vehi­ cles, 130 million homes, 6 million trucks, all manufactur­ ing and industrial processes and 5.5 million commercial buildings covering 90 billion square feet”, says the report (Griffith/Calish/Fraser 2020). The plan would put the country’s electrical system on ster­ oids, increasing it from 450 gigawatts of electricity deliv­ ered today to 2,000 gigawatts. However, according to the report, as electric machines are generally more efficient than those that require combustion, the country’s overall energy demand would be cut by more than half. Accord­ ing to the report, the overall energy needs of the United States would drop from about 98 quads to about 42 quads. A“quad” is 1 quadrillion of British thermal units and represents a staggering amount of energy. The“Rewiring America” report calls for a“period of mo­ bilization” like the effort made for World War II arma­ ment, which created a peak of 17.5 million jobs. This new hive of clean energy activities in the 21st century could create 25 million jobs over an intense three-to-five-year transition period, which would become 5 million jobs to maintain the system once in place. Currently, the US ener­ gy industry employs around 1.8 million people or 2.7 mil­ lion if gas station employees are included. Aggressive de­ carbonization would create, rather than destroy, several million well-paying American jobs. According to the re­ port, these jobs will be widely distributed geographically and difficult to relocate(Griffith/Calish/Fraser 2020). EXPLORING THE POTENTIAL FOR JOB CREATION An IRENA study analyzed job creation in the energy sector in the world(IREANA 2020c). In the light of this study, we expect job creation to be higher in renewable energies and energy efficiency than in fossil fuels, which will experience a job reduction despite 40% of jobs created. In renewable energy and energy efficiency, the solar sector will be the most important. The structure of employment in the value chain will be as follows: 80% technicians, 8% engineers, 8% experts, 4% in marketing and administration. The overall need for Algeria is expected to reach 1 million jobs by 2050 according to the following structure: 800,000 technicians, 80,000 engineers, 80,000 experts and 40,000 in marketing and administration. The segments of the val­ ue chain include project development, manufacturing and supply, transportation and logistics, construction and in­ stallation, operation, and maintenance The global trend confirms the study(IRENA 2020c). So ac­ cording to Saul Griffith and Sam Calish who propose a to­ It should be noted that according to pre-Covid-19 fore­ casts, a median target between the oil lobby and the cli­ mate lobby was projected, which was to give an electrici­ ty share of 55% of global energy demand. The post-Cov­ id-19 period should be a game changer. MEANS OF FINANCING THE RENEWABLE ENERGY DEVELOPMENT PROGRAM It will also be necessary to provide the means of financing the renewable energy development program without State debt. The most suitable model is that of Project Fi­ nance. Such an arrangement undoubtedly requires a sufficiently transparent and unconstrained business environment for investors in capital-intensive projects. As we have noted above, the trend for accessing external financing is through subscribing to sustainable development and green econo­ my. Good governance is essential to allow meeting COP21 commitments. 19

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY Graph 10 Structure of a Project Finance Sponsors Offtakers/ Market Dividend Equity Sales Contract Project Company (Special Purpose Company) Loans Repayment SMBC Other Financial Institutions Export Credit Agencies Feedstock Supply Contract Feedstock Suppliers EPC Contract EPC Contractors O&M Contract Operators Source: SMBC 2020 IDENTIFYING INVESTMENT CONSTRAINTS It is important to identify investment constraints and pro­ pose the necessary measures to remove constraints. This re­ quires reforming the investment rules. Revising the 51/49 rule is an initial step. We propose an approach based on the free-zone principle. It will allow more daring reforms re­ stricted to the free zone. PROPOSING REFORMS TO STIMULATE INVESTMENT Finally, reforms capable of stimulating investment are neces­ sary. Digitization, big data, and transition to artificial intelli­ gence reflect moving to the fourth industrial revolution.​​ Franz Fanon’s revolutionary idea of avoiding following the development process of developed countries and taking the appropriate technological shortcut would be of high rele­ vance. Our country, however, adopted the opposite ap­ proach of returning to the automotive revolution. As mentioned above, we recommend enhancing our part­ nership with the EU by creating a specific pilot zone in the three main regions of the South. We propose making them free trade zones, thus removing the current constraints of the present restrictive investment code. The free zones will be autonomous, with customs duties exemption, access to foreign companies, tax reduction, land availability, etc. It is essential to stay abreast of the evolution of financing means and digital currencies. We will develop block chain technol­ ogy in value chains. Such zones will of course be restricted, with no public ac­ cess. We will strengthen security, with special arrange­ ments, not be available in the rest of the country for yet sev­ eral years. The management of the free zones will be auton­ omous, making them an example of the country’s desire for economic decentralization. The proposed projects stem from this definition of a free zone. The free zone will be a techno park with training and re­ search centers and industrial partnerships for solar equip­ ment manufacturing. A financial authority will oversee the block chain management, and clusters will create SMEs, which will be involved through subcontracting with large companies in charge of important projects and approved by the existing training centers in the free zone. The approach is inclusive and gives an overview of all the partnership pro­ jects expected by the Maghreb countries. 20

Embedding the 100% renewable energy strategy in the national economic development plan COOPERATION BETWEEN THE SECTORS OF GOVERNANCE It is essential to increase cooperation between different sectors and levels of governance. Cross-sectoral and inter­ disciplinary platforms for dialogue will contribute to devel­ oping a strong, coherent, and comprehensive policy frame­ work that will facilitate transformation. The general objec­ tive is to formulate policy recommendations on how 100% renewable energy can strengthen the development of Al­ geria to benefit the population. The first part of this report briefly describes the main rea­ sons why renewable energies are not only a priority but al­ so the first source of a wide range of opportunities for Al­ geria. After the concise summary of the current energy pol­ icy framework in Algeria, the study will highlight the main obstacles impeding change towards renewable energies in the country. Then we will make a few key recommenda­ tions based on such observations. They should serve as guidelines not only for the Algerian government and legis­ lators, but also for all parliamentarians, political actors and decision-makers willing to implement the necessary meas­ ures for transition towards 100% renewable energy in Al­ geria. A clear and coherent political framework is essential to ef­ fectively transform the energy sector and truly benefit the economy and the people of Algeria. This political frame­ work should have certain characteristics and be structured around two main poles. The burden of the structural up­ heaval required to achieve 100% renewable energy must not lie on one sector alone. We have identified the follow­ ing main types of collaboration. We can impose neither a particular site to investors, nor a particular renewable energy sector. Investors bear the risk of the investment, and they are responsible for choosing the site. However, international studies have identified lo­ cal renewable potential in the whole country. It would therefore be relevant to choose model areas for each re­ newable energy sector, and essential to organize raising awareness campaigns for the population. HORIZONTAL DIALOGUE/ IMPROVING COOPERATION BETWEEN THE VARIOUS ECONOMIC ACTORS In this regard, the following factors require validation: – Introduce a progressive eradication of fossil fuel subsi­ dies in a socially acceptable way. – – Establish a strong and transparent source of financial support to renewable energy. – – Implement a sustained environmental policy, support­ ing renewable energy in the short and long terms. – – Promote the necessary technical and structural chang­ es to ensure that renewable energy complies with the principles of the energy consumption model. – – Expand the digital system, creating Big Data for the entire economic sector. – – Implement policy measures that facilitate the use of renewable energy and clean energies in all aspects of energy use by 2050. VERTICAL DIALOGUE/ CREATING ALLIANCES BETWEEN THE VARIOUS LEVELS OF GOVERNANCE It is essential at first to enhance coordination and coopera­ tion at national, regional, and local levels, as evidence of internal good governance. It will contribute to an image of credibility and attract international collaboration, at a time of a major global existentialist crisis, where funding will in­ deed be more difficult to secure and where investors will tend to reduce investment risks. It is necessary to be reas­ suring through partnerships between stakeholders and a deeper political dialogue. This can be achieved through re­ gional organizations like the Greater Maghreb and the 5+ 5 Dialogue, including Germany. Although it is member of IRENA, Algeria does not gain any benefit since the representative of Algeria is the Ministry of Foreign Affairs; the Ministry of Energy having, at the time, refused to be part. Interregional collaborations allow ac­ cess to larger markets. For a better approach to 100% re­ newables, we must abandon the balanced distribution of projects. Energy potential is not equally available across the country. 21

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY 7 CONCLUSION Climate change and the eradication of poverty and inequal­ ity are among the main fights of our times. We know that they are closely related, as we cannot end poverty without containing climate change. In Algeria, the population faces an additional challenge: the demand for energy is continu­ ously increasing, in particular for electricity, due to econom­ ic growth, rampant industrialization, population growth and increasing individual wealth. At the same time, Algeria has failed to achieve diversifica­ tion. Its imports in general affect the country’s market bal­ ance and energy subsidies weigh heavily on the national budget(10% of GDP). The forecasts of energy demand fur­ ther predict that, as a result, greenhouse gas emissions, cur­ rently still low, will increase dramatically. It is interesting to adopt this global vision while taking the energy burden into account, which shows that economic powers have relied on controlling the strategic resources. Energy remains the most important among them. The pred­ ators of the three industrial revolutions have succeeded to keep control over these resources in an indirect way. Their strategy had been to dispossess the minor countries of their wealth. The oil era will have been the toughest and will leave its mark in history. The predators had a hold even over sizable nation state The threats inflicted upon these states were in proportion to the strategic importance of certain strategic resources, and primarily energies. The result consisted in maintaining these States in a constant state of underdevelopment. If we go back to the rationale in the definition of the eco­ nomic development strategies of these States, we will find aspects including the scarcity of resources, the need to re­ duce consumption as a major source of climatic disturbanc­ es, and the search for equity in sharing resources and finan­ cial means. These States were expected to ensure energy se­ curity, food security, and social cohesiveness through social equity. The European program focuses largely on job creation, sup­ porting major heavy European renewable technologies, on­ shore and offshore wind, and solar photovoltaic energy, which have admittedly experienced years of high growth but are facing a challenging year 2020 due to Covid-19. The European Commission has developed a vigorous recovery program, giving the European bloc€ 1.85 trillion to boost economic recovery, with at least 25% of all funds going to support climate-friendly programs, while fossil fuels or nu­ clear projects gain no support under the‘do no harm’ prin­ ciple(European Commission 2020). The reason is simple. The European program only targets wind and solar photovoltaic power because the solar ther­ mal potential is non-existent in northern Europe and low in southern Europe. There is undoubtedly lower solar irradia­ tion in Europe than in Algeria, but above all, no site land is available for large solar thermal projects. Citizen opposition to the establishment of a large PV plant in Larzac is an ex­ ample of the general resistance to reducing farmland for these projects. For the European needs of around 4,000 TWh, the challenge is too great for wind and PV without storage and without site land. During the People’s National Assembly(APN) on May 22, 2020, Chinese Premier Li Keqiang presented an important tool for economic stimulation. It is the“special bonds” total­ ing 3.75 trillion yuan($ 523 billion) in 2020, 74% higher than the amount in 2019(Liu 2020). This funding, at the dis­ cretion of local governments, is for“special purpose” pro­ jects to support a mix of new and traditional industries. The promotion of electric vehicles, of renewable energies and of other environment friendly projects are eligible for this“spe­ cial purpose” funding.* 1 In the United States, energy has not featured prominently in economic recovery talks, whether it is conventional or green energy. However, those with interests in renewable energy are lobbying for this to change, calling Washington to their rescue amid major job losses: in fact, the number of clean energy jobs lost in March and April was more than twice the number of jobs created since 2017. The European Energy Forum is increasing the number of din­ ner invitations to provide meeting opportunities to MEPs and industrialists. Are they briefing missions or examples of pro-fossil fuel lobbying? Brief winking to a“gray area” of * Communication with Mr. Abderrahmane Hadj-Nacer, former Gover­ nor of the Bank of Algeria. 22

Brussels lobbying. A dinner meeting took place on February 17, at the European Parliament, before the Coronavirus dis­ rupted everything. The event gathered several MEPs, at­ tachés from Member State permanent representations, and officials around a very topical theme, namely“The role of gas and oil in the European Green Deal”. We now understand the dimension of the threat that re­ newable energies represent to fossil fuels. Climate change has only exposed the threat. Covid-19 accelerated it. This in­ formation only explained the motivation of the oil lobbies. The nuclear lobby is another to have also reacted against re­ newable energies for the same reasons, as indeed green power was a threat to the electricity market held by the nu­ clear sector. The strategy that these two lobbies pursued had consisted in restraining Algeria to the sole PV use, knowing that our potential in this area did not exceed 7 MTEP/ year. Solar thermal for its part reaches 40,000 MTEP/ year. Our coun­ try has significant resources. The first colonizers were aware of this. It was El Dorado! We have wasted precious years as Rentier State, a culture in­ herited in fact from the colonizer. There is no point in crying over the past. Our youth would not forgive us. We must rather address the challenge because no past-oriented ap­ proach is valid. Tomorrow’s world will be very different. The participation of all the actors concerned without exclusion, is the only way of meeting the challenge. This is the main success factor. Developing networks between the countries that actively and successfully develop their renewable energies is highly useful. Indeed, despite local success, government deci­ sion-makers and legislative actors are not aware of many good practices and effective policy instruments. Conclusion 23

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY ANNEX 1: TEXTS ON ENERGY CONTROL Decree No. 85-235 of 25 August 1985 creating an Agency for en­ ergy promotion and rationalization. https://www.energy.gov.dz/Media/ galerie/decr_85-235_5b6861ef2a06e.pdf Amended by: Executive decree No. 04-314 of 25 September 2004 amending and supplementing decree No. 85-235 of 25 August 1985, amended and supplemented, establishing the creation of an Agency for the promotion and rationalization of energy use. https://www.energy. gov.dz/Media/galerie/decret_ exécutif_n_04-314_5b686241523c4.pdf Law No. 99-09 of 28 July 1999 on energy control. https://www.en­ ergy.gov.dz/Media/galerie/loi_99-09_5b68630e15102.pdf Executive decree No. 2000-90 of 24 April 2000 on thermal regu­ lation in new buildings. https://www.energy.gov.dz/Media/galerie/de­ cret_executif_n_2000-90_5b68637d205dd.pdf Executive decree No. 04-149 of 19 May 2004 laying down rules for the development of the National Program of Energy Control(PNME) https://www.energy.gov.dz/Media/galerie/de­ cr_04-149_5b6863c286420.pdf Executive decree 15-319 of 13 December 2015 establishing the op­ erating procedures for the special appropriation account No. 302-131 entitled“National fund for energy control, and for renewable energies and cogeneration”. https://www.energy.gov.dz/Media/galerie/decret_ executif_n_15-319_5b6864d0580c3.pdf Amended by Executive decree No. 16-121 of 06 April 2016 amend­ ing and supplementing executive decree No. 15-319 of Aouel Rabie El Aouel 1437 corresponding to 13 December 2015 establishing the oper­ ating procedures for the special appropriation account No. 302-131 en­ titled“National fund for energy control and for renewable energies and cogeneration”. https://www.energy.gov.dz/Media/galerie/decret_ex­ ecutif_n_16-121_5b68655e7d14f.pdf Executive decree No. 17-168 of 22 May 2017 amending and sup­ plementing executive decree No. 15-319 of Aouel Rabie El Aouel 1437 corresponding to 13 December 2015 establishing the operating pro­ cedures for the special appropriation account No. 302-131 entitled “National fund for energy control and for renewable energies and cogeneration”. https://www.energy.gov.dz/Media/galerie/decret_ex­ ecutif_n_17-168_5b694d563e1ab.pdf Inter. order of 22 December 2016 determining the list of revenues and expenditures chargeable to the special appropriation account No. 302-131 entitled“National fund for energy control and for renewable energies and cogeneration”. https://www.energy.gov.dz/Media/galerie/ arrete_interministeriel_du_22_decembre_2016_nomenclature_des_re­ cettes_et_des_depenses_imputables_sur_le_compte_d’affectation_ speciale_n_302-131_5b694ef6d63dc.pdf Inter. order of 22 December 2016 specifying the methods for mon­ itoring and evaluating the special appropriation account No. 302-131 entitled“National fund for energy control and for renewable energies and cogeneration”. https://www.energy.gov.dz/Media/galerie/arrete_ inter._du_22_decembre_2016_precisant_les_modalites_du_suivi_et_ de_l’evaluation_du_compte_d’affectation_speciale_nd_302-131_5b­ 694f28a6ac6.pdf Executive decree No. 05-16 of 11 January 2005 setting the specific energy efficiency rules applicable to devices running on electricity, gas and oil products. https://www.energy.gov.dz/Media/galerie/decret_ex­ ecutif_n_05-16_5b694f7b63e7a.pdf Inter. order of 03 November 2008 establishing the appliances and categories of appliances for domestic use subject to specific energy efficiency rules and operating on electrical energy. https://www.en­ ergy.gov.dz/Media/galerie/arrete_inter._du_03_novembre_2008_5b­ 694fe911ff0.pdf Inter. order of 29 November 2008 defining the energy efficiency classification of household appliances subject to specific energy effi­ ciency rules and running on electrical energy. https://www.energy.gov. dz/Media/galerie/arrete_inter._du_29_novembre_2008_appareils_a_ usage_domestique_soumis_aux_regles_specifiques_d’efficacite_ener­ getique_et_fonctionnant_a_l’energie_electrique_5b69503d5600a.pdf Inter. order of 29 November 2008 defining the general provi­ sions on the methods of organization and practice of energy effi­ ciency control of household appliances subject to specific energy effi­ ciency rules and running on electrical energy(point 12). https://www. energy.gov.dz/Media/galerie/arrete_inter._du_29_novembre_2008_ modalites_d’organisation_et_d’exercice_appareils_a_usage_domes­ tique_5b6950914075f.pdf Decree of 21 February 2009 on energy labelling of refrigerators, freezers and combined household appliances subject to specific en­ ergy efficiency rules and running on electrical energy. https://www. energy.gov.dz/Media/galerie/arrete_du_21_fevrier_2009_etiquetage_ appareils_usage_domestique_soumis_aux_regles_efficacite_energeti­ que_5b6950da0ecc4.pdf Order of 21 February 2009 on the energy labeling of household lamps subject to specific energy efficiency rules and running on electri­ cal energy. https://www.energy.gov.dz/Media/galerie/-arrete_du_21_ fevrier_2009_relatif_a_l’etiquetage_energetique_des_climatiseurs_a_ usage_domestique_5b69515a43778.pdf Executive decree No. 05-495 of 26 December 2005 on the energy audit of energy-intensive facilities running on electrical energy. https:// www.energy.gov.dz/Media/galerie/arrete_du_21_fevrier_2009_relat­ if_a_l’etiquetage_energetique_des_lampes_domestiques_5b695196e­ 4dec.pdf Décret exécutif n° 05-495 du 26 Décembre 2005 relatif à l’au­ dit énergétique des établissements grands consommateurs d’énergie https://www.energy.gov.dz/Media/galerie/decret_ex­ ecutif_n_05-495_5b69520e71cd1.pdf Amended by: Executive decree No. 13-424 of 18 December 2013 amending and supplementing executive decree No. 05-495 of 24 Dhou El Kaada 1426 corresponding to 26 December 2005 on the energy au­ dit of energy-intensive facilities. https://www.energy.gov.dz/Media/ galerie/decret_executif_n_13-424_5b6953b590506.pdf Inter. order of 29 September 2010 on the specifications defining the methodology, the audit report and its summary, the methodological guide, the heating values, the conversion factors for consumption cal­ culation, and the methods for approving auditors. https://www.energy. gov.dz/Media/galerie/arrete_interministeriel_du_29_septembre_2010_ cahiers_des_charges_calcul_de_la_consommation_ainsi_que_les_mo­ dalites_d’agrement_des_auditeurs_5b69541eab3af.pdf Amended by: Presidential decree No. 12-416 of 11 December 2012 (point 3) ratifying the memorandum of understanding between the Government of the People’s Democratic Republic of Algeria and the Government of the Republic of Tunisia in the fields of energy control and renewable energies, signed in Algiers on July 2, 2009. 9 https:// www.energy.gov.dz/Media/galerie/decret_presidentiel_n_12-416_5b­ 6954f9ea707.pdf Amended by: Executive decree No. 13-218 of 18 June 2013 setting the eligibility criteria for bonuses for the diversification costs of electric­ ity production. https://www.energy.gov.dz/Media/galerie/decret_ex­ ecutif_13-218_(4)_5b684ba2e6348.pdf Amended by: Executive decree No. 17-166 of 22 May 2017 amend­ ing and supplementing executive decree No. 13-218 of 9 Chaâbane 1434 corresponding to 18 june 2013 setting the eligibility criteria for bonuses for the diversification costs of electricity production. https:// www.energy.gov.dz/Media/galerie/decret_17-166_5b684c5741d24.pdf Order of 2 February 2014 setting the guaranteed feed-in tariffs and the conditions of their application to the electricity generated from fa­ cilities using wind power. https://www.energy.gov.dz/Media/galerie/ar­ rete_jo_23_2014_5b684cd5c6715.pdf Amended by: Order of 07 December 2016 supplementng the order of 2 February 2014 setting the guaranteed feed-in tariffs and the con­ ditions of their application to the electricity generated from facilities using wind power. https://www.energy.gov.dz/Media/galerie/arrete_ du_7_decembre_2016_tarifs_drachat_garantis_et_conditions_applica­ tion_electricite_produite_installations_eolienne_5b684d86efebe.pdf 24

Order of 02 February 2014 setting the guaranteed feed-in tariffs and the conditions of their application to the electricity generated from facil­ ities using solar photovoltaic power. https://www.energy.gov.dz/Media/ galerie/arrete_(3)_5b684e77277a4.pdf Amended by: Order of 22 November 2016 supplementing the order of 2 February 2014 setting the guaranteed feed-in tariffs and the condi­ tions of their application to the electricity generated from facilities using solar photovoltaic power. https://www.energy.gov.dz/Media/galerie/ar­ rete_du_22_novembre_2016completant_arrete_du_2_fevrier_2014_5b­ 684fa45ca67.pdf Order of 01 September 2014 setting the guaranteed feed-in tariffs and the conditions of their application to the electricity generated from fa­ cilities using cogeneration energy. https://www.energy.gov.dz/Media/ galerie/arrete_(21)_5b684fffb0fd4.pdf Amended by: Order of 07 December 2016 supplementing the order of 01 September 2014 setting the guaranteed feed-in tariffs and the con­ ditions of their application to the electricity generated from facilities us­ ing cogeneration energy. https://www.energy.gov.dz/Media/galerie/ arrete_du_7_decembre_2016_completant_arrete_du_1er_septem­ bre_2014_5b68504c4cc61.pdf Executive decree No. 17-98 of 29 Joumada El Oula 1438 corresponding to 26 February 2017 defining the tender procedure for the production of renewable or cogeneration energies and their integration into the national electricity supply system. Law No. 04-09 of 14 August 2004 on promoting renewable energies in the context of sustainable development. The National Energy Council, which will be headed by the President, will lead the energy strategy of the country. According to the Algerian President, this decision-making body must play a leading role in the coun­ try’s energy strategy(30 June 2020). Prime Minister Noureddine Bedoui stated, on Thursday 14 November 2019 in Algiers, that the creation of the National Commissariat for renew­ able energies and energy efficiency would help face the obstacles and difficulties hampering the implementation on the ground of the national program. ANNEX 25

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY ANNEX 2: ADDITIONAL SOURCES OF INFORMATION BIBLIOGRAPHY Energy Intelligence: https://www.energyintel.com/ European Solar Thermal Electricity Association(ESTELA): https:// www.estelasolar.org/ Fraunhofer Research Institution for Energy Infrastructures and Geothermal Systems(IEG): https://www.ieg.fraunhofer.de/en.html German Aerospace Center(DLR): https://www.dlr.de/EN/Home/ home_node.html International Energy Agency(IEA): https://www.iea.org/ International Renewable Energy Agency(IRENA: https://www.irena. org/ Institute for Advanced Sustainability Studies(IASS): https://www. iass-potsdam.de/en National Renewable Energy Laboratory(NREL): https://www.nrel. gov/ Oil& Gas Business, The energy magazine: https://www.facebook. com/OilGasBusiness/ Oil Price: https://oilprice.com/ Solar Power and Chemical Energy Systems(SolarPACES): https:// www.solarpaces.org/ Trans-Mediterranean Renewable Energy Cooperation(TREC): https://www.e5.org/cooperations-spin-offs/trec/ United States Department of Energy: https://www.energy.gov/ World Bank: https://www.worldbank.org/ World Watch Institute: http://www.climatenetwork.org/profile/ member/worldwatch-institute Charlez, Philippe(2019): L’énergie: un projet structurant pour relancer l’Europe, Institut sapiens, https://www.institutsapiens.fr/lenergie-un-pro­ jet-structurant-pour-relancer-leurope/ CREG: Annual reports, https://www.creg.dz/index.php/publications/rap­ port-d-activite DLR, German Aerospace Center(2005): Concentrating Solar Power for the Mediterranean Region(with the contribution of Tewfik Hasni), https://www.dlr.de/tt/Portaldata/41/Resources/dokumente/institut/sys­ tem/publications/MED-CSP_complete_study-small.pdf DLR, German Aerospace Center(2010): Renewable Energies in the MENA Region: Potential for Sustainable Energy Provision and Export to Europe(Hans Müller-Steinhagen and Franz Trieb, https://www.dlr.de/ tt/Portaldata/41/Resources/dokumente/institut/DLR_Presentation_Re­ newable_Energies_in_MENA_Region_MAR08.pdf European Commission(2020): Recovery Plan for Europe, https://ec.eu­ ropa.eu/info/live-work-travel-eu/health/coronavirus-response/recove­ ry-plan-europe_fr Griffith, Saul/ Calish, Sam/ Fraser, Laura(2020): Rewiring America. A Field Manual for the Climate Fight, https://www.rewiringamerica.org/ handbook Hasni, Tewfik(2014): Les subventions à Energie(unpublished study) Hasni, Tewfik(2017): La transition énergétique et les défis, European University Publishers Hasni, Tewfik(2019): Le développement des deux rives,(unpublished study, presented for the discussion on energy transition in the context of 5+5 including Germany) Hasni, Tewfik(2020): La« Guilde» et le Covid-19 face à la 4ième Révo­ lution Industrielle, Generis Publishing IRENA(2020a), Renewable Power Generation Costs in 2019, Abu Dhabi, https://www.irena.org/publications/2020/Jun/Renewable-PowerCosts-in-2019 IRENA(2020b), Global Renewables Outlook: Energy transformation 2050, Abu Dhabi https://www.irena.org/publications/2020/Apr/Glo­ bal-Renewables-Outlook-2020 IRENA(2020c), Renewable Energy and Jobs – Annual Review 2020, Abu Dhabi, https://www.irena.org/publications/2020/Sep/Renewable-Ener­ gy-and-Jobs-Annual-Review-2020 IRENA(2020d): Post-COVID Recovery: An Agenda for Resilience, De­ velopment and Equality, Abu Dhabi, https://www.irena.org/publica­ tions/2020/Jun/Post-COVID-Recovery Liu, Yishuang(2020): Ouverture de l’Assemblée populaire nationale, aucun objectif de croissance fixé pour 2020, Le Quotidien du Peuple en ligne, http://french.peopledaily.com.cn/Chine/n3/2020/0522/c313549693291.html People’s Democratic Republic of Algeria, Ministry of Energy (2020): National Energy Balance – Year 2019, https://www.energy.gov. dz/Media/galerie/bilan_energetique_national_2019_5f7b107553bcd.pdf SMBC(2020): Products& Sevices, Turning Opportunity into Reality, https://www.smbcgroup.com/americas/products-services/project-fi­ nance/ SONATRACH: Annual Balance Sheets, https://sonatrach.com/rapports UNECA(2011): The Renewable Energy Sector in North Africa: Current Si­ tuation and Prospects, Addis Ababa, https://www.uneca.org/sites/de­ fault/files/PublicationFiles/renewable_energy_sector_in_north_africa_ fr.pdf 26

ABREVIATIONS CREG de Régulation de l’Electricité et du Gaz(Electricity and Gas Regulation Com­ mission) CSP Solaire Parabolique(Parabolic Solar Concentrator) DLR Aerospace Center EU European Union GEF Global Environment Facility IAP Algérien du Pétrole(Algerian Petrole­ um Institute) IRENA Renewable Energy Agency NEAL New Energy Algeria UN United Nations PV Photovoltaic SONATRACH Nationale pour la recherche, la pro­ duction, le transport, la transformation et la commercialisation des hydrocarbures Algérie (Algerian National Oil Company) SONELGAZ Nationale de l’électricité et du gaz (Algerian National Electricity and Gas Com­ pany) UNECA Nations Economic Commission for Africa abrEviations 27

FRIEDRICH-EBERT-STIFTUNG – ALGERIA 100% RENEWABLE ENERGY LIST OF GRAPHS  Graph 1 Energy subsidies 14 Graph 2 Energy mix in Algeria(2018) 15 Graph 3  energy potential of the different energy sectors 15 Graph 4 Comparison between the different energy tracks 16 Graph 5  electricity consumption forecast 17 Graph 6 World average energy(2050) 17 Graph 7 Energy mix in Algeria(2050) 19 Graph 8 Program 2020–2030 20 Graph 9 Program 2030–2050 21 Graph 10 Structure of a Project Finance 28

Imrpint ABOUT THE AUTHORS IMRPINT Tewfik Hasni is an expert consultant in energy transition and an engineer in refining and petrochemicals. He spent most of his career at SONATRACH in the LNG division as a first level engineer until he reached the position of Vice-President. In 2002, as his interest shifted to sustainable development and renewable energies, he founded New Energy Algeria(NEAL), a renewable energy development company. He is also Presi­ dent of IAP’s Association of Engineers and President of APE­ QUE, the Association for quality development, and for sus­ tainable development in business. Redouane Malek is director of a consulting and communi­ cation agency. He is the editor of the journal»Oil& Gas Busi­ ness«. Friedrich-Ebert-Stiftung| Algeria Office 175 blvd Krim Belkacem| Telemly| 1600 Algiers https://algeria.fes.de/ To order publications: info@fes-algeria.org Translation from French: Saloua Essayah Commercial use of all media published by the Friedrich-Ebert-Stiftung(FES) is not permitted without the written consent of the FES. Nazim Zouioueche is an engineer in telecommunication and reservoir engineering. He spent his entire career at SONATRACH, holding positions from head of oil field opera­ tion in the south, to SONATRACH Chief Executive Director. He contributed to raising SONATRACH from a hydrocarbon transport and marketing company to the 10th largest oil com­ pany in the world. The views expressed in this publication are not necessarily those of the Friedrich-Ebert-Stiftung. ISBN 978-9931-551-16-4

ALGERIA 100% RENEWABLE ENERGY Recommendations for a National Strategy of Energy Transition Because of their infinite nature, their limited and competitive costs, renewa­ ble energies in Algeria have evidently gained a foothold, especially as the abundantly produced green electricity could be an interesting export item. The development of renewables in Al­ geria would help mitigate the effects of climate change. Like other countries, Algeria, must contribute to the fight against climate disorders and global warming. Renewable energy will benefit the country and provide a definitive answer to the problem of lack of energy securi­ ty. While carbon-based energies have largely contributed to solving the em­ ployment problem, renewable energy will be an important source for creating low appreciation jobs and jobs requir­ ing high-level training. This dual char­ acter will promote local participation and stimulate social development. An objective should be set, reflecting a common political vision, which should play a central role in the implementa­ tion of global, national, and local ener­ gy practices and strategies. It is essen­ tial to define an ambitious long-term goal, backed by political commitment. This will allow both investors and the lo­ cal population to have a long-term po­ litical vision. It will also give the differ­ ent actors involved the opportunity to better understand their role in this change and the part they can play in achieving this common goal. Further information on the topic can be found here: https://algeria.fes.de/