Still a carbonised affair: Israeli gas and normalization
Although Jordan is hailed as ‘one of the leading countries in the Middle East and North Africa (MENA) region in renewable energy (RE) adoption and clean energy growth’,30 most of its grid is still a carbonised affair. Solar and wind energy only account for 20% of Jordan’s capacity, with a target to reach 31% by 2030. 80% of its total electricity production still relies on fossil fuels, which makes the process of decarbonising the Jordanian energy sector somewhat far-fetched. Nevertheless, Jordan’s efforts to achieve energy transition have encouraged EU countries such as France, Germany, Portugal and Spain to draft various agreements with the country. These initiatives have struggled to lift off because of the IFIs’ lack of interest.
The Jordan National Energy 2020-2030 Strategy31 focuses on promoting ‘energy security’ by improving energy efficiency, energy diversification, and increasing the share of renewable energy in the whole energy mix, in order to reduce carbon emissions, and drive down energy costs. But as many energy experts have noted,32 ‘exceeding this percentage [20% of renewable energy] will be challenging for Jordan unless storage solutions are implemented’.
Another challenge to the expansion of renewable energy in Jordan is its gas deal with Israel. Many have cited why the deal is a clear ‘violation of Jordan's constitution’, and is incompatible ‘with climate concerns and Jordanian sovereignty‘, while ‘providing funding for Israel's abuses of Palestinian human rights’.33 Others have mentioned the consortium of US-based Noble Energy (part of Chevron) and the Delek Group (a conglomerate of Israeli gas and oil companies) that received the main drilling contracts, but there has been less focus on the effects of newly forged PPPs on energy deals and on how efforts to achieve the renewable energy transition are characterised by contractual arrangements like PPAs that mimic its hydrocarbon predecessor.
The Power Purchase Agreement (PPA) model
Located east of Amman, Baynouna is the largest34 single solar energy project in Jordan. It began operating commercially in 2020 and supplies the annual power needs of approximately 160,000 homes. Developed as a PPA between Masdar and National Electric Power Company (NEPCO), Jordan’s state electricity company, this $260 million project generates 563.3 gigawatt-hours (GWh) of electricity each year, equivalent to 4% of Jordan’s annual energy consumption. The 200 MW solar power plant and Masdar’s 117 MW Tafila wind farm are the bedrock of Jordan’s renewable energy megaprojects.
What is a Power Purchase Agreement (PPA)?35 A PPA or electricity power agreement is a long-term binding contract between an electricity generator (the UAE-based Masdar in this case) and a client, usually a utility, government or company (the Jordanian state, in the form of NEPCO). PPAs usually last anywhere between five and 20 years, during which time the purchaser buys energy at a pre-negotiated price. Financial institutions backing the Baynouna project include the International Finance Corporation, the OPEC Fund for International Development, the KfW, and the Japan International Cooperation Agency (JICA).
PPAs are no exception in efforts to move towards renewable energy and are increasingly becoming the norm.36 PPAs allow for the company that builds and operates a power station to effectively shift all financial risks associated with the electricity produced to the utility. PPAs are the template for PPPs and thus play a key role in the privatisation of energy. While they offer certainty against price fluctuations, they also lock countries into fossil fuels, prevent a rapid transition to renewables and transfer payment risk from the off-taker to the state (in this case from state-owned, but privately operated, Emirati Masdar to Jordan’s NEPCO).
The ever-expanding Energy Charter Treaty
PPAs have already proven to be a nuisance for the public sector and, together with the Energy Charter Treaty, the private sector is using them to extract more from taxpayers in the Global South. In 2014, Al Jazeera released the documentary ‘Egypt’s lost power’37 that revealed how an Egyptian–Israeli gas deal enabled Egypt (then under Mubarak) to export its gas to Israel at below-market prices through the East Mediterranean Gas Company (EMG), which eventually pocketed huge profits. Increased insecurity regarding pipeline safety due to a growing number of attacks eventually led to the cessation of supply, with an international arbitration committee ordering38 the Egyptian national gas company to pay the Israeli Electric Corporation more than $1.76bn in damages, as EMG also sought compensation from the Egyptian government. This is one of many ensuing cases and was further institutionalised by the Energy Charter Treaty (ECT).
The Transnational Institute’s The Energy Charter Treaty’s Dirty Secrets39 shows that ‘in recent years the number of ECT investor lawsuits has exploded’. ‘While just 19 cases were registered during the first 10 years of the agreement (1998-2008), 75 investor lawsuits were filed in the 2013-2017’ period. As Jordan becomes40 the acting Chair of the Energy Charter Conference for 2023 and 2024, and following the case of Egypt’s ‘lost power’ example, it is only a matter of time before Jordan’s taxpayers will face costs from its renewable energy transition PPA agreement with Masdar.
As financial risks and defaults are gradually but surely displaced onto taxpayers and the wider population, authoritarian practices, similar to those41 used to quash the anti-normalisation protests in 2016, are bound to become commonplace. These will be mediated by more rigid private–public agreements and their international financial backers, who will be determined to recoup their initial investments with interest. Just as efforts to achieve energy transition in Tunisia or Morocco enable the flows of energy and high-skilled labour, while repressing irregular South–North migration, energy politics in Jordan is diametrically opposed to popular demands and marked by growing authoritarian reinforcement.