Libya and the reconfiguration of global energy: From the global hydrocarbon crisis to the green transition
If the resulting crisis from the US-Israeli attack on Iran has shown the world one thing, it is that the global energy network is suffering from a lack of diversification. Not only in a geographical sense, but also in our overreliance on hydrocarbons to fuel the global economy. With Libya poised to benefit from a structural shift in the global flow of energy, the current energy crisis brings forth further questions for the country. Although Libya benefits from a global economy that is reliant on hydrocarbons, what does this mean for the country’s future in light of the ongoing climate crisis? Can Libya benefit from the global shift in energy whilst also mitigating itself against a global reliance on hydrocarbons?
The global economy’s energy demands are far too reliant on the geographical bottle neck that is the Strait of Hormuz, but also the Middle East as a whole. For a region that comprises less than 5% of the worlds land area and 6% of the global population, the fact it produces over 30% of the world’s oil tells this story in simple terms.
This of course is not new information or analysis. The world’s largest and most powerful economies have been acutely aware of the geographically strategic nature of the Middle East for a long time, which has been consistently demonstrated by the countless imperialist interventions in the region over the last century or so since the end of formal colonial rule.
However, things have changed since February 28, 2026. The illusion of the United States military capability to protect its allies has been shattered by Iranian drones that cost less to manufacture than a tractor does.
Saudi Arabia, Qatar, Kuwait, the United Arab Emirates, and the rest of the region who have cosied up with America over the last century, are now suddenly finding themselves in unchartered territory. The global economy at large is currently sailing into unfamiliar waters. However this ends, whether Trump and Bibi back down, or whether they lead the world into a global recession of epic proportions, the global economies reliance on the hydrocarbons from the Middle East has been exposed and the global flow of energy has been reconfigured.
Regarding Libya and other alternative hydrocarbon nations around the world, many have rightly pointed to their potential to capitalise on this moment as the global order of energy flows responds to the seismic shifts in the Gulf. Just as alternative oil and gas producing nations benefitted from the reconfiguration of Europe and America’s energy sources following Russia’s invasion of Ukraine in 2022, Libya will be the beneficiary of a similar “crowding out effect” as consumer nations avoid the Gulf and perhaps the Middle East as a whole.
The COVID-19 pandemic already served as a wake up call to many countries around the globe regarding their overreliance on global supply chains, which in times of global crises, have proven to be unreliable. The process of “reshoring” had become a popular term across many developed nations who have deindustrialised in the last few decades, such as in the United States with Donald Trump and his “America First” policy, alongside the United Kingdom’s exit from the European Union, both of which materialised in 2016.
In the case of Europe, switching to oil and gas providers such as Libya, would not only meet the goal of diversifying their hydrocarbon providers, but would also constitute a process of “nearshoring” at the very least, due to Libya strategic position in the central Mediterranean. However, the problem of Europe’s overreliance on hydrocarbons has not been solved in this equation. If Libya was able to diversify its energy production, it could stand to benefit from not only the short-term shift in hydrocarbon sourcing away from the Gulf, but also the longer term global shift in energy as countries aim to reach their carbon emissions targets.
Libya’s renewable energy potential is huge and is often overlooked due to the country’s vast oil and gas wealth. 88% of Libya is covered by the Sahara desert and the country receives over 3,200 hours of sunlight annually. There is also huge potential along Libya’s coast for large scale wind farms. At the time of writing, Libya’s renewable energy production is minimal, constituting around 4% of total energy production, with oil and gas making up the rest.
Libyan officials should look to its neighbours in the Maghreb, such as Morocco, when investigating how Libya’s energy production can be diversified. Around 20% of Morocco’s energy production is renewable energy based, with a goal set by the country’s National Energy Strategy for that figure to reach 50% by 2050.
If Libya can build a substantial renewable energy sector, whilst also expanding its hydrocarbon sector, the country stands to benefit from not only the geographical diversification that is taking place following the chaos in the Middle East, but also the global diversification in energy production in light of the climate crisis.
The benefits of a green energy shift in Libya are not just economical and geostrategic, but could also have profound impacts on Libyan society at large, due to the country’s vulnerability to increasing global temperatures.
Libya is particularly vulnerable due to its location in the southern/central Mediterranean, as temperatures in this region are rising 20% faster than the global average. Libya is the 4th most water stressed country in the world, an issue that is only getting worse as the country receives less and less precipitation every year on average.
From increasing desertification, irregular precipitation leading to flooding and drought, water scarcity and sea level rise, Libya will undoubtedly feel the effects of rising global temperatures. Even though Libya’s emission only constitutes 0.17% of global emissions, the country still has an important role to play in a regional context, as Libya currently has the highest emissions per capita on the African continent.
As the global equilibrium of energy ripples from the seismic shifts currently unfolding in the Middle East, Libya stands to benefit from the geographic reconfiguration of the worlds energy sources. In addition to this, the unfolding energy crisis and the potential for runaway inflation serves as a reminder of how hydrocarbons are integrated into every dimension of the global economy, despite all the efforts that have been made around the globe to increase renewable energy output following the 2015 Paris climate agreement. The result of the current energy crisis could take shape in the form of new commitments to green energy targets around the globe, with Libya’s untapped renewable energy resources standing the country in good stead in a world that reconfigures itself away from hydrocarbons and the Middle East.
The ideas and concepts expressed in this piece are those of the author and do not necessarily reflect the positions of Libya Economic Review. If you would like to contribute to LER, contact us at younis@libyaeconomicreview.com.
