Cyprus's energy policy
Cyprus's energy policy is shaped by its strategic geographic location in the eastern Mediterranean, serving as a critical junction for energy transport among Europe, Africa, and Asia. The island nation faces significant challenges due to its lack of domestic energy resources, relying heavily on energy imports for its electricity production, which primarily comes from oil, coal, and a growing share of renewable sources. In recent years, Cyprus has made strides in increasing its renewable energy capacity, achieving 17% from solar and wind by 2022, and aims to enhance this further by 2030. The government has enacted policies to promote renewable energy and energy efficiency, aligning with European Union targets to reduce emissions and increase the renewable energy share in the energy mix. Additionally, Cyprus is exploring its potential for hydrocarbon development through drilling in its territorial waters and establishing exclusive economic zones. Collaborative projects with Greece and Israel, including an electricity interconnection and potential natural gas pipeline, reflect Cyprus's efforts to bolster its energy independence and regional partnerships. Despite these advancements, the electricity market remains largely dominated by the Electricity Authority of Cyprus, although gradual liberalization efforts are underway.
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Cyprus's energy policy
Official Name: Republic of Cyprus.
Summary: Cyprus’s geostrategic location has always attracted great powers’ attention. Situated at a crossroads of energy transport, the resourceless island state is expanding its energy policy as it faces domestic and international challenges.
The island nation of Cyprus, where, according to Greek mythology, Aphrodite was born, is located in the eastern Mediterranean. It borders with Turkey in the north, Syria, Lebanon, and Israel in the east, Egypt in the south, and Greece in the west. Its geographic location has great geopolitical significance; Cyprus acts as bridge for three continents: Europe, Africa, and Asia. It is at the crossroads of vital energy corridors from both the Middle East and the Caucasus and Central Asian regions. In the south, there is the Suez Canal; in the north, the Turkish port of Ceyhan, where the Baku-Tbilisi-Ceyhan and Kirkuk-Ceyhan oil pipelines end.
Since the Mycenaean period (about 1400 BCE) the Greek population has always constituted the majority of the island’s population, but Cyprus was not always governed by Greeks. It has been conquered by Assyria, Egypt, and Persia; experienced Greek rule again under Alexander the Great; and became part of the Roman Empire in 58 BCE The empire was divided in 395 CE into two competitive, eastern and western, parts. For almost eight centuries, Cyprus was part of the Greek-dominated Eastern Roman Empire. During the Third Crusade (1191), Cyprus experienced the rule of Richard I of England and later of the Venetians (1473), until it was conquered by the Ottomans (1570). In the eighteenth century, Cyprus became a piece of the greater puzzle that composed the Eastern Question (1774–1923)—namely, a series of territorial, commercial, and strategic arrangements among the British and Russian Empires and other European powers, triggered by the disintegration of the vast Ottoman Empire.
To the disappointment of the Cypriot Greeks who had assisted the British military effort in World War I, Cyprus became a British colony in 1925. The struggle for enosis (union) succeeded in gaining independence in 1960 but not in uniting Cyprus with Greece. The Zurich and London Agreements among the United Kingdom, Greece, and Turkey provided the island’s independence, leaving two military bases (Akrotiri and Dhekelia) under British sovereignty. The changing geopolitical environment during the cold war, intercommunal tensions (Turkish Cypriots form 18 percent of the island’s population), the ineffectiveness of the treaties and agreements, and the continuous involvement of great and regional powers resulted in Turkey’s invasion in 1974. Since then, 37 percent of the island state has been occupied; 180,000 Greek Cypriots were forced to move to the south and 50,000 Turkish Cypriots to the north. In 1983, Turkey established and is the only country to recognize the Turkish Republic of Northern Cyprus; settlers from the Turkish mainland have altered the island’s demographics and have undermined Cyprus’s jurisdiction and sovereignty.
In 2004, Cyprus became a member of the European Union (EU). Despite its occupied territory in the north, Cyprus managed to enjoy remarkable economic growth, which was later enhanced by its EU membership and the eurozone (2008). However, economic growth has increased Cyprus’s energy consumption.
Lack of Energy Resources
Cyprus currently has no nonrenewable resources and is heavily dependent on energy imports. The state’s electricity production comes mainly from oil and to a lesser extent from imported coal and solar energy. Electricity was introduced by the British in 1903. In the 2020s, the Electricity Authority of Cyprus (EAC) operated three power stations with 988 megawatts of total installed capacity and was a vertically integrated company. The demand for electricity continues to rise each year, due in large part because of rising temperatures caused by climate change.
Cyprus has been increasing electricity generation from renewable energy sources. In 2022, 17 percent of its energy came from renewable energy in the form of solar and wind power. In the early 2010s, Cyprus created a fund to finance its development of renewable energy called the Law on the Promotion of Renewable Energy and Energy Efficiency.
Cyprus has adopted the policy targets that the EU set in its spring 2007 Brussels meeting. By 2020, the EU aimed to have 20 percent lower gas emissions compared to 1990, to increase to 20 percent the share of renewable energy sources in the energy mix, and to save 20 percent of the total primary energy consumption. Simultaneously, Cyprus was responsible for creating the proper conditions for competition in the energy market, but EAC is still a monopoly in generation, transmission, and distribution of electricity. Despite these difficulties, Cyprus was gradually liberalizing both its electricity market, by opening 35 percent to competition, as well as its oil sector, by terminating its pricing control system.
Photovoltaic panels have also been introduced through funding schemes, and subsidies are given through investments in energy-efficient materials for both households and companies. In solar water heating for households, Cyprus is a world leader, covering 90 percent of private accommodations. The country's prime minister announced in 2023 that Cyprus's generation of renewable energy was steadily increasing each year, and it was possible that the country could increase its projected 2030 goal of 23 percent.
Other energy policy goals include the creation of a strategic oil stock terminal and the exploitation of indigenous sources of energy. Since the early 2000s, Cyprus has been searching for oil and gas in its territorial waters. By late 2007, it was widely accepted that the nation has potential for hydrocarbon development. In anticipation of developing its own petroleum, Cyprus has sought to declare its exclusive economic zones (EEZs) and to make arrangements with all neighboring countries but Turkey. In 2023, Cyprus, Greece, and Israel planned to install an electricity cable connecting their power grids. They also discussed the installation of a natural gas pipeline. Their partnership stemmed from the discovery of significant natural gas offshore.
Bibliography
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