Energy Transition and Economic Resilience in Algeria: An Econometric Analysis and a Macroeconomic Simulation

DOI

10.2991/978-94-6239-743-9_7How to use a DOI?

Keywords

Algeria; energy transition; economic resilience; hydrocarbon dependence; diversification; SVAR

Abstract

This paper examines the economic impacts of oil shocks, delayed decarbonization, and the potential for energy transition policies to enhance Algeria’s economic resilience. Using econometric modeling and scenario analysis, we find that negative oil shocks trigger severe GDP contractions, while non-hydrocarbon sectors, particularly agriculture and construction, are subject to fiscal procyclicality and import dependence. Energy transition policies demonstrate dual effects: reducing energy intensity stabilizes growth and curbs volatility, but renewable energy adoption initially increases macroeconomic instability without complementary reforms. An ambitious transition pathway could unlock long-term growth, though short-term costs are inevitable. Sectoral outcomes vary: agriculture benefits from decarbonization, while construction faces structural adjustments. However, Algeria’s lack of a sovereign wealth fund exacerbates fiscal exposure during this shift. Policy recommendations include fossil fuel subsidy reforms, a stabilization fund for shock resilience, and sector-specific strategies prioritizing solar energy deployment and industrial efficiency. Regional green energy partnerships and institutional reforms are critical to breaking the rentier cycle. Without urgent action, Algeria risks prolonged boom-bust cycles and worsening climate vulnerability. A phased, adaptive approach balancing immediate stability with long-term diversification will offer the most viable path forward. This paper provides actionable insights for policymakers navigating the complexities of energy transition in resource-dependent economies.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Kamel Malik Bensafta
PY  - 2026
DA  - 2026/08/11
TI  - Energy Transition and Economic Resilience in Algeria: An Econometric Analysis and a Macroeconomic Simulation
BT  - Proceedings of API Conference 2025: Empowering the future: Energy Transition and Economic Diversification in Arab Countries
PB  - Atlantis Press
SP  - 103
EP  - 132
SN  - 3005-155X
UR  - https://doi.org/10.2991/978-94-6239-743-9_7
DO  - 10.2991/978-94-6239-743-9_7
ID  - Bensafta2026
ER  -