Energy

gy Challenges:
g Egypts
gyp Next
Battle
Third
Thi d Round
R
d Table
T bl for
f UN Global
Gl b l Compact
C
t Local
L
l Network
N t
k / ECRC
Hisham Zaazou, First Assistant to the Minister of Tourism
Ministry of Tourism, Arab Republic of Egypt
Cairo : 27 Sep, 2010

MoT is implementing the Green Sharm Strategy that will position

Sharm as a global leader in holistic greening of tourist destinations
Green Sharm Initiative Highlights

Eco
Eco-Tourism
Tourism is the way of the future - this is the right time to get on board while some first
first-mover
mover
advantage is still attainable
To become a Green Tourist Destination, a holistic approach has to be used, based on four key Greening
components: Reduced Carbon Emissions, Sustainable Water Supply, Effective Waste Management,
Healthy Bio-Diversity
Sharm has a lot of opportunity for substantial improvement along all greening components - if the current
trend of environmental degradation is not reversed, Sharm risks losing at least 16 - 35% of its annual
revenue (USD 300
300-600
600 Mn per year)
A holistic Green Sharm Initiative has been developed to address all four greening components through
a set of 33 integrated projects
Th
The IInitiative
iti ti uses a two-stage
t
t
strategy:
t t
St
Stage
1 achieves
hi
li ti green results
realistic
lt ffor Sh
Sharm iin th
the shorth t
medium term, while Stage 2 aims for a more radical green approach in the longer-term
The Initiative requires a cumulative investment of EGP 1.6 Bn over the next 10-years (above 2% of
y) 48% of which offer strong
g returns-on-investment for local
Tourism Revenue from Sharm annually)
businesses and can thus be financed through the private sector
Source: Booz & Company analysis
STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

The Pressing Need for Change

The Journey to Becoming a Green Sharm
Next Steps

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

Global tourism market is responding to demand for eco-tourism,

and successful tourist destinations are quickly becoming green
Shift in Global Tourism towards Eco-Tourism
Global Tourism Demand
- Mn Tourists; 1997-2008

Mn Tourists

1,800
1,600
,

4.0%

Total World
Tourism

1,400
1,200
1,000
800
600

14.9%

Ecotourism1

400
200
0

% of Global

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

15%

19%

23%

24%

27%

29%

32%

33%

35%

38%

41%

45%

Note:
1) Ecotourism is referred to by the WTO as nature based tourism
Source: World Travel and Tourism Council; The International Ecotourism Society; UNWTO; Locum Consulting; Booz & company analysis
STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

To effectively become environmentally sustainable and capitalize

on eco-tourism trends, a destination must address four key areas
Baseline Analysis Dimensions
Analysis Dimensions
1

Sustainability Com
mponents

Emissions
2

Water Supply
pp y
Technology &
Operations

Stakeholder
Choices &
Behavior

Regulations &
Governance

Solid & Liquid Waste

4

Bio-diversity

Source:

Booz & company analysis

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

44% of carbon emissions in Sharm are locally driven, while 100%

of Sharms energy supply is emission generating
Carbon Emissions

A
Breakdown of Total Sharm Emissions
- 2007 (Kt CO2)
Limited Local
I fl
Influence

Breakdown of Energy Supply in Sharm1

- in Bn MJ in 2007 -

Area of Full
Local Influence

30%
Fuel Oil2

27%
Hotels

56%
Air Transport

68%
Gasoline

1% 1%
% Diesel
Natural Gas

11%
Other
Infrastructure

Total = 3.02 Bn MJ
Avg. Global Energy Supply

2%

3%

Water Transport

Total = 992 Kt
Note

Land Transport

1) Excludes air transport and electricity (electricity is generated outside Sharm)

2)
Source: CAPMAS; Booz & Company interviews; Booz & Company analysis

Oil

34%

Coal

25%

Gas

21%

Renewable

13%

Nuclear

7%

20%
Green Energy

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

Transport emissions in Sharm are higher per passenger km than

benchmarks, mainly driven by taxis and local dive boats
Carbon Emissions

A
Average Land Vehicle Emissions
- gm of CO2 per passenger km Future land transport
options for Sharm

SharmHurghada
Trips

160
140

Boat Fuel Consumption

- Litres per Nautical Mile in 2009 3% 1%

International
Trips

6.0

115

Max.

99
Local
Diving
Trips

22

97%

2.5
4.3

31

Avg.

1.4

Glass-bottom Boat Sharm Diving Boat2

Buses1

Note

Battery
Plug-in
Electric
Hybrid
(Renewable
energy)

Battery Italian and

Electric
French
(Natural
Taxis
Gas)

Sharm
Taxis

T t l CO2
Total
= 34,424 tons

1) Passenger load factor for buses is assumed at 60%

2) Based on the daily distance traveled to Ras Muhammad (10 nautical miles) and Tiran Island (20 nautical miles) from Travco Marina
Source: How green is your diving? - divernet.com; On the road in 2035 MIT; Booz & Company interviews; Booz & Company analysis
STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

 similarly emission related to hotel energy consumption is both

high relative to benchmarks, and rising per guest night
A

Carbon Emissions

Beach
B
Des
stinations

Be
est
Prac
ctices

Average Hotel Energy Consumption per Guest Night

- MJ/GN; 2007 Alto Green Hotel1

37

Melbourne Green Hotels

Majorca
Seychelles Islands
Sharm

140

72
212

Avg. by
y
Continent

Middle East

Europe

CO2e = GN * Energy/GN * CO2e/Energy

51

Africa

Sharm Hotel Emissions vs. Guest Nights Growth

225

CO2e

GN

Energy/
GN

CO2e/
Energy

164
226

Asia and the Pacific

237

Caribbean

240

North America

244

25 7%
25.7%

18 0%
18.0%

6 5%
6.5%

C
Constant
t t

Note:

1) In Melbourne
2) For Holiday Inn; Laguna Beach and Laguna Gardens Resorts
Source: Sustainable Tourism Project Report; UNWTO; Green Globe; Booz & Company analysis
STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

Water desalination in Sharm is energy intensive, while water

wastage as well as water consumption per GN are relatively high
B

Water Supply

Electricity Consumption
C
in Desalination
By Reverse Osmosis1
- KWh per m3 -

Water Waste as % of Total Production

- Sharm vs. Benchmarks - %; 2007 20%

7
10%
5%

5%

Tokyo

Berlin

13%
%

7%

Paris

California Albuquerque2 Sharm

3
4

Max

Average Water Consumption per Guest Night

- Liters/GN; 2007 450
416
413
279

Sharm

Min

149

Best Practice1
Malta

Note:

Spain Balearic
Islands

Sharm

Caribbean

Greece
(Aegean
Islands)

1) Libert, J.J., Desalination and Energy, Desalination

2) Largest city in New Mexico - US. Albuquerque's climate is usually sunny and dry
Source: Quantum Sphere Inc; Governorates Environmental Affairs Office; Caribbean Alliance for Sustainable Tourism; International Tourism Partnership; UNWTO; Sustainable Urban Infrastructure,
Siemens, 2008; www.cabq.gov; Booz & Company analysis
STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

Waste management practices in Sharm are significantly below

acceptable standards, leading to negative tourist perceptions

Solid Wastte

Level 5

Level 1

Waste
Collection and
Transportation
Bestpractice
Current
Sharm
Baseline

Liq
quid Waste

Waste Management

Collection of
waste in closed
carts or disposal
bags

Transportation
of waste in
closed trucks

Waste is collected in closed

carts and
transported in closed trucks

2008 Breakdown of Liquid

Waste Treatment Capacity
by Methodology

Disposal
Disposal of
remaining waste
in a sanitary
landfill

Recycling/
Processin
g
Sorting and
recycling of
waste

Energy
Recovery
Using waste to
generate energy

Waste
Optimizati
on
Prevention, and
minimization of
waste at main
sources

Dumping in
desert in nonsanitary landfill

Filtration

Chlorination

54%

46%

100% = 42,805 m3/day

Note:
Executive regulations of law 4 of 1994 prohibit the emanation of bad odor from treated wastewater
Source: Governorates Environmental Affairs Office; Law 4 of 1994 and its Executive Regulations; Booz & Company analysis

Minister of Housing issued a decree (no. 44 of 2000)

that allows level-2 treated water to be used in irrigation1
In 2002 the Minister of Agriculture issued decree no.
603 allowing irrigation of inedible plants using treated
wastewater
However, Red Sea Governor recently prohibited use of
treated waste water in irrigation except after disinfection
STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

Sharm suffers from over-use of diving sites, significant above

recommended levels, thus threatening the survival of coral reefs
D

Bio-Diversity
Summary of Current State

Sector Overview
1 Demand is intense and threatening
biodiversity
~80,000 dives and snorkel stops
per site - 4x above internationally
accepted levels
At current rate, dives expected to
reach 172,000 by 2020
Capacity is not actively managed
2
Infrastructure (moorings, marinas,
boats) cannot meet forecasted
demand in 2015
Reefs are in good health due to

3 their natural structure, yet threats to

coral reefs will continue to intensify,
mainly due to:
Shoreline construction ((frozen))
Fishing
Desalination sludge

Market Economics
4 Prices for diving are low and not

Regulations & Governance

6 Regulation & governance are

proactively managed

inefficiently applied

Diving fees (USD 9) low versus

benchmarks

Distribution of mandates across,

MoT, EEAA & CDWS, Coast
Guards & Marine Police is creating
overlaps in regulation setting and
poor enforcement

Advanced divers willing to pay up

to USD 18
No fee plan across sites
Fees not collected consistently

5 Dive operators are sensitive to

demand fluctuations

Dive operators have high fixed

costs ( ~70% ) which makes them
sensitive to changes in demand
volumes

Source: Booz & Company Analysis

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

10

In summary, the current rate of environmental degradation in

Sharm risks the loss of 16%-35% of tourism revenue in 10 years
Why Sharm Urgently Needs To Change
Tourism Revenue
from Sharm

Tourism Revenue
from Divers

NON EXHAUSTIVE

Potential Loss due to

Coral Reef Degradation

Total # of Tourists
in Sharm

Tourists who visit

Primarily for Diving

Avg. Companions
per Diver

Total # of Tourist
Visits at Risk

2.3 Mn

7 - 15%

1.5

0.4 - 0.86 Mn

Avg. Spending
per Tourist Stay

Avg. Spending per

Diver Stay

Avg. Spending per

Companion Stay

Avg. Spend Per Diver

& Companion Stay

$780

$636

$780

$726

Total Revenue From

Tourism in Sharm

Total Revenue
From Divers

Total Revenue
From Companions

Net Revenue at Risk

$ 1.8 Bn

$102-219 Mn

$189-405 Mn

$ 291 Mn $ 624 Mn
(16%)
(35%)

Source: Ministry of Tourism, Booz & Company analysis

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

11

The Pressing Need for Change

The Journey to Becoming a Green Sharm
Next Steps

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

12

Green Sharm team has successfully completed Phase II project

design and with implementation pending
Phases of Transformation into a Green Tourism Destination
Completed
(2 months)
th )

Phase I
Scoping & Target Setting
Key
K
Elements

Develop Green framework for

Sharm
Baseline key environmental
components (as-is situation)
Benchmark best practices in
other tourism destinations
Identify key gaps in achieving
environmental sustainability
Develop green strategy and key
strategic initiatives
Develop a multi-year
transformation plan
Identify projects that can produce
change momentum
Phase and prioritize initiatives
Identify key success factors for
program delivery

Completed
(6 Months)
M th )

Phase II
Project Planning & Design
Launch high-priority projects
identified in Phase I
Develop detailed transformation
blueprint, e.g.
Detail legal and/or regulatory
framework
Detail future investment needs,
and study public and private
financing opportunities
Outline delivery platform for key
environmental components
Initiate discussions on relevant
public-public partnerships with
key stakeholders
Build consumer demand approach
to brand, market and promote
green tourism in Sharm

O G i
On-Going

Phase III
Multi-year Implementation
Finalize the implementation
roadmap to become a green
destination
Secure public and private
commitment
St
Structured
t d and
d well-phased
ll h
d
implementation of all individual
initiatives identified in Phase I and II
Ongoing monitoring of
implementation progress

STRICTLY CONFIDENTIAL - FOR INTERNAL USE ONLY

13

Outcome of Green Sharm Initiative Phase I was approved by H.E.

Th P
The
Prime
i
Mi
Minister,
i t with
ith th
the goall off reaching
hi 7 key
k targets
t
t by
b 2020
Green Targets for Sharm by 2020
G
Green
Components
C
t
1

G
Green
Targets
T
t by
b 2020
Emissions
(Ktons)
128

a Reduce destination related emissions by

36% compared to business-as-usual.

Emissions

b Reduce Hotels energy consumption per

GN by 13%
c Decrease water consumption per guest

night for existing hotels by 13%, and for

new hotels by 28%

Water Supply

d Reduction in water wastage in supply

network by 75%

Hotels Energy
Consumption 172 184
(MJ per GN)
212

Water
C
Consumed
d
(litres per GN)
336

Bio-diversity
y

48%

Liquid
q
Waste
Index

L1
413
359

20%

L2

L1

management best practice (Level 5 is

highest standard)

Waste
Management

323
505

e Achieve at least level 31) in solid waste

Coral
Degradation
(% per year)
5%

L3

L3

Achieve at least level 2 in sewage

treatment best-practice (Level 3 is
highest standard)

Water Waste
(%)
5%

L5

Solid Waste
Index

g
of
g Reduce the rate of degradation
biodiversity to 5% per year

Long-term Vision

2020 Target

Baseline (2008)

1)
Level based on qualitative Booz & Company evaluation
Source: Booz & Company analysis
Prepared for H.E. The Prime Minister of Egypt

14

Reaching these targets requires undertaking 14 Programs (detailed

i t 33 projects)
into
j t ) that
th t address
dd
all
ll four
f
(4) greening
i components
t
Each of the below programs
has been further detailed
into a set of 33
interlinked projects
i

Overview of Green Sharm Programs

1

Bio-diversity

Waste
Management

Emissions

Water Supply

Green Air Access

Greening Programs

ii Conservation of Bio-diversity
iii Effective Waste Management
iv Green Energy Infrastructure
v Green Land Transport
vi Operational Efficiency Improvement for Hotels
vii Operational Efficiency Improvement for other Buildings
viii Green Building Design
ix Green Water Transport

Enabling
E
Prrograms

x Resilient Water Supply

xi Legislation & Governance
xii Funding & Financing
xiii Marketing & Branding

Enabling programs are developed to ensure

implementation and increase effectiveness of all 10
green strategic programs so that all greening
components are effectively addressed

xiv Awareness & Community Education

Source: Booz & Company analysis
Prepared for H.E. The Prime Minister of Egypt

15

Green Sharm Initiative - Phase II covered 17 projects that focus on

pressing
i issues,
i
such
h as bio-diversity
bi di
it and
d solid
lid waste
t managementt
Phase II Project List
ii

Conservation of
Bio-diversity

Greenin
ng
Projectts

Bio-diversity
iii
2

Effective Solid Waste

Management

Waste Management
v
3

Emissions

vi

Green Land Transport

Operational Efficiency
for Hotels

E
Enabling
Projects

xi

Legislation & Governance

xii

Funding & Financing

xiii

Marketing & Branding

Develop Sustainable Diving Management Strategy

Set Standard for Technology Upgrade of Marine Engines
Set Measures to Reduce Excessive Fishing
Set Environmental Standards for Water Sports Operators
Establish Effective Solid Waste Management
Evaluate & Develop Recycling Plan
Evaluate & Develop Organic Composting Plan
Evaluate & Develop Waste-to-Energy Conversion Plan
Setup a Bus Rapid Transit System
Adopt Green Best Practices in Hotel Operations Efficiency
Develop Eco-label Certification Program

Establish Green Council & Green Centre

Review & Update Green Legislation
Create Green Funding Strategy
Initiate Fundraising Campaign
Develop Tourism
Tourism Marketing Center
Center
Develop Branding & Marketing Strategy

Source: Booz & Company Analysis

Prepared for H.E. The Prime Minister of Egypt

16

A comprehensive list of funding sources was evaluated to ensure

th t all
that
ll projects
j t are adequately
d
t l financed
fi
d
Fund Sourcing Framework
S
Sources

Financing
Contribution

Ch
Channels
l

Comments

Green Center Generated Revenues

Internal
Financing

MultiCorLateral porations
Orgs&
Intl Govs

Philanthropy

National
Government

Individuals

Revenues
Revenues
R

Green Fees, Taxes & Fines

Green fees, taxes and fines that

could be collected (e.g. diving fees)
Other revenue generated by Green
Center activities (e.g. training fees)

Sponsorship / Partnership

Fundraising

Internal, or self-financing was

considered to be the primary source
of funding, including:

Contributions

External funding was considered to:

Capital
Market
Financing

Equity
Sourcing

Private Sector Equity

Debt
Sourcing

Debt (e.g. loans, bonds)

Exte
ernal
Exte
ernalFunds
Funds

Special
p
Events

Close gaps in required financing

Fill any cash-flow gaps
Provide supplementary funding (to
mitigate
iti t revenue generation
ti risk)
i k)

Source: Booz & Company analysis

Prepared for H.E. The Prime Minister of Egypt

17

To ensure implementation, about EGP 100 Mn. for must have

G
Green
Projects
P j t for
f the
th coming
i 3 years will
ill be
b needed
d d
Must Have
Projects

Description

2010-2012 Funding
Requirements (EGP Mn.)

Ensure smooth roll-out of Green Sharm Projects

Green
Center

Review and update existing legislations

Develop a comprehensive training and educational program

37.3

Build human resource capabilities

p
of p
protectorates

Biodiversity

Implement Diving & Snorkeling Sustainable Capacity Management

Launch desert conservation project and prohibit commercial fishing

29.3

Develop Branding & Marketing Strategy for Green Sharm

Marketing

Establish a Tourism Marketing Center to coordinates national and international

marketing activities for Green Sharm

17.0

Launch a comprehensive marketing & communications campaign for Green Tourism

Green Fund

Establish the Green Tourism Fund to secure financing for priority programs
Launch fund raising campaign

11.0

Source: Booz & Company analysis

Prepared for H.E. The Prime Minister of Egypt

18

External fundraising is currently being pursued from international

d
donors,
who
h h
have expressed
d significant
i ifi
t interest
i t
t in
i Green
G
efforts
ff t
2 Fundraising Contributions
Wave 1

Wave 2

July - August

September - December
Solar Power Plant

European
Neighborhood Policy

GFMECD

Establish Green Center

JBIC
Marine Engines

Forum on China-Africa
Cooperation

Solar Power Plant

Liquid Waste Management
Bus Transit System

African Development
Bank

World Bank
CTF

Waste Management
Upgrade Water Supply

French Development
Agency

USAID

Others

Establish Green Center

E t bli h Green
Establish
G
Fund
F d

Prepared for H.E. The Prime Minister of Egypt

19

To ensure success of the Green Sharm Initiative, three (3) key

success factors
f t
need
d tto b
be adhered
dh d to
t
Success Factors for Green Sharm Initiative
The pioneering factor of the Green Sharm Initiative is driven by its holistic approach to
greening. It is this holistic approach that will give Sharm the global leadership role that is
required to attract international funding. As such the initiative needs to be launched in its
entirety avoiding inclinations to cherry
entirety,
cherry pick
pick amongst project
To ensure commitment and support for the green transformation journey from all relevant
Ministries and stakeholders, the Green Sharm Initiative must be sponsored and led by the
highest levels of government leadership. As such the establishment of a PPP-style Green
Council chaired by the Prime Minister, and comprised of all related Ministers (Tourism,
Environment, Aviation, Transportation,, etc.) and private sector leaders (Head of Egyptian
Hotel Association
Association, and Head of Chamber of Diving and Water Sports
Sports, etc)
To ensure continuity and effective implementation of programs, a small team of dedicated
full-time project managers must be assigned to the Green Sharm Initiative. As such the
establishment
t bli h
t off a Green
G
Centre
C t reporting
ti to
t the
th Green
G
Council
C
il is
i critical
iti l ffor success
Prepared for H.E. The Prime Minister of Egypt

20

Prepared for H.E. The Prime Minister of Egypt