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The Africa Catch-22: How to Transition without Energy

Energy is the golden thread that connects economic growth, social equity, and environmental sustainability.

– Ban Ki-moon, former Secretary-General of the UN in Washington, D.C. (2012)

Africa faces formidable obstacles as it bids farewell to fossil fuels. For a continent that produces only 3.9% of greenhouse gas emission and houses 18% of the world’s population (Worldometers, Statista 2023), the fault for excessive greenhouse emissions falls elsewhere. Clearly each African nation faces unique obstacles in electrification, and there is no “bingo” solution for future charging renewable energy development in every country, but perspective is certainly a start.

In the aftermath of COP28, this article will take a brief at the complexities surrounding Africa’s energy transition, the funding required for comprehensive energy networks and the potential for a hybrid approach to the energy transition.

What happened at COP28?

 COP28, held in Dubai, marked a significant milestone in international climate negotiations. It was the first time in 28 years of climate negotiations that nearly every country in the world agreed to transition away from fossil fuels. This commitment was included in the first “global stocktake” of how countries can accelerate action to meet the goals of the Paris Agreement.

Two big policies and steps were taken at COP28 related to climate change. First, the establishment of a fund to address the losses and damages faced by vulnerable countries due to climate impacts – the Loss and Damage Fund. This fund aims to provide financial support to those countries dealing with severe climate-related challenges.

Global political leaders at the UN Headquarters in New York. Credits: Matthew Tenbruggencate

Second, COP28 resulted in an international agreement to tackle fossil fuels and triple global renewable energy capacity by 2030, marking the beginning of the end of the fossil fuel era, which you can read on the COP28 post-conference press site. As part of this “Global Renewables and Energy Efficiency Pledge,” one of the declarations drafted in the statement signed by 130 nations reads:

Recognizing that ambitious actions should be taken by every country, taking into consideration different starting points, national circumstances and the unique realities of different regions, as well as the September 2023 Nairobi declaration of the Africa Climate Summit to “increase Africa’s renewable generation capacity from 56 GW in 2022 to at least 300 GW by 2030”.

– from the COP28 Global Renewables and Energy Efficiency Pledge, 2023
Countries that signed the “COP28 Global Renewables and Energy Efficiency Pledge”

Africa’s Grid Infrastructure

According to recent data, only 43% of Africa’s population has access to electricity (World Bank 2023). There is an urgent need for robust grid infrastructure to foster the UN’s sustainable goals. Education, health, agriculture and any industrious sector all require energy infrastructure.

The construction of transmission lines, substations, and distribution networks will require significant upfront investment. Such infrastructure is crucial for ensuring reliable and efficient energy supply to support economic growth and improve living standards. However, the energy consumed to even develop this infrastructure is a monumental task, necessitating careful planning and coordination.

Funding for Grid Infrastructure

To finance grid infrastructure projects in Africa, both domestic and international support is needed. According to the International Energy Agency, investment in Africa’s energy sector needs to double to achieve universal electricity access by 2030 (IEA 2023).

$85 billion was mobilized at COP28 to limit global temperature rise by 1.5 degrees Celsius to help avoid some of the most harmful consequences of climate change. Additionally, there was an agreement on the first day of COP28 to set the Loss and Damage Fund in motion with $792 million in pledges, which was welcomed by developing countries, including those in Africa.

International organizations like the World Bank and the African Development Bank play a vital role in providing financial assistance and technical expertise. Moreover, private sector investments and public-private partnerships are essential for mobilizing the necessary funding.

UAE Finance

A recent initiative announced by the COP28 President-Designate, H.E. Dr. Sultan Al Jaber, demonstrates a significant push to unlock Africa’s clean energy potential through substantial funding. This initiative, backed by a total investment of US$4.5 billion, brings together a coalition of public, private, and development capital from several UAE institutions, including the Abu Dhabi Fund for Development (ADFD), Etihad Credit Insurance (ECI), Masdar, and AMEA Power, in collaboration with Africa50 (World Resources Institute 2023).

The aim of this investment initiative is to address the critical infrastructure challenges in Africa and provide clean electricity to 100 million people across the African continent by 2035 through the Etihad 7 development platform championed by the UAE Ministry of Foreign Affairs.

Finance from the US

The Biden-Harris administration has been highly active in its engagements with Africa, committing to invest $55 billion in the continent over three years. Notably, over 17 Cabinet and leaders of U.S. Government Departments and Agencies have visited 26 countries in Africa to expand partnerships. The United States has facilitated 547 new trade and investment deals with a total estimated value of $14.2 billion (The White House 2022).

Specific initiatives include the International Development Finance Corporation (DFC) committing over $2 billion across 46 transactions in Africa and the U.S.-Trade and Development Agency (USTDA) funding fifteen project preparation grants to leverage over $3.4 billion in infrastructure finance. Additionally, the U.S. Department of Commerce facilitated nearly $3.6 billion in U.S. exports to Africa and Prosper Africa mobilized $274 million in financing for West Africa’s housing sector.

To put both of the amounts into context, UAE spent $19.8 billion on defense in 2020 and USA spent $782 billion on defense in 2022.

Finance from China

From 2003 to 2021, China sent $42 billion in aid to Africa (John Hopkins 2023) and, for five years between 2013 – 2018, African aid made up 45% of all Chinese foreign aid. In 2021, Chinese FDI in Africa hit $5 billion – the highest amount since 2008 when the Industrial and Commercial Bank of China (ICBC) bought 20% of the Standard Bank of South Africa.

According to the New York Times, as of August 1, 2023, the cumulative Chinese FDI, Aid and Loans for the Belt Road Initiative (BRI) engagement reached the $1 trillion mark, with about $596 billion in construction contracts and $420 billion in non-financial investments.

African nations which that are top focus for Foreign direct Investment (FDI) from the US are Egypt, Nigeria, Ethiopia and the Republic of the Congo. For China, the focus is Democratic Republic of Congo, Zambia, Guinea and Kenya. US in blue. China in red. South Africa is a focus for FDI from both nations.

Double standards?

Africa is receiving parcels of development funding to accelerate the development of its energy infrastructure and achieve its sustainable energy goals but the reality is leaping from minimal grid and energy infrastructure to the fluctuating peaks and troughs of solar and wind generation will not work. African countries have significant natural gas reserves: a valuable energy source for their own development. The “hypocrisy” of western nations forcing Africa to transition away from natural gas instead of focusing on self-consumption is evident in the conflicting actions and policies (The Guardian 2023). US commerce and industry consumes ca. 84 quadrillion terrawatt-hours per year, around 16% of total global consumption.

While western countries advocate for a shift away from fossil fuels, they often fail to address their own high levels of energy consumption. This double standard places undue pressure on African nations in group politics. Instead of supporting Africa’s efforts to utilize natural resources responsibly, western nations impose unrealistic expectations that hinder Africa’s economic growth and self-sufficiency – and ultimately the long-term sustainability of our planet.

What does climate justice really mean for Africa in the energy context? Credits: Markus Spiske

Why not letting Africa use natural gas could destroy our planet

If African nations are not allowed to use natural gas to generate baseload electricity, hidden costs associated with intermittent energy transmission will hinder international trade, African national development and energy security. The transition to renewable energy sources requires both energy and existing infrastructure. For Africa, this makes natural gas a unique key to transitioning. As renewable sources like solar and wind power do not provide constant, steady output (without capacity building mechanisms), energy from natural gas needs to fill in the gaps.

As the renewables are further developed in these nations, they will also require energy and further infrastructure development in order to be fully integrated into existing energy systems. Without access to reliable and affordable energy sources, these countries will face challenges in building reliable grid infrastructure. This could lead to energy poverty and result in a greater reliance on traditional fossil fuels, contributing to higher greenhouse gas emissions.

Furthermore, the abundance of natural gas fields in Africa, including the newly discovered Greater Tortue Ahmeyim field in Senegal and Mauritania, gives nations a clear transitional path: develop gas energy infrastructure to foster self-sustaining economies and transition to renewables. Not only will nations be able to export the natural gas, they can create fertilizer, power industrial processes for sanitary supplies, even create schools with the increased level of self-sustained funding in the economy.

Natural gas might allow African nations to transition faster to renewables. Credits: Chris LeBoutillier

Natural gas can serve as a transitional fuel that provides a reliable and flexible energy source during this transition period. It can be used to generate the baseload electricity needed, which is important for maintaining a stable and consistent power supply. Unlike solar and wind farms, natural gas power plants can be easily ramped up or down to accommodate fluctuations in renewable energy generation, providing a reliable backup for intermittent sources like solar and wind power.

Utilizing natural gas allows nations to meet their immediate energy needs while laying the foundation for the integration of more renewable energy technologies in the future. An approach that not only supports economic development and energy security but also helps reduce greenhouse gas emissions and combat climate change in the long-term.

Half-and-Half Transition

A hybrid transition approach offers a comprised solution for Africa’s electrification needs while reducing reliance on fossil fuels. Mauritania’s 3-phase vision for transitioning from fossil fuels exemplifies this approach and sets a template for spring-boarding off natural gas to a renewable future.

The Mauritania government plans to first build natural gas plants, then renewables and then retrofit gas plants with hydrogen combustion. By retrofitting existing gas plants with hydrogen combustion technology, the country can increase access to electricity while working towards a complete phase out of fossil fuels.

Mauritania is abundant in minerals and natural gas. Credits: Daniel Born

Egypt has set ambitious targets to increase the share of renewable energy in its electricity mix. The country aims to generate 20% of its electricity from renewable sources by 2022 and 42% by 2035. To achieve this, Egypt has implemented measures such as feed-in tariffs, competitive tenders, and net metering to attract private investments in the renewable energy sector. The country has also invested in large-scale projects, including wind farms and solar power plants.

Morocco has adopted an integrated approach to its energy transition by focusing on both renewable energy development and energy efficiency. The country aims to increase its renewable energy capacity to 52% by 2030, with a particular emphasis on solar and wind power. Morocco has implemented policies to attract domestic and international investments in renewable energy projects and has also launched energy efficiency programs to reduce energy consumption.

These transitions play the middle ground. Operating diplomatically to appease wealthier COP28 nations to grant funding, whilst also increasing the access of electricity (McKinsey 2022).

Africa’s Energy Transition: The Catch22 of COP28

One of the potential downsides of development funding is the risk of creating dependency on external aid (Katch 2016). If countries become overly reliant on foreign aid, it may hinder their efforts to develop sustainable domestic revenue streams and reduce their long-term reliance on external support. This consideration supports the fact that many hydrocarbon-wealthy African nations, which currently receive significant aid, should be allowed to guide an energy transition that starts with stimulating their own economies using natural gas.

For those African leaders at COP28, a Catch-22 has emerged: do we limit our own autonomy and increase development aid for renewables, forgoing the quality of life and stable energy access for the next 20-years? Or do we push ahead for economic self-sustainability, independence and drive a clean transition to meet 2030 targets using our own resources and a hybrid approach?

Africa’s leaders face a long-road of decision-making in the clean energy transition.

References


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