JOHANNESBURG/LAGOS/LONDON  - At Africa's first-ever climate summit in Nairobi this week, government and U.N. leaders sought to promote the continent as a source of solutions to the world's global warming challenge, rooted in its rich natural resources from sunshine to forests.

But they identified one big snag: a lack of finance to turn that potential into the reality of a green and fair transition.

"We must see in green growth not just a climate imperative, but also a fountain of multi-billion-dollar economic opportunities that Africa and the world is primed to capitalise," Kenyan President William Ruto told the summit.

In a break from the conventional view of the continent as bearing the brunt of floods, drought and other climate change impacts, the Nairobi gathering highlighted how African nations can tackle the climate crisis - especially by boosting renewable energy - and help their people prosper.

While rich in critical minerals, including cobalt used in electric vehicle batteries, and home to 60% of the planet's best solar resources, Africa receives just 2% of global clean energy spending, according to the International Energy Agency (IEA).

In a new report released at the summit on Wednesday, the IEA and the African Development Bank Group said energy investment in Africa needs to more than double by 2030 to achieve the region's energy development and climate goals, with nearly two-thirds of that going into clean energy.

Malawi, for example, estimates it will need more than $3.6 billion to expand wind, hydropower and on- and off-grid solar facilities to increase the share of its population with access to electricity from 12.5% to 100% by 2030.

United Nations Secretary General Antonio Guterres said renewable energy could be "the African miracle" if the continent created an alliance with developed countries, financial institutions and technology companies to drive progress.

"We must all work together for Africa to become a renewable energy superpower," the U.N. chief told the summit on Tuesday.

In Nairobi, hundreds of millions of dollars in pledges were made to support the Africa Carbon Markets Initiative in a bid to fund climate action by selling carbon credits backed by forest protection, land restoration and renewable energy projects.

And the United Arab Emirates - a major oil and gas producer that will host this year's COP28 climate summit - announced it will give $4.5 billion to clean energy initiatives in Africa.

African countries - which account for less than 4% of global planet-heating emissions - are seeking more climate finance from wealthy, high-polluting countries, including through a new "loss and damage" fund due to be set up at COP28 and carbon taxes on sectors like fossil fuels, maritime transport and aviation.

Those and other proposals were enshrined in a "Nairobi Declaration" adopted by more than 20 African leaders at the summit on Wednesday, which also emphasised the continent's untapped renewable energy potential and outlined a common position ahead of December's COP28 talks in Dubai.

 

'HUGE CLEAN ENERGY POTENTIAL'

The IEA report pointed to several barriers holding back investment in Africa for scaling up its renewable energy efforts and transitioning away from polluting fossil fuels, including mounting indebtedness and political instability.

"The African continent has huge clean energy potential... But the difficult backdrop for financing means many transformative projects can't get off the ground," Fatih Birol, director of the Paris-based agency, said in a statement.

The cost of capital for utility-scale clean energy projects in Africa is at least two to three times higher than for developed countries, the report noted - a big hindrance for energy developers and their consumers.

It called for an increase in cheap loans and other funding from development finance institutions and donors to bring clean energy projects to fruition and encourage private investment.

Besides large-scale energy infrastructure, the report highlighted the benefits of smaller projects that can cater to rural areas and users with limited spending power.

One example is the expanding roll-out of minigrids - small-scale electricity generation and storage systems powered by renewables that work independently from national grids but can also be connected where required.

Husk Power Systems, a U.S.-based operator of minigrids mainly in India and Nigeria, recently launched an "Africa Sunshot" initiative to mobilise $500 million over five years to boost the decentralised solar power sector in rural sub-Saharan Africa.

CEO Manoj Sinha said the programme "is intended to send a clear signal to governments and investors that the minigrid industry is bankable and ready to scale at speed".

While systems like minigrids are key to replacing polluting diesel generators and supporting vulnerable communities, major partnerships between private developers and governments will be needed for Africa to deploy clean energy at scale, he noted.

"This means governments must create an investment environment that is de-risked," added Sinha.

 

TRILLIONS FOR FOSSIL FUELS

Despite growing efforts to boost renewable energy in Africa, activists say the region's aspirations to transition its energy supplies are challenged by ongoing funding of fossil fuel extraction and use by governments and investors.

A report released this week by development charity ActionAid said that banks worldwide gave $3.2 trillion to the fossil fuel industry in Global South countries in the seven years since the 2015 Paris climate agreement, which agreed to limit global warming to "well below" 2 degrees Celsius by slashing emissions.

Dean Bhebhe, campaigns lead at Kenya's Power Shift Africa think-tank, said many African nations are struggling to boost renewables in their energy mix because they are locked into long-term bank loans for new coal, oil and natural gas projects.

Those countries rely heavily on earnings from fossil fuels to service the loans and pay back investors, Bhebhe noted, calling for debt cancellation from financial institutions along with "loss and damage" assistance from industrialised nations whose greenhouse gas emissions have driven warming.

"We need a renewed global funding architecture that is mindful of certain needs of the Global South," Bhebhe said.

Nnimmo Bassey, director of the Health of Mother Earth Foundation, a Nigerian environmental think-tank, suggested African countries should request international compensation for "loss and damage" driven by climate change, to give governments more fiscal space to fund their clean energy transition.

But African states must also redirect their own energy spending - still mainly earmarked for exploiting fossil fuel reserves for export - towards renewables, he added.

"The truth is that as long as the continent depends on the benevolence of external investors, its target for (clean) energy supply may not be attained," Bassey said.

(Reporting by Jack Graham in London, Kim Harrisberg in Johannesburg and Bukola Adebayo in Lagos; writing by Jack Graham; editing by Megan Rowling. The Thomson Reuters Foundation is the charitable arm of Thomson Reuters. Visit https://www.context.news/)