By NJ Ayuk, Executive Chairman, African Energy Chamber (http://www.EnergyChamber.org).
I arrived Sharm El Sheikh for COP27 to stickers bearing the circulating arrows emblem of sustainability. The city appears to be in tip-top shape. I listened to the speeches at the opening ceremony of COP27 noting that Africa faces a quandary: The continent is seeking to eradicate energy poverty and create a better future for our people with a known solution that developed countries have exploited for centuries, namely fossil fuels. Yet many of those very countries are now standing in Africa’s way.
Rich Western forces, especially in Europe, have been pushing for an immediate shift away from fossil fuels, and their pressure is impacting Africa’s oil and gas industry. We’re already seeing investments in new oil and gas projects dwindle and one announcement after another about majors divesting African oil and gas assets. New developments, especially of our vast, newly discovered natural gas reserves, remain under threat.
What Western proponents for a rapid energy transition are ignoring is the role fossil fuels can play in bringing reliable energy to the hundreds of millions of Africans who now go without it, not to mention fossil fuel’s potential to pave the way for industrialization, economic growth, and greater stability for our people. At the same time, Western activists conveniently forget that they have used — and continue to use — fossil fuels to expand their own wealth and energy security.
In fact, as the war in Ukraine and subsequent cut-off of Russian energy supplies to the EU has shown, in the coin toss between energy security and environmental causes, even for Europeans, energy security wins.
It is interesting to note that as European households face higher utility prices amid a bleak winter outlook for power and gas supplies, the EU’s answer to reducing dependence on Russian fossil fuels is to source alternative providers and bring in additional liquified natural gas (LNG) imports – not to ramp up its green solutions.
The African Energy Chamber’s (AEC) recently released report, The State of African Energy: 2023 Outlook, notes that this quest has actually softened the stance of Europe and its allies to stop financing African fossil fuel development – at least for now.
We feel for Europe. We know what it’s like to lack access to reliable and affordable energy. We also know we’re every bit as deserving as it is of a just energy transition that factors in our unique needs.
Expanding Africa’s Energy Mix
At its core, this issue is a matter of basic human dignity. Just consider the 600+ million people in sub-Saharan Africa who lack access to electricity. Would their lives improve by guaranteeing them the energy that Westerners take for granted every single day? Absolutely. Would providing clean, modern energy sources for cooking reduce indoor air pollution? Of course. Could this help eradicate disease and premature death in some of the poorest areas? Certainly.
Energy poverty is one of the continent’s biggest impediments to inclusive economic growth. To eradicate energy poverty, the AEC estimates that Africa’s electricity generation needs to reach 2,586 terawatt hours (TWhs) by 2040, which equals an annual increase of 5.8% in generation capacity. This is a huge volume that will require concerted effort and massive investment in ALL energy resources at our disposal. We need a healthy balance. As the State of African Energy: 2023 Outlook suggests, Africa must be allowed to leverage a multi-resource approach, which upholds the well-known principle of diversification and includes natural gas.
Natural gas is a crucial fuel choice for any decarbonization pathway for the continent. It can get us closer to energy independence and environmental sustainability in pursuit of global climate goals.
African governments must push back on the attempts by certain global interest groups and financiers to prohibit us from making the best choices in our energy transition. Because a just and equitable energy transition for Africa must include natural gas.
Natural gas can be monetized to generate revenue while serving as a feedstock for chemical and fertilizer manufacturing, creating even more opportunity and revenue. Gas-to-power projects could make a tremendous difference in Africa — but gas-fired power plants are only built when oil and gas revenues are strong.
Self-Reliance in Financing?
As we expand our natural gas usage as a bridge to a greener future, we continue to explore solutions to finance these efforts.
The State of African Energy: 2023 Outlook highlights how this is demonstrated in national energy plans and targets, including how countries deliver on their Nationally Determined Contributions (NDCs), that is, their commitment to reduce greenhouse gas emissions and adapt to climate change.
It is estimated that Africa needs USD250 billion each year until 2030 to be able to implement its NDCs under the Paris Climate Agreement. Unfortunately, so far this isn’t happening, in large part because the international community that pledged billions of dollars for climate finance to developing countries has not kept its promises.
This leads us to believe that Africa cannot rely on international partners. We must spearhead our own energy strategy, one that involves significant collaboration in joint strategy formulation, financing, and communication with our neighbors. Now that Western finance institutions and countries have been reluctant to invest in African oil and gas, the AEC has been working to develop home-grown solutions to the challenges of financing our projects, like the African Energy Transition Bank.
The AEC is also fighting for fair financial instruments because we recognize the futility of piling on debt for already struggling developing economies. Instead, we need to expand tailored investment vehicles that open and broaden access to green projects.
African Solutions on African Timetables
Don’t misunderstand: I’m a big proponent of renewable energy. Renewables offer tremendous promise — for Africa and for the entire world. And I’m delighted to see how the continent is embracing green technology: Africa’s 68% share is already higher than the global average and other regions, including North America and Europe.
But I’m an even bigger proponent of Africa and her people. And without the revenue, jobs, and capacity-building opportunities of a thriving oil and gas industry, many African economies stand little chance of affording the billions of dollars necessary to develop the infrastructure we need to shift to renewables, and Africans are much less likely to fully capitalize on the jobs and economic opportunities that renewable energy industries can deliver.
The transition to renewable energy will happen. And I’m excited about Africa’s prospects when it comes to renewables. What I’m not excited about is the pressure from lobbying groups in rich Western countries to implement our transition on their timeline.
African nations have just as much right to develop a robust energy industry that includes oil, gas, and renewables as the wealthy Western nations who have done – and continue to do – the same.
Distributed by APO Group on behalf of African Energy Chamber.
