The world is wrestling with the question of how to most effectively manage a transition from a fossil fuel driven economy to one based on low or zero carbon usage. The debate over how and how fast to bring about the transition is happening in the rich countries of the Global North and the developing countries in the South. In Africa the debate has taken on a special character. Depending on their role in the industry, there are two schools of thought regarding the transition to a low/no carbon African energy mix. This week’s COP-26 meeting is a great time to think about to implement the transition.
FOSSIL FUELS – THE SELL SIDE
Governments of oil producing countries, and oil and gas companies both upstream and downstream are of course eager to continue exploring for, drilling, and/or selling fossil fuels.
For major producing countries such as Nigeria, Angola and Algeria oil and gas are the source of the majority of export earnings. Another group of countries, mostly on the west coast of Africa and some In East Africa are relatively new producers and have looked forward to reducing or eliminating what was once a massive import bill.
Amid all the understandable self interest the oil producers make the strong point that renewables are not meeting Africa’s energy needs and are nowhere near closing Africa’s energy gap. Nigeria’s vice president gives a full throated defense of his and other African countries’ need to maintain their oil and gas industries.
Some of Africa’s supporters also favor a measured approach to the energy transition.
AFRICAN ENERGY FINANCE
Environmentalists and much of the development finance community are ready to leave oil in the ground and cease all production and exploration.
Many development finance institutions are reluctant to finance natural gas ventures or any energy project not using solar, wind or hydro power. We have built relationships with several energy investors most of which have multilateral or bilateral development finance institutions as major investors. These investors explicitly state their intention to finance renewable energy.
The African Development Bank describes its Energy & Power initiative as “Accelerating Africa’s Green Energy Transition.” and “supporting access to clean and affordable energy across the African continent.”
Each of these viewpoints has a valid argument. Africa is blessed which considerable energy resources and should be able to use them, just as the West has since the start of the industrial revolution. Also unlike in the west, where the transition debate is about whether to replace a dirty power source with a clean one, in Africa most people have no power at all and it is not clear that in the near term renewable energy can supply more than a fraction of the continent’s power needs.
Yet we are faced with the stark reality of climate change. The most recent IPCC report shows we are already feeling the effects of a higher global temperature and the greatest impacts are in the developing world. Many expect Africa, like it did in telecom to leapfrog the old technology and quickly adopt sustainable energy. The bottom line is we cannot continue business as usual, but it is far from clear that Africa can meet its energy needs without some mix of old and new forms of energy. The transition has to happen, but how and how quickly? What is the plan?
NO CONSENSUS, NO PLAN
As far as we can tell there is no plan. Neither companies nor importing or exporting countries have made plans that recognize Africa’s energy goals which are different from those of the West. Is there coordination from the African Union? One attempt is at a coordinated global effort is Sustainable Energy for All, an organization funded by a mix of foundations and bilateral development agencies in partnership with the United Nations. Some broad thinking has been done by McKinsey but a lot of details are left unaddressed like how to deal with the inevitable stale assets that will result from the transition to renewable energy.
We urge the decision makers in the public and private sector to think comprehensively and realistically about universal access to energy and a plausible route to zero carbon as well as the consequences of winding down the production and distribution of fossil fuels.
emergingmktstories 