Africa’s Case for Energy Transition, A Choice and A Chance (By NJ Ayuk)

PUBLISHED: Wed, 02 Jun 2021 07:00:08 GMT
Share

Content provided by APO Group. CNBC Africa provides content from APO Group as a service to its readers and does not edit the articles it publishes. CNBC Africa is not responsible for the content provided by APO Group.

Remarks by Mr Ayuk

Last month, the International Energy Agency proclaimed that the time for new oil and gas investments is behind us. In its report “Net Zero by 2050: A Roadmap for the Global Energy Sector,” the agency’s guide for tackling the climate crisis, the IEA argued that if the world has any hope of achieving neutral greenhouse gas emissions by the year 2050 and limiting global warming to 1.5 degrees Celsius, then the world must make a radical shift away from fossil fuels.

Immediately.

The IEA’s roadmap to Net Zero by 2050 is hardly the first time there have been calls to usher in the world’s transition from petroleum energy sources to renewable ones as soon as possible. This momentum has been building for years, and it has made funding African oil and gas projects more challenging.

Consider the international environmental group Friends of the Earth. After threatening last year to initiate a legal challenge against the UK’s decision to provide $1 billion in funding for the Mozambique LNG project, Friends of the Earth has also taken aim at the East Africa Crude Oil Pipeline (EACOP) project.

It’s joined more than 260 environmental groups in asking commercial banks not to fund this pipeline, which will run from Uganda to Tanzania. We’ve also seen decreasing support for African fossil fuel production from international organizations, including the World Bank, and private investors, under pressure from environmental groups.

Then there was last year’s joint statement by the Organization for Economic Co-operation and Development (OECD) and the IEA: They described the low oil prices caused by the COVID-19 pandemic as a “golden opportunity” for governments to phase-out fossil fuel support and usher in an era of renewable energy.

Certainly, countries around the globe should be working together to prevent the most catastrophic impacts of global warming, from extreme weather and drought to widespread political instability. And, of course, those concerned efforts must include commitments to reduce greenhouse gas emissions.

I also understand that these objectives are aligned with the goals of the Paris Agreement. And that more than 125 countries have adopted, or are considering, net zero targets, including many African Countries.

However, a global mandate for an immediate shift away from fossil fuels is not the way to go. The path that will get African countries to net zero emissions should not, cannot, and must not be the same as the path that European countries travel.

Africa’s best hope for a successful energy transition…

A pragmatic approach that addresses African countries’ economic and energy needs, must harness natural gas.

Why do I say that?

Let’s start with energy poverty: More than 800 million people in sub-Saharan Africa lack electricity. Either they don’t have it, or they don’t have enough of it. It only makes sense to harness Africa’s abundant gas resources to help alleviate this problem.

Then there’s natural gas’ potential to breathe new life into struggling African economies that are still reeling from the brutal economic impacts of the COVID-19 pandemic. Natural gas, affordable and abundant in Africa, has the power to spark significant job creation and capacity-building opportunities, economic diversification and growth.

Why shouldn’t African countries capitalize on those opportunities?

Especially since a rapid move away from oil and gas in African countries  would not even pack the same environmental punch, so to speak,  as it would in developed regions of the world. If you were to combine the carbon dioxide that all African nations emitted in 2019, you’d find it was seven times less that the volumes emitted in China and four times less than in the U.S.

I am not saying that African nations should continue oil and gas operations indefinitely, with no movement toward renewable energy sources. I am saying that we should be setting the timetable for our own transition, and we should be deciding how it’s carried out.

What I’d like to see, instead of Western pressure to bring African oil and gas activities to an abrupt halt, is a cooperative effort.

Partnerships. What does that look like?

Relationships rooted in respect, open communication, and empathy. It begins with the belief that when African leaders, businesses, and organizations say the timing is not right to end our fossil fuel operations, that we have a point. That when we’re discussing our own countries, we know what we’re talking about.

In that scenario, governments, organizations and finance institutions such as, the EU, the UK, Germany, Denmark, Swedfund, CDC Group, European Investment Bank, Investment Fund for Developing Countries and others would reconsider their departures from African natural gas investments.

We know that investments in fossil fuels continue to take place around the globe:

Suriname, Guyana and Brazil, for example, are all oil and gas hot spots these days. Investments are also continuing, as they should, in North America, Europe, and Australia. And they should continue in Africa as well to ensure a just, equitable, and inclusive global energy transition,  one that protects, rather than disregards, African needs and economies.

Folks, Energy Poverty Is Real

I’d like to take a closer look at the realities on the ground in Africa, that we must consider when we talk about the continent’s energy transition. Let’s start with something I mentioned earlier: energy poverty. If you’re one of the hundreds of millions of Africans without reliable electricity, you cook your food and warm your home by burning wood, charcoal, or maybe even animal waste.

As a result, you're regularly exposed to indoor air pollution that increases your risk of respiratory infections and other chronic conditions. If you need to go to the hospital, you’ll get treatment by lantern light  or, worse yet, in the dark.

You won’t have any access to life-saving equipment that requires electricity, like MRI machines and ventilators. And that doesn’t even touch on how the lack of electricity impacts your children’s education or holds back businesses and economies and limits your employment opportunities.

Energy poverty breeds suffering. It holds people back. Gas all the way Baby.

That’s why a comprehensive approach to battling energy poverty, one that includes gas-to-power initiatives, is absolutely necessary. And we’re seeing movement in that direction. More than a dozen African countries are already using natural gas they produce themselves or import from other countries to generate electricity. And new projects are on the way. Ghana, for example, is preparing to launch sub-Saharan Africa’s first LNG-to-power plant before the end of the year.

Cameroon plans to convert an oil-fired power plant at Limbé to a natural gas-fired facility and expand production capacity. And in Côte d'Ivoire, a new combined cycle power plant is coming to Jacqueville.

These projects will change African lives for the better. Reversing direction now would be a serious mistake. Yes, renewable energy can help meet Africa’s power needs, too. Solar and wind power in particular have great potential in Africa. South Africa, for example, has eight of the 10 largest solar plants in Africa; the continent’s largest is in Morocco.

At the same time, we’ve also seen advances in bringing off-grid, home scale solar systems to rural villages in sub-Saharan Africa.

That’s exciting!

But because wind and solar energy are intermittent power sources, they require backup to ensure a steady flow of electricity to the grid. What’s more, Africa’s population, and its power needs, are expected to surge in coming decades. Africa countries’ ability to scale up solar power infrastructure in time to meet those needs is questionable.

The IEA, in its “Net Zero by 2050” report, says its guidelines will, among other things, set the stage for universal energy access by 2030. Which is another objective in the Paris Agreement. But for African countries, ending energy power for nearly 800 million Africans in less than a decade is a very tall order. Remove natural gas from the equation, and it gets even harder.

Economy

While Africa’s energy poverty is a major consideration, it’s not the only concern. Let’s talk about African states’ economic realities. For far too long, Africa, from the global community’s point of view, has been a charity case. It’s a viewpoint rooted, most likely in compassion,  but not necessarily in respect. I have, in previous presentations, described what happens when you do a Google search for “Help Africa.”

Approximately 1.7 billion results show up. They say things like “Help children in Africa.”  “African hunger and how to help.” For more than 60 years, the world has poured financial aid into Africa. And where has that gotten us? We still have hunger. We still have poverty. We still have violence, infrastructure deficits the list goes on.

I’d like to gently suggest a better approach to supporting Africa. We don’t need help or quick fixes. We don’t need aid. We need partners and investors. We need free-market solutions that contribute to long-term stability and economic growth. And the thing is, strategically harnessing our oil and gas resources, natural gas in particular, puts those objectives within our reach.

We’re already so close. Some countries, like Senegal, Mozambique, South Africa, Tanzania, Nigeria, Cameroon, Algeria and Equatorial Guinea have taken steps to monetize their natural resources so that they can raise the funds to help themselves.

We need to give them time to realize the benefits of their strategic efforts. And we need to give other African countries a chance to do the same.

The idea is to use our natural gas as a feedstock to create other value-added products, like petrochemicals, from fertilizers to ammonia. Then we take the revenues to build infrastructure, from pipelines to ports and roadways. And we open the door to economic diversification.

My ideas are far from revolutionary.

Western countries have already seen fossil fuels, including natural gas,

lead to economic growth, stability, and increased lifespans. Worldwide, over the past three decades, natural gas, along with coal, has provided 1.3 billion people with electricity and helped them escape poverty.

The IEA itself wrote in 2020: “Modern energy services are crucial to human well-being (https://bit.ly/3cdnbCT) and to a country’s economic development.  “Access to modern energy is essential for the provision of clean water, sanitation and healthcare and for the provision of reliable and efficient lighting,

heating, cooking, mechanical power, transport and telecommunications services.”

While the IEA sees renewable energy as the solution to meeting those needs, we can’t discount the fact that natural gas has supported, and continues to support, economic stability around the globe very effectively.

In fact, it’s what powers many of the plants that provide backup for areas served by solar and wind facilities. Another thought to consider: Natural gas currently does even more than provide power. In Africa, it also is used for industry, fertilizer manufacturing, and cooking,

for activities that will need more than electricity to weather the transition.

Costs of transition for Africa

There are other issues, too. Money is a significant one. Clearly the continent will require an unprecedented scale of investments to achieve the Net Zero scenario that the IEA is describing. Changing the energy mix to make it compatible with a 1.5°C pathway would require $150 billion to flow into Sub-Saharan Africa annually. This is 15 times an increase on the $10 billion invested in 2018.

Africa needs to invest between $330 billion and $410 billion in U.S. dollars now and an additional $290 billion to $415 billion in U.S. dollars from 2026 to 2030 to make Africa’s energy transition a reality and if we want to ensure Africa’s economic stability and promote the continent’s economic diversification.

How can we even begin to fund that without our fossil fuel revenue? We can’t.

Concluding thoughts

Why not, instead, take a strategic approach to Africa’s energy transition? Why not set aside a portion of fossil fuel revenues to help fund the infrastructure we’ll need? And at the same time, global community. why not continue investing in African oil and gas projects, natural gas projects in particular, to move Africa closer to achieving a successful energy transition?

And why not share your technologies with us, so we can employ solutions like carbon capture, to keep carbon emissions to a minimum. Africa needs an energy transition that takes a pragmatic approach to resolving energy poverty:  by making our natural gas resources part of the solution.

We need a transition that isn’t rushed or carried out on the Western world’s timetable. We need to have a strategy in place for protecting and growing African economies.

We need a transition that factors in African goals, concerns and priorities. I’m not asking for your help to achieve this goal. But I am asking for your cooperation.

Thank you.

Sign Up for Our Newsletter Daily Update

Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.

Distributed by APO Group on behalf of African Energy Chamber.

Media files