Category: Climate Change

Charting Africa’s Energy Future

Africa’s Energy Future

 

The world is at a crossroads. The war in Ukraine has seen Russia force Western Europe into an energy crisis, and the wider world has been subjected to higher energy prices to keep the lights on and cars on the road.

In Africa, this pain is being felt as energy-driven inflation. Coupled with the rise of the dollar which is making everything paid for in dollars, such as oil gas and coal, wheat, maize, cooking oil and fertilizer even more expensive, doubling the pain. The focus of most policymakers is on the immediate cost of energy and its impact on the cost of living. However, the question we should be asking ourselves is, what is Africa’s energy future?

In a world where the impacts of climate change are causing a myriad of natural disasters, should we be investing in hydrocarbons? What technologies will provide the right mix for the continent, and how do we transition to that mix? Energy is not just electricity and petroleum, its cooking, heating, fertiliser production and the lifeblood of a modern digital economy.

How we chart our energy future will determine our socioeconomic future. Unlike the industrial revolution or the rise of the Asian tigers, we do not have the luxury of using oil, gas, and coal without concern for the consequences. Nevertheless, Africa does need an energy revolution as the foundation for a developmental one, and for that to happen, we must ask the tough questions about the continent’s energy future.

What must Africa’s energy future achieve?

As the continent thinks about its energy future there are a number of factors that must be considered as part of the equation for developing a viable long-term energy strategy.

  1. Access

Currently, about 43% of the continent, over six hundred million people do not have access to energy. Energy access is critical to improving standards of living, basic services (lights in schools, refrigeration and working machines in hospitals etc.) and as a foundation for growth (energy is critical for the development of any sort of industry). Thus, the first imperative is that Africans must have access to affordable and reliable energy.

  1. Sustainability

Africa is facing the brunt of the global climate crisis and we cannot be responsible for pouring fuel on an already raging fire. Africa should not and must not try to power the development of the continent by burning hydrocarbons. We must find and use alternatives. Many see this as unfair, as the developed world blocking the path that they used to industrialise while making Africa pay the price for their past sins. While morally, there may be validity to this argument, it does us no good to make it, as we would bear the brunt of its consequences both now and in future generations. As I have written before rather than treat climate change as a disaster that happens to us, we must also see it as an opportunity as I have written about previously. Seize the opportunity to leapfrog the hydrocarbon phase and make Africa a Green economic hub. An opportunity to develop new crops for Africa whose IP is owned by Africa that does not need as much energy-intensive fertiliser. An opportunity to stop begging for aid but instead use our oil, gas, and coal reserves to instead make money to fund our energy revolution off of carbon credits.

  1. Africa first

Africa’s energy future cannot be another victim of decisions made in foreign capitals. By this, I mean that we cannot allow Africa to be the casualty of the developed world’s net zero strategies, which will affect the continent in a number of ways.

First and foremost, what is the long-term viability of Africa’s, oil, gas and coal deposits, which an energy-starved west is pushing us to develop? Yet, in the long term, they will choose their own net-zero path and leave the continent with stranded assets. Should we consider the option of selling these assets as carbon credits or offsets instead rather than taking the financial and environmental risks of developing them (you can read more about this idea here).

Second, it is likely that development financing and aid will have new “climate” conditionalities attached as extensions of national climate goals further reinforcing Africa’s need to rely on taxes, not aid and decouple ourselves from the policy whims of Brussels or Washington.

  1. Security

Africa must be in control of its energy future, the fuel, resources, and technology that is used to produce that energy must be in Africa. As the current crisis in Europe shows, without control of your own energy, your destiny is decided by international energy markets. Thus, if Africa decides to pursue green hydrogen, it must be produced on the continent, and we must have an ownership stake in the plants and technology doing so. Energy security ensures accessibility.

Charting a path to the future

Charting Africa’s energy future will require crafting an energy policy that combines the four elements of accessibility, sustainability, security, and primacy. How they are combined and balanced will look different in each African country (and therefore I have not advocated any specific energy solutions in this post). However, there are things we can do as a continent (or regions of the continent), which can have a positive impact such as developing inter-connected grids. Sharing knowledge, expertise, and investment (how can Kenya’s expertise in geothermal energy be applied on the continent). Most importantly, what African financing solutions can we develop to fund an energy transformation on the continent?

Energy is the lifeblood of any economy and the foundation of socio-economic transformation. If Africa is to develop and build a better future energy will be a key part of that story. We must be deliberate and forward-thinking in how we build our energy infrastructure to ensure that better future. We cannot take it for granted or wait for someone else to produce the solution or the funding. Through smart, deliberate policy we can take charge of our continent’s energy future and take control of the future of our economies and societies.

Africa needs its own CoP

“No more empty promises, no more empty summits, no more empty conferences. It’s time to show us the money. It’s time, It’s time, it’s time. And don’t forget to listen to the people and places most affected.” – Vanessa Nakate Ugandan Climate activist

In November 2021, the world came together for the 26th meeting of the Conference of Parties, CoP 26, in Glasgow. To build on the Paris climate change agreement and work towards keeping global temperature rises to 1.5 degrees or below. The outcome of summit was a disappointing agreement with weak promises to “phase down” instead of phase out coal, and a reaffirmation of the Paris agreement. Much of the progress hoped for at the summit was again punted down the road for finalisation at a future summit.

More relevant to us is to ask whether Africa’s goals were met. Frankly, no (you can read more here). On climate finance and technology transfers from the developed world to poor countries old unmet promises were remade, while African countries are already spending billions on climate adaption. On climate responsibility developed countries refused to accept responsibility for historic emissions and climate related losses.

The CoP process is not working for Africa, which despite being responsible for only 3.8% of emissions will be hardest hit by climate change, and through 26 CoP processes the progress on Africa’s climate agenda has been marginal. There is no reason to expect CoP 27 in Egypt in 2022 will be any different. In an earlier article I wrote about the need to strengthen African multilateralism, and climate change is an area that is ripe for that sort of initiative. Africa needs its own CoP, tailored around its climate needs and goals, mobilising climate finance and driving global climate action.

What should AfriCop look like?

Since 1992, world governments have met to forge a global response to the climate emergency. Under the 1992 United Nations Framework Convention on Climate Change, COP stands for conference of the parties under the UNFCCC, the supreme decision-making body of the Convention.

This can be replicated under the African Union, all that would be needed is a resolution under the Heads of State Summit establishing an African Conference of Parties. The key question is what would this AfriCop do what should be its purpose?

1.Get rid of the begging bowl

There are two realities of climate funding that Africa must deal with

  1. It is clear that the developed world cannot be relied on to keep its promise to provide $100 billion a year of climate funding. I
  2. Despite promises made by multinationals and hedge funds, the private sector cannot be relied upon to provide adequate climate funding or investment. The case of the UN backed climate fund launched with much fanfare and promises on the brink of collapse is emblematic of this.

As a result, it is time to get rid of the current funding strategy of holding out the begging bowl and develop a new funding model. This can and should be a core mandate of an AfriCop and there are several options available to Africa:

  • Africa could use its vast Fossil Fuel resources. Not by digging up the coal, oil, and gas, rather by selling it as a carbon offset. Realising the potential earnings and profits from these resources, while keeping that carbon that would otherwise have been emitted into our atmosphere in the ground. I explore the idea in more detail here.
  • Africa’s mineral wealth goes beyond hydrocarbons, lithium, cobalt, copper, and rare earths that are critical for the manufacture of green technology are all found in abundance in Africa. This resource extraction, where it leaves continent, needs to be taxed properly closing off avenues for transfer pricing and other tax avoidance strategies. Something I wrote about here
  • In 2016 the AU decided to implement a 0.2% levy on imported goods to finance the AU and reduce dependency on donor funding. This is an idea that can be revived, by imposing a tax on the carbon content of goods imported to Africa from industrialised economies most responsible for historic greenhouse gas emissions, the tax could potentially be waived if they meet their climate funding promises.

All these mechanisms would create funds in individual countries which they could use these as they please, maintaining the agency of those countries to decide what is most critical for them. A portion potentially going to one of the regional or African development banks to disburse to climate related projects or programs that have a continental or regional impact.

2. Develop and drive an African Climate agenda and voice

A dedicated AfriCop would be in the unique position of focusing on Africa’s climate needs and African solutions to climate change. And this presents two critical opportunities.

First to develop a much stronger foundation for the African Group of Negotiators when representing Africa at global summits and treaty negotiations, a stronger more united African voice would have a much greater impact on the world stage and would weaken the efficacy of divide and rule tactics.

Second, to build bridges and common positions with the other developing world countries and regions that face a similar climate dilemma (largest impacts with the least resources to mitigate or prevent them) developing strategies and proposals that can be put forward and pushed at a global level for the benefit of the so-called Global South.

Third, AfriCop can provide a constant consistent African voice on climate both on the continent and on the world stage. Not just coordinating and pushing an agenda but telling Africa’s story on the impact of climate and what we are and can do about it.

Conclusion

Some of you may be reading this thinking that Africa does not need yet another organisation to add to the plethora of regional and continental organisations across the continent that do little. I share that scepticism; however, of all things the Covid-19 Pandemic gives me hope.

After the Ebola crisis of 2014, the 26th Ordinary Assembly of Heads of State and Government to improve coordination among health institutions among African Union member states in dealing with disease threats set up, The Africa Centres for Disease Control and Prevention (Africa CDC) as a public health agency of the African Union to support the public health initiatives of member states and strengthen the capacity of their health institutions to deal with disease threats. The Africa CDC has exceeded the expectations of many throughout the pandemic, it has worked to coordinate responses across the continent, collectively acquire PPE, resources, and vaccines for the continent, spread learnings and experience from one country to all and worked to help government across Africa more effectively manage the pandemic.

Climate poses a similar challenge to health threats. Those threats pose a challenge to us all, second no individual country has the capacity and resources to face the challenge alone. Third, this issue affects aid and grant giving nations and like the pandemic, when they are under threat, Africa is an afterthought at best. Thus, similar conditions exist in climate policy as they did in health for a pan-African institution or initiative to find wide acceptance, buy in and cooperation among African governments and publics to make it viable. Africa needs its own CoP, its way to drive an Africa focused agenda both at home and on the global stage, and the elements exist for it to be viable and successful.

Using Africa’s black gold to fund a green future 

“Stabilizing the climate will require strong, rapid, and sustained reductions in greenhouse gas emissions, and reaching net-zero CO2 emissions.” highlights IPCC Working Group I Co-Chair Panmao Zhai.  

The latest Intergovernmental Panel on Climate Change (IPCC) report makes for sober reading. The climate crisis is unequivocally caused by human activities and is affecting every corner of the planet’s land, air, and sea already. The fact sheet on Africa does not make for pleasant reading we will experience more heatwaves, more floods, more unpredictable weather, and more extreme weather events. The whole continent is vulnerable, our largely rain-fed agriculture, underdeveloped infrastructure, existing inequalities, and poverty will all amplify the impacts of climate change that are now certain.  

In a previous article, I advocated that we use climate change as an opportunity to harness science and technology and equip our farmers with tools to feed the continent in an era of shifting weather patterns. To leapfrog fossil fuel energy and lay the foundation of Africa’s economic and social development on green sustainable energy. 

This is still the case; however, not only must Africa innovate to mitigate the impacts of Climate change on the continent, but we also must fund it. The global commitment to provide US$ 100 billion a year is falling woefully short. Furthermore, as the Coronavirus pandemic has shown, when crisis strikes, Africa is left to fend for itself. As the impacts of climate change become more pressing and deadly, the rich world will focus increasingly on solving their own problems just as they have done with Covid vaccines.  

Thus, Africa must develop a financing strategy not based on the generosity of the rich world, the philanthropy of global billionaires, the whims of development banks or the iniquity of global markets. To do that Africa will have to make use of its own resources, and, in a delicious irony, Africa’s black gold, the oil, gas and coal can be used for this purpose. Not by burning it or digging out of the ground and selling it. But, by leaving it where it is and selling it as a carbon offset.  

The Financing Dilemma  

Because developing countries would be hardest hit by climate change yet have the least resources to invest in mitigation measures or invest in clean energy and sustainable solutions to our development needs. The developed world committed to mobilizing the finance necessary to do this. As a result, at COP16 the developed world agreed to an Accord, that states that: “developed country Parties commit, in the context of meaningful mitigation actions and transparency on implementation, to a goal of mobilizing jointly USD 100 billion per year by 2020 to address the needs of developing countries”.  

This goal has never been met. And with the impacts of the Coronavirus pandemic and the resources devoted by the developed world to their own needs, I am not hopeful that funding will materialise. Furthermore, the financing solutions being proposed are the same old, same old of “mobilising external financing and private-sector solutions,” which can be translated as getting money from donors and banks. That’s a formula that has not worked for 70 years.  

Using our black gold 

Africa’s natural wealth, especially oil has often been more of a curse than a boon, added to that, it is humanity’s use of those hydrocarbons that are the cause of the problem we find ourselves in. Thus, Africa finds itself with an odd problem, it would be mad not to exploit these resources, they are a vital source of income. However, it is that very exploitation that will come back and bite us as a cause of climate change.  

It is estimated that Africa has: 

  • 499 billion MMBtu (Metric Million British Thermal Unit) of proven gas reserves (7.1% of global proven reserves), 
  • proven reserves of 125 billion barrels of oil.  
  • Proven reserves of 36.7 billion metric tonnes of coal  

At the time of writing, the price of oil is US$ 68 per barrel, US$ 3 per MMBtu of Gas and US$149 per tonne of coal. Meaning that Africa has about 8.5 trillion dollars’ worth of Oil, 1.4 trillion dollars’ worth of gas and 5.4 trillion dollars’ worth of coal. While that may be their value, to get their true value you would have to factor in a heavy discount for the cost of developing the fields/mines, the profits of the oil, gas and coal companies and the environmental degradation and impact of their extraction. Beyond that, as the world moves away from hydrocarbons, these assets will become increasingly stranded as the world strives to buy less of them.  

Selling the oil without burning it  

Increasingly companies and governments are investing in carbon offsets and offset credits. A carbon offset broadly refers to a reduction in Green House Gas (GHG) emissions – or an increase in carbon storage (e.g., through the planting of trees) – that is used to compensate for emissions that occur elsewhere. A carbon offset credit is a transferrable instrument certified by governments or independent certification bodies to represent an emission reduction of one metric tonne of CO2 or an equivalent amount of other GHGs.  

The oil, gas and coal under African soil have an approximate equivalent of 53.7 billion and 114 billion and 91 trillion metric tonnes of carbon dioxide respectively1. Currently, carbon offsets sell at $3-5 per tonne, using a conservative price of $3 Africa’s oil, gas and coal assets would be worth $275 trillion. That may seem low but the price of carbon offsets is expected to rise to between $20-$50 within the next 10 years bringing them in line with the oil prices which would more than double those estimates.2 

Thus, rather than developing these assets, Africa can sell the potential carbon emissions as carbon offsets. Africa would sell the potential emissions from all that oil, coal and gas to companies and governments that want to emit carbon. This would do three crucial things. First, it would lock that carbon in the ground, if we are ever going to solve the problem of climate change, we must stop burning fossil fuels. Even though Africa has contributed the least to the current problem we can make sure we never become part of the problem by leaving that carbon in the ground. Second, it would give Africa an income stream that is wholly owned by Africa. No oil companies, no production sharing contracts, no royalties, and no drilling and mining projects that destroy ecosystems. That money can be spent financing Africa’s own green and sustainable industrial revolution and mitigating the effects of the damage already done by investing in our agriculture and infrastructure to ensure that they can cope with a changing climate. Third, it would remove our dependence on the generosity of the rich world, debt, or capriciousness of the market, giving Africa true ownership of its climate response.  

To make this a reality much smarter people than I would need to figure out key elements of turning our hydrocarbons into carbon offsets.  

  1. A mechanism for certifying hydro-carbon reserves and quantifying the potential carbon emissions.  
  2. A pricing strategy that does not put too many offsets onto the market at the same time to ensure that viable prices are kept.  
  3. A verification and enforcement mechanism to ensure that any reserves sold as an offset are not exploited and sold by those looking to have their cake and eat it too.  

Keep it in the ground  

Africa has contributed the least to climate change, yet we will bear some of its worst consequences. We cannot rely on the rich world to live up to aid and financial mobilisation promises if Africa is to deal with the dual challenge of climate change. That dual challenge is to ensure that our own development does not contribute further to climate change and that we put in place measures to deal with the consequences of global warming. We are not responsible for the past of others, but we must seize responsibility for our future.  

Selling the potential carbon emissions from African hydrocarbon reserves can be a critical tool in meeting that dual mandate. It will keep the GHG in the ground and maximise Africa’s contribution to ensuring a net-zero world. And it would give us the revenues to fund sustainable development and climate mitigation, on our terms, designed by Africans for Africans rather than at the World Bank or the Gates foundation.  

It may seem crazy, but oil, gas and coal may be just what Africa needs to stop climate change.  

Seizing Africa’s Climate change opportunity

Saving our planet, lifting people out of poverty, advancing economic growth… these are one and the same fight – Ban Ki-moon former UN Secretary-General

On the 8th October the UN Intergovernmental Panel on Climate Change released a report and  its frightening. The report warns that there are only 12 years for global warming to be kept to a maximum of a 1.5C rise set by the Paris accords. Anything beyond that will radically increase the risks of flooding, droughts, and extreme heat. Keeping warming to 1.5C is possible but will require concerted global action, something that has been elusive thus far.

For Africa the situation is dire, the continent will bear the brunt of climate change. As CarbonBrief  points out the heat waves will get hotter, the rainy seasons will become more erratic and droughts more likely. For a continent largely reliant on rain fed agriculture it means yet more cycles of drought and famine. The implications of climate change for Africa, if we do nothing, will further entrench poverty for another generation, and displace millions creating climate refugees.

However, this does not need to happen. Climate change is not a good thing, but as the saying goes ‘you should never let a good crisis go to waste’. Climate change is a crisis for Africa, but it is also an opportunity. Rather, than hold out our proverbial begging bowl for money and technical assistance to foster resilience, which is the strategy of most African governments at climate change summits. We can use climate change as the spark for transformation, as we actively seek to mitigate its effects and minimise the continents contribution to climate change. It can be an opportunity to harness science and technology and equip our farmers with tools to feed the continent in an era of shifting weather patterns. To leapfrog fossil fuel energy and lay the foundation of Africa’s economic and social development on green sustainable energy. And to take up the mantle of leadership where the worlds advanced nations have failed to do so. In previous posts (here and here) I have advocated for a conception of development in Africa with the dignity of all Africans as its core goal. Anybody thinking about development in Africa in the 21st century has to account for climate change, as climate change not only endangers our environment but our development and dignity as well. However, with smart, forward-looking policy it need not be a disaster.

Harnessing science to transform agriculture

Agriculture is the employer and source of livelihood for about 60% of the continent. The impact of climate change on agriculture in Africa will be significant and we are already seeing it. This is only the beginning, as pointed out earlier, the bigger the increase in warming the more pronounced these effects will be. This poses a challenge to African states, farmers and consumers; how can we ensure that we can grow enough to feed a growing continent. A large part of that answer lies in investing in science and technology to empower African farmers. To give them the tools (such as GM crops which I have written about previously) that can handle the changing climatic conditions and boost yields. Using technology to give farmers better knowledge about weather, soil and water conditions so they can improve yields, access to markets so they can get the best prices, and access to storage facilities so that we can cut post-harvest losses.

Investing in science and technology would not only help farmers and feed the continent it could provide the push we need to grow our scientific and technological capabilities on the continent. Industrialisation, development, science and technology are intimately linked and if Africa is to succeed in the 21st century digital and knowledge economy it must develop its STEM capabilities. Confronting the challenges of climate change, such as the ones it poses to agriculture could be the African moonshot, that spurs innovation and industry throughout the economy.

Leapfrogging dirty energy

Leapfrogging is the idea that less developed regions, countries or companies can advance rapidly through the adoption of modern systems without going through intermediary steps. The classic case of this in Africa is mobile phones. Mobile phones allowed most of the continent to skip expensive copper land lines, and the embrace of the technology has revolutionised many aspects of life and the economy. Like phone lines we have the ability to leapfrog fossil fuels. Renewable energy is now getting to a stage where they are almost as cheap and will soon be cheaper than fossil fuels. There are some who would argue that fossil fuels like coal are cheap and readily available, however that is increasingly untrue and African countries have free and broad access to the sun and wind. There are others who argue that developed nations used fossil fuels to industrialise and thus why should Africa be disadvantaged by not using them. But that sounds like a petulant child arguing that they too should be allowed to misbehave because everyone else did, frankly Africa has to be better than that. By investing in green ways of generating energy and innovative (e.g. mini-grids) of getting it to the people who need it, Africa can lay a sustainable foundation for its development. We can leapfrog the dirty fossil fuel generating plants and possibly even the expensive centralised electricity grid systems, most importantly we can develop our economies not at the expense of future generations but with their welfare in mind.

Leading the world

We may be a poor continent but that does not mean that Africa cannot lead on key issues. From the 1960’s onwards African nations led the international and diplomatic fight against apartheid South Africa. Boycotting international events, helping South African exiles and the ANC, getting the apartheid government banned from international fora and sports, sanctioning and boycotting their economy, it took a while eventually the rest of the world caught up and the apartheid system fell. The developed world has displayed a remarkable lack of leadership on the issue of climate change. Australia and the USA have leaders in charge who, despite the mass of evidence, deny climate change. Canada and the EU talk a good game but are yet to make those hard choices that would have a real impact on carbon emissions (like taxing carbon). There is a gap which Africa could fill. With policies, like putting a tax on the carbon emissions content of imports. with actions and putting our money where our mouth is, such as investing in green energy instead of fossil fuels. And smart diplomacy – combining our voice on the global stage to help build consensus, shame others into action and forge constructive engagement with the issue of climate change. Not all global leadership issues require a big wallet, or a big gun, determination and concerted effort can make a difference. This is not just wishful thinking on my part, as the continent in line to bear the biggest impacts of climate change, utilising whatever influence we may have to get global action is effort well spent.

Climate opportunity

The 2018 winners of the Nobel prize for economics were Paul Romer and William Nordhaus. Both won for their work on economic growth over the long term and though they did not work together, the work they did does dovetail. Romer’s work looked at how innovation and new technologies come about, and he found that by investing in innovation (like funding research and development initiatives) you can boost economic growth in the wider economy. Nordhaus’ work looked at the connection between the economy and the environment and the impact of climate change on the economy and wider society. Their work comes together in a rather simple way, to combat climate change, to shift our societies and economies to low-carbon ones, will require innovation, new technologies and new policies. We need to invest in the knowledge and ideas that will combat and mitigate the effects of climate change.  Most importantly what Nordhaus and Romer’s work suggests is that by investing in knowledge and ideas and implementing them you can generate long-term growth. Thus, by combating climate change we could actually stimulate economic growth.

For Africa this is an opportunity to do the right thing for current and future generations, and to lay the foundation for the development that we have been chasing for the last half century. Climate change could be a disaster for Africa, or it could be the thing that forces us to pursue a path that leads to long-term, sustainable growth. It will require us to be innovative with our policies, to rethink our ideas of development and industrialisation and to invest in the ingenuity, knowledge and innovation of African’s from all walks of life. Climate change will be one of the defining issues of the 21st century and Africa faces a choice, we can be a victim, or we can take the initiative, take responsibility and make it the springboard to a sustainable successful future.