ISS TODAY ANALYSIS
The potential of Africa’s considerable fossil fuel reserves remains a fly in the ointment of renewable energy transition
While the continent has the increasing capability and desire for a phased move to green energy, economic competitiveness and drives for investment are likely to tip the scales in favour of gas and coal in the short- to medium-term.
South Africa was abuzz this month with the announcement of a R131-billion deal on the margins of the 2021 United Nations Climate Change Conference (COP26) in Glasgow. International partners Germany, France, the United Kingdom and United States pledged a combination of grants and loans at more favourable rates to help South Africa in its Just Energy Transition Transaction (Jett).
Together with a new bundle of renewable energy projects, South Africa is now on the road to achieving targets in the Nationally Determined Contributions (voluntary country carbon targets) at the core of the Paris Agreement. This includes the path to net-zero emissions and hopefully a route to higher national energy security. The agreement was led by the Presidency and heralded in many quarters, including civil society sectors that support the potentially catalytic step.
Rand Merchant Bank Chief Executive James Formby said the deal could mobilise further funding of up to R390-billion for energy transition projects. By contrast, the reaction from the Minister of Mineral Resources and Energy, Gwede Mantashe, was cautionary.
This cautionary optimism from government reveals the fundamental dilemma that many African countries face. Continental leaders were among the prominent voices in the high-level segment of COP26, pushing strongly for greater commitment and a global deal to accelerate the world to a lower-carbon future.
At the same time, a more sober approach was being taken at Africa Energy Week held from 9–12 November in Cape Town. The African Energy Chamber chairperson NJ Ayuk was clear that “we are going to have an energy transition … but it has to be just.” This sentiment was repeated and reinforced in the governments’ ministerial statements.
Secretary-General of the African Petroleum Producers’ Organisation Dr Omar Farouk Ibrahim reminded delegates of the confirmed oil and gas reserves around the continent. Africa has a yield potential of 125.8 billion barrels of oil (7.7% of global reserves). At today’s prices, this is worth upwards of $10.5-trillion in revenue (close to four times the gross domestic product of Africa).
Africa also sits on 503.3 trillion cubic feet of natural gas (7.2% of global reserves). These, together with coal, represent a significant energy asset in the current market. Apart from the economic potential this represents, fossil fuel supply and African mineral wealth are pivotal in determining the continent’s geopolitical positioning and strategic importance.
The accelerated development of Organisation for Economic Co-operation and Development countries and significant emerging economies are powered by energy access and energy security. These were initiated mainly in the coal power era with exponential growth in the oil and gas era.
This happened even though science had already linked greenhouse gases to climate warming in the early 19th century. By the 1960s, the science clearly mapped the relationship between carbon emissions and what we now call global warming. So developed economies, despite being aware of the consequences, continued to emit at prolific rates to achieve their growth objectives.
The landmark Kyoto Protocol represented an acknowledgement of a carbon-based environmental crisis, and a global deal was signed. But even before the celebratory sake cups had dried, then US president Bill Clinton’s administration had to retract when the country’s Senate voted unanimously, 95-0, to reject the Kyoto agreement.
World Trade Organization diplomat Prof Faizel Ismail told ISS Today that, “Eventually it all comes down to competitiveness,” as the successes of the emerging economies were becoming apparent. The reason that the US and many other developed partners gave was the need for inclusion, particularly India and China. Later the fossil fuel lobbies invested in research to dispute the phenomenon. While this failed, it did buy more time.
A lack of energy access has hampered Africa’s development. Its ambitions — as expressed in the African Union’s Agenda 2063 Masterplan and the corresponding Regional Economic Community Plans — are dependent on the expanded access to energy and energy revenues.
At the same time, the potential for renewable energy in Africa is vast. The continent has made great strides and has shown leadership in the renewable energy domain. Morocco’s Noor Ouarzazate project (the world’s largest concentrated solar power project), the Lake Turkana wind farm in Kenya, and South Africa’s Jett are all world-leading initiatives.
Already in planning are solar farms in Namibia, advanced experiments with the hydrogen economy and mega-projects like the Great Green Wall initiative, which aims to create a green belt across the width of Africa. The continent also contributes significantly to maintaining a carbon equilibrium, being home to the second-largest rainforests in the world. These rainforests are a critical global carbon sink and oxygen producer.
Africa is vocal on many platforms about the vital need for global climate mitigation to keep the temperature increase to around 2°C by 2100. The continent has high renewable energy potential and tremendous carbon sequestration assets like the rainforests. It also has minerals like lithium and rare earth metals required to power the renewable energy revolution.
The key limitation is finance and affordability at multiple levels. It is difficult to ignore that Africa sits on a massive fossil fuel reserve. Its associated economic dividend is vital to recover from the Covid-19-induced recession and realise the continent’s development plans.
This is the African climate and energy dilemma. The linear solutions proposed and demanded, on both sides of the carbon divide are inappropriate. The innovative path to net-zero emissions lies in an appreciation of the continent’s climate dilemma and the recognition that Africa is a potential global climate asset. DM
Dhesigen Naidoo, Senior Research Associate, African Futures and Innovation, ISS Pretoria.
First published by ISS Today.
Daily Maverick © All rights reserved