COP27, the next round of global climate talks, set for in Sharm El Sheikh, Egypt, in November, should see the advanced economies fulfilling and expanding on pledges made at COP26 to close African countries’ enormous funding gap in their transition to low-carbon economies.
African nations require billions of dollars for the transition from fossil-fuel based energy systems to renewables and to achieve net-zero carbon emissions by 2050.
According to Deon Fourie, senior economist at research group Oxford Economics Africa, conditions attached to such funding should be affordable and promote rather than restrict industrial development on the continent.
Estimates of Africa’s energy investment needs vary widely depending on the time frame and on country-specific circumstances, Fourie said during a presentation.
Nigeria, for example, would require about $9.7bn a year to achieve net-zero by 2050, while SA needs about $6.6bn a year to shift away from a predominantly coal-fired energy system.
Due to huge public debt burdens and insufficient fiscal leeway to finance large capital investments, most African governments aren’t able to fund the switch to renewable energy on their own.
These countries also face challenges in raising finance at affordable rates without further compromising their debt burdens. Government investment has therefore generally lagged private sector fixed investment from 2017 to 2021.
Conditions attached to international financing must be realistic and not stifle growth on the continent, Fourie said. “There needs to be a careful balance between net zero ambitions, Africa’s development goals and the need to ensure energy security, access, reliability, and affordability.”
Conditions must also be fair and not impose restriction on African countries that advanced economies aren’t prepared to adhere to themselves, he added.
Some of the countries that have committed funds to SA as part of a landmark climate finance agreement announced at COP26 — under which rich countries such as the UK, US, France and Germany will provide $8.5bn to help SA manage the “just transition” of its carbon-intensive economy — have indicated that any new investment by SA in coal-fired power generation would be inconsistent with the spirit and intent of the funding package.
According to Fourie, 39 advanced economies and development organisations committed to stop funding fossil fuels, including natural gas, at last year’s COP26 climate conference in Scotland. Yet many of these countries are pressing ahead with their own new hydrocarbon developments.
Climate mitigation plans for Africa must be pragmatic to ensure structural shift to renewable energy do not compromise energy security and affordability, Fourie said.
“It is difficult to talk about net-zero emission when over 600m people on the continent still must get by without any access to electricity,” he said
An analysis by Oxford Economics Africa of 10 African countries, including SA, Nigeria, Kenya, Botswana, and Mauritius, shows that biomass is still the largest source of energy for several of them. In Kenya, Mozambique, Nigeria, Tanzania, Uganda and Zambia, between 60% and 90% of total domestic primary energy supply comes from the burning of biomass (such as wood and charcoal) and waste.
The disproportionate reliance on biomass is a result of inadequate access to electricity and cleaner cooking alternatives. Africa is far from achieving the basic sustainable development goal of delivering universal access to energy, Fourie said.
Botswana, Ghana, Kenya, Mauritius, Nigeria and SA fare best in terms of access to electricity, but in Mozambique, Tanzania, Uganda and Zambia, 50% or less of the population has access to electricity.
However, even in those countries that perform better in terms of electricity access, the poor state of electricity infrastructure contributes to uncertainty of supply. For example, in Kenya about 24% of electricity generated in lost during transmission; in Nigeria backup generators used during frequent power outages is equal to half of the country’s total installed capacity.
“Sudden, deep and disruptive changes to energy trajectories of countries reliant on fossil fuels may not only jeopardise their energy systems, but can also have serious economic, social and development repercussions. This will be unjust,” Fourie said.
Other important considerations for policymakers and investors at COP27 should include the broadening of pledges made by advanced economies to African countries into tangible finance agreements. In addition, Fourie said, for Africa’s transition to net zero to be successful, international financial support should be accompanied by technical support. That shouldn’t be limited to mitigation, but should also prioritise adaptation and improving Africa’s climate resilience.
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