Energy poverty and funding hurdles hold back Africa’s green transition

The effects of a rapidly warming climate are all too evident in Africa. Floods described as “unprecedented” killed more than 200 people in Kenya in May and displaced thousands more. In the Sahel, the semi-arid strip south of the Sahara, climate change is causing desertification that has made livestock production increasingly difficult, exacerbating conflict and driving people to poverty. And, in west Africa, a lethal heatwave earlier this year has been attributed by scientists to human-induced climate change. The situation is expected to get worse.

As the world’s least industrialised continent, Africa currently contributes only 2 to 3 per cent of the world’s carbon dioxide emissions from energy and industrial sources, according to UN data. But it is the continent most vulnerable to the effects of global warming, having less reliable infrastructure, energy production and funding to build resilience to climate change.

There is an urgent need for Africa to industrialise. Some 600mn people on the continent, or about half of its population, still lack access to electricity. This has detrimental effects on household income, education and overall economic growth. And 950mn people have no access to gas or electricity for cooking, so instead resort to burning charcoal or firewood.

However, there is a divergence of views on how industrialisation is to be achieved. High-profile figures including Gwede Mantashe, South Africa’s energy minister, are calling for Africa to continue using fossil fuels to generate electricity. Oil-rich nations such as Nigeria and Angola also say it is important for the continent to exploit its mineral resources.

The African Energy Chamber, a lobby group, argues that Africa has the “sovereign right” to develop its energy resources — 125bn barrels of oil and 620tn cubic feet of natural gas, according to the organisation — in a “balanced and sustainable” manner.

And other proponents of continued fossil fuel exploration in Africa say they understand the effects of climate change but believe solving energy poverty should be the most immediate priority. They point to what they call western hypocrisy as financing for fossil fuel projects in Africa becomes harder to come by, even as western countries push back their own net zero targets and continue to license new oilfields.

“Africa should produce every drop of hydrocarbon it can use to power and industrialise Africa,” says Nj Ayuk, chair of the African Energy Chamber — claiming that scenario would add less than 1 per cent to global emissions.

“Climate change is a big issue and we shouldn’t underestimate the challenges,” Ayuk adds, but he argues that Africa should use revenues accrued from drilling fossil fuels to invest in green technologies.

An alternative view exists, though: that Africa should “leapfrog” fossil fuels altogether and skip straight to clean energy to achieve its industrialisation goals. However, Ayuk warns this “doesn’t really make sense” because Africa “cannot afford it”.

James Mwangi, chief executive of Africa Climate Ventures, an investment company, adds that the “leapfrog” framing is wrong because most of the fossil fuels extracted in Africa are exported, with little used for energy generation at home.

Africa already has more renewable energy resources than fossil fuel reserves, notes Mwangi. But more funding and development in renewable power is needed if it is to cover the continent’s own energy needs, he points out. “Investment in green energy is a sound financial decision for Africa,” Mwangi says.

For example, Africa has more than 60 per cent of the world’s best solar resources but only 1 per cent of globally installed solar PV capacity, according to the International Energy Agency.

Wind power exists in abundance, too: a study commissioned by the International Finance Corporation found that the continent has the potential to generate 180,000 terawatt hours of electricity from wind per year — 250 times more than Africa’s electricity demands annually. But Africa only accounts for 1 per cent of global installed wind capacity despite a surge elsewhere in recent years, the study notes.

Africa also needs billions of dollars in climate adaptation financing if it is to build the resilience it needs for a warming planet. An average of $29.5bn in financing — including national government funding and financing flows from western countries — was committed to the continent in 2019 and 2020, according to analysis by the Climate Policy Initiative and the Global Center on Adaptation think-tanks. Adaptation measures include early warning systems, land and water management, and climate-conscious agriculture.

And yet the amount of investment falls short. To meet the targets set for African countries, under the nationally determined contributions in the 2015 Paris Agreement, would require an extra $41.3bn of investment, annually, for the continent, according to the analysis.

At COP26, in 2021, rich nations promised to double the 2019 level of funding for climate adaptation in developing countries by 2025. But investment has instead dropped, according to Patrick Verkooijen, chief executive of the Global Center on Adaptation.

Africa needs $100bn on adaptation finance annually, but receives only $10bn

“The situation is most dire in Africa,” he says. “Africa needs $100bn of adaptation finance annually, but receives only $10bn. Investing in adaptation is not a sunk cost — every [sum of] money spent on adaptation saves lives and ecosystems.”

Currently, about half of the money pledged to Africa comes from multilateral development finance institutions and climate funds, with African and international governments and bilateral development finance agencies making up most of the rest, according to FSD Africa, a UK-funded development agency.

But only 14 per cent comes from the private sector, including pension funds, and private equity firms. In addition, the agency says, climate financing is concentrated in the hands of too few countries: 10 of Africa’s 54 countries receive more than half of the inflows.

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