African energy demand will grow fast between now and 2050. That demand has to be met by renewables if global net zero targets are to be met. The trouble is, there’s only one template for Africa’s energy transition on the table, and its fate hangs in the balance.
The template is the South Africa deal struck at Cop26, in which France, Germany, the EU, the UK and the US promised $8.5 billion to help South Africa to shut down the coal plants which currently generate 80 per cent of its electricity. The deal was seen as a model for an equitable transition, enabling a fossil fuel-dependent African nation with a growing population to shift into renewables. “Everybody is trying to find a way to replicate South Africa… It’s a way to incentivise private capital to go for it,” Laurence Tubiana, CEO of the European Climate Foundation, said last month.
But almost four months on from Cop, the model is far from a proven success. The South African state is having an internal debate about whether it should spend the money on switching away from coal after all:
- Eskom, the state-funded power company is pushing, as per the original deal, for the money to be spent on expanding South Africa’s grid and decommissioning coal plants. But Eksom’s in trouble. On Sunday, Cape Town, which is prone to blackouts, ditched the company to seek electricity from independent producers of power.
- Some of the $8.5 billion may now be directed either to boost electric vehicle production (cars are one of South Africa’s main exports)…
- …or increase hydrogen production to a scale where it can be sold abroad, to countries like Germany.
That throws Africa’s energy transition into question. If the funds don’t go towards South Africa’s own energy grid, it won’t help a population that sat through 1130 hours (or 47 days’ worth) of planned power cuts in 2021. And if the South Africa deal doesn’t live up to its promise as a means to a fair transition, other African leaders will keep looking at fossil fuel reserves as a way to bring energy to their own people.
You can understand why:
- Around 600 million Africans already live in energy poverty – more than the entire population of the European Union, and by 2040, 90 per cent of the world’s population without access to electricity will be in Africa, most south of the Sahara.
- Meanwhile, Africa as a whole has more than 100 billion barrels of crude oil reserves and 6 per cent of global natural gas, which it could draw on to bring millions of people onto the grid.
- And there are still plenty of companies helping them get this energy out of the ground – including Russia’s Gazprom, and France’s TotalEnergies, which got the go-ahead last week for the East Africa Crude Oil Pipeline (EACOP) from Uganda to Tanzania.
Sub-Saharan Africa is already looking towards natural gas. At Cop26, developed countries promised to end financing of fossil fuels, including gas. But Macky Sall, president of Senegal and of the African Union, said this month that refusing funding for new gas exploration in Africa would be a “fatal blow” for emerging economies. It is, he argues, a key part of an equitable transition for African economies – enabling them to get energy to people in fuel poverty without burning coal.
And European countries have damaged their chances of striking more South-Africa-esque deals with African economies by observing double standards on gas – refusing to invest in gas in Africa while Germany plugs into NordStream 2 and the EU classifies liquified petroleum gas as a sustainable energy source in its own taxonomy.
“The EU was seen by a lot in Africa as a region that is highly responsible for emissions and yet not necessarily willing to make compromises; that it is dictating, one would say, to the rest of the world,” says Faten Aggad, Senior Advisor on Climate Diplomacy and Geopolitics at the African Climate Foundation.
Last week, the European Union and African Union announced an investment plan that attempts to build on the South Africa deal: €150 billion – a counteroffer to China’s Belt and Road Initiative – to support African infrastructure and energy (as well as assisting the African medicines agency and vaccine delivery), with pilot projects in Senegal, Egypt, Ivory Coast, Kenya and Morocco. It was, the EU said, a sign of a renewed partnership.
But questions remain about where exactly the €150 billion will come from, and how much of it is new. “In reality this is a set of assumptions about what Europe can mobilise using existing aid money, so it’s not nearly as impressive as it sounds,” said David McNair of the One Campaign.
There is an alternative – for sub-Saharan Africa to build grids that harness its limitless renewable resources, bypass oil and gas, and empower hundreds of millions of people. But it’s not clear where the finance for that would come from, and until it becomes clear African nations can’t be blamed for continuing to drill.
Tax tips the scales
When will oil and gas companies stop extracting fossil fuels from the North Sea? The current UK government’s instinct is to leave it to the market: companies will pack up when it becomes too expensive to keep drilling. But in a report released today, Green Alliance, a think tank, says the true cost of extraction is masked by the almost £10 billion in tax breaks given to oil and gas companies from 2016-2020. The report says this distorts the market and means “the government is hiding price signals from investors”. The UK is not alone in funding environmentally damaging sectors: the Financial Times reported last week that 2 per cent of global GDP is spent every year “on subsidies that encourage unsustainable production or consumption, deplete natural resources and degrade ecosystems”. Much of this is on price subsidies in developing countries where consumers have come to depend on them. Not in the North Sea, where the money goes straight back to oil companies as tax relief for spending on new infrastructure. Qui bono?
Trees pass test
Re-planting forests has become a key tool in tackling the climate crisis – helping to capture carbon and, if done right, boost biodiversity. But if those forests don’t survive the future impacts of climate change, the work would be for nothing. Scientists at the University of Hong Kong have run hundreds of computer simulations to see how replanted tropical forests will respond to climate change – and the results were promising. Many new forests, even those planted on degraded landscapes, are likely to keep accumulating carbon until the end of the century. The findings also help scientists understand which areas are best suited to maximise carbon sequestration, helping pinpoint where to focus efforts.
EU supply chains
Large companies operating in the EU could be required to ensure their suppliers respect environmental standards if draft legislation that the European Commission will publish on Wednesday passes into law. It would also require company boards to make sure their business models align with the Paris Agreement’s 1.5 degree goal. Companies found by EU governments to have broken the rules could be fined. This would raise EU standards, and the cost of business – but not for a while and not for everyone. Negotiations between the commission, parliament and EU member states could take a year. And even if the legislation passes, it would only apply to 13,000 EU companies and 4,000 non-EU ones that trade with the bloc.
“Implementation, plus.” That was the core message of a speech John Kerry gave in Cairo yesterday, where Egypt hosts the next Cop in eight months’ time. “Raise the commitments that aren’t strong enough, and create new ones where none exist,” Biden’s climate envoy told delegates at the American University of Cairo. He reiterated that current policies put the world on a catastrophic trajectory of 2.7 degrees of warming. Backing up the pledges made at Glasgow with concrete policies would put that number closer to 1.8, according to the IEA. But with concerns about energy security front of mind for many countries this year, the chances of ratcheting up climate ambition across the board by November look slim. That may be why Kerry’s speech was littered with overtures to the private sector: Maersk, Ford, GE, Anglo American and Air BnB all received honourable mentions as companies leading the green charge. With Biden’s own regulatory agenda in a precarious state, is Kerry turning to business to save the day at Sharm?
Thanks for reading.
Additional reporting by Barney Macintryre. Edited by Giles Whittell.
With thanks to our coalition members: a network of organisations similarly committed to achieving Net Zero
Visit the homepage to find out more about the coalition and join us.