COP26: Africa charts a complex road to net zero
As we approach the COP26 conference, the world’s brightest minds are focused on one urgent goal: reaching net zero carbon dioxide emissions globally. Africa presents policymakers with a particularly complex conundrum.
While the region has made a negligible contribution to the problem, the international community largely expects Africa to respond in much the same way as the rest of the world. Indeed, in order to limit the average global temperature increase to well short of 2°C above preindustrial levels by 2050, it is critical that Africa plays its part.
And yet, with most of the continent having had none of the benefits of carbon-intensive systems experienced elsewhere, African governments face the toughest challenge in prematurely curbing their nations’ very low energy use of approximately 180 kWh per capita compared to 6,500 kWh in Europe and 13,000 kWh in the US.
The Paris Agreement’s provisions for multiple pathways with common but differentiated responsibilities recognise that nations which became rich from burning fossil fuels should cut their emissions faster to allow poorer ones to develop. Africa needs a realistic road map that takes a different, but effective, approach.
While it contributes only 2-3% of greenhouse gas emissions, the continent suffers disproportionally from the impacts of climate change. Four of the 10 worst disasters identified by the World Meteorological Organisation in 2021 occurred in Africa. At the same time, as home to 14% of the world’s forest cover serving as carbon sinks, Africa also plays a vital role in achieving global net zero.
African countries such as Nigeria, Algeria, Angola and Libya are highly dependent on oil exports for revenues. Overall, around 70% of African exports are derived from oil, gas and carbon-intensive mining. These sectors account for about half of the continent’s gross domestic product, and are an essential component of government income.
Meanwhile, the majority of Africa’s population still lacks access to electricity and the basic energy needed for cooking. As a result, Africa relies predominantly on wood fuel and charcoal for its energy requirements, endangering valuable forest cover.
The desperate irony here is that Africa has the resources in abundance to provide all of the energy needed for development. Stranding such resources makes no sense, especially if they can be exploited in a cleaner way.
How to get to net zero
It is of critical importance that African countries, along with the rest of the world, take deliberate and realistic steps to arrest climate change. A prerequisite is that the transition from fossil fuels to alternative sources of energy occurs in a way that won’t punish the region’s struggling economies and create more poverty.
Sudden global divestment from this sector would have catastrophic development impacts. Many African countries – particularly large oil producers – while recognising the need to move to a low-carbon economy, lack any means of transitioning wholesale away from fossil fuels.
Rather than switching off existing energy sources, the sustainable way forward lies in adding alternative energy to take an increasing share of the power supply in the run-up to 2050.
Renewable energy is the ultimate objective. This is dependent on adequate financing to sufficiently boost renewable supplies. There is also the issue of base loads to consider: the sun doesn’t always shine and the wind doesn’t always blow. Ensuring a reliable source of power will need a mix of some fossil fuels, even as reliance is reduced over time.
Exploiting natural gas reserves is key as a cleaner transitional source of fuel. Africa has plentiful supplies of natural gas that can be accessed relatively cheaply. Natural gas can provide a more sustainable and lower cost alternative cooking fuel for millions of people, thereby supporting conservation of the continent’s forest cover, which plays a vital carbon absorption role for global mitigation.
In some oil-producing countries, such as Nigeria, harnessing natural gas is also critical to curbing dangerous emissions such as methane from uncombusted portions of flares. Despite a 70% decrease in the past two decades, according to the International Energy Agency, fossil fuel companies’ gas flaring remains responsible for more emissions than from all of the transport or electricity used by 200m Nigerians.
Achieving net zero demands more than cleaner energy. It depends significantly on eliminating unnecessary shipping and localising manufacturing. African raw materials are typically shipped to Asian manufacturers and then sent on to European markets where they are consumed as finished goods. This wastes massive amounts of energy.
One important solution lies in ramping up manufacturing capabilities, with production facilities in as close proximity as possible to raw materials.
Take a look at the success of the ARISE Integrated Industrial Parks in Gabon, Togo and ongoing construction in Benin, funded with $290m from AFC.
Working with Olam and the Government of Gabon, the Nkok Industrial Park in Gabon has been certified as the first carbon neutral region in Africa and arguably the entire globe by Société Générale de Surveillance, the Swiss multinational certification company, showcasing the capacity for climate sensitive development given the right mix of responsible partners and sufficient financing.
The project has transformed Gabon’s exports from raw timber to high-value finished veneers and furniture by taking a joined up approach to development, combining business incentives with a port, roads and other physical infrastructure.
Too many of Africa’s roads, buildings and other infrastructure are poorly built and highly vulnerable to changing weather patterns. Core physical infrastructure is required to connect, feed and industrialise the continent so that Africans can capture a fairer share of the value of our resources.
The final piece to the puzzle of achieving climate transition lies in the mobilisation of significant domestic and international financial flows.
Development finance institutions and private capital have key roles to play in creating innovative investment vehicles and deploying catalytic blended finance models to derisk climate investments and increase the supply of bankable projects.
The surge in demand for green bonds and ESG-friendly investing shows the scope to unlock trillions of dollars held by sovereign wealth funds, pension funds, insurance companies and other institutional investors.
Yet, at the same time, Africa risks being cut out of the evolving global financial architecture, which is being reshaped towards richer countries’ emissions targets. AFC is one of the few institutions in Africa to issue green bonds, with the continent accounting for less than half of a percent of the amount issued globally, according to data from the Stockholm Sustainable Finance Centre.
As policymakers and leaders at COP26 grapple with the multiple challenges of global net zero, the mandate for Africa is clear. International climate action must not put Africa’s development at a further disadvantage. As a casualty of circumstances that it did not create, the region needs access to creative and affordable financing initiatives from the world community to adapt to the effects of climate change.
At the same time, Africa’s path to net zero should broaden energy sources, drive efficient fuel consumption, and cut unnecessary shipping through localised manufacturing.
Ultimately, with appropriate policies to support a strong expansion of clean technologies and sufficient emphasis on energy efficiency improvements, Africa could claim a notable achievement: becoming the first continent to reach a significant level of economic and industrial growth primarily using cleaner energy sources.
Samaila Zubairu is the President and CEO of the Africa Finance Corporation.