Financial institutions and multi-lateral funding organisations need to rethink their bans on funding oil and particularly gas projects in Africa, as it will deprive the continent of much-needed economic development on its route to renewable energy self-sufficiency.
This was according to International Energy Agency deputy executive director Mary Wartick, who spoke at the African Energy Week in Cape Town yesterday.
Lack of adequate financial support, infrastructure, technologies and upstream, midstream and downstream activities have in the past hindered Africa’s oil and gas industry from reaching its potential.
But the energy challenges in Africa are daunting. The conference heard that over 600 million people, almost twice the population of the US, have no access to electricity on the continent, while more than 900 million people, double the population of the EU, do not have access to regularly cooked food. The number of people with access to electricity declined in Africa between 2019 to 2021, this after a rising trend between 2013 and 2019.
Wartick said these were “truly staggering figures” for a continent that was also having to deal with a global energy market that had been upended by the Russia/Ukraine conflict, poverty, droughts, extreme weather and food insecurity.
She said Africa had contributed only 3% to cumulative global warming since the start of the industrial revolution, and using the continent’s known gas energy reserves would only push this figure up to 3.5%, with a negligible impact on total global warming outcomes.
She said the continent would require gas as base load energy on its transition to renewable energy sources, to meet massive development needs such as industrial development, infrastructure such as desalination plants and the need to build many homes.
She said the use of natural gas would accelerate development and the “green transition” on the continent.
European Commission vice-president Frans Timmermans said the EU had undergone a significant energy transition and some 24% of its energy was now derived from renewable energy such as solar and wind, although oil and gas remained critically important.
He said the Russia/Ukraine crisis (which has increased energy prices and resulted in gas shortages in the EU) was speeding up renewable energy development in the EU “much faster than we had planned… the case for renewable energy is growing by the day,” he said.
“The climate crisis is our common challenge and a challenge of a lifetime. The window for action is closing fast, but it is still open. Many countries in Africa already suffer from the consequences of the climate crisis but bear little responsibility for getting into this crisis.”
Professor Benedict Oramah, the president of Afreximbank, said: “Divesting from fossil fuel could cut as much as $30 billion (R519bn) off Nigeria’s GDP (gross domestic product) and almost $190bn off the continent’s GDP.”
He said the social and economic repercussions of banning oil and gas funding on the continent, some of which were already playing out, would see the export earnings and revenues of many countries dry up, fossil fuel-dependant factories would close, the limited power grid would be further strained, jobs would be lost, and poverty would increase.
“Our transition (to decarbonisation) must be sensible and pragmatic. It must address the development gap and the continent’s ability to address climate change.”
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