As countries pivot towards green growth powered by renewable sources away from dirty fuels that have long fouled nature, a fine balance has to be struck between the environment, people’s welfare and economic growth.
Social protection, including reskilling, upskilling, and creating new jobs would ensure a just energy transition for affected workers and communities.
To meet its short-term gas needs occasioned by Russia’s war on Ukraine, Africa has become the frontier of new oil and gas projects. What does this mean for Africa (energy security, debt, stranded assets) given that the rest of the world is well on their path to transitioning to clean energy forms?
Natural gas is being pushed as the solution to Africa’s energy needs that would accelerate the connection of the 600 million homes currently without electricity.
Gas is also seen as a potential source of forex earnings from exports to European countries, which are drifting away from Russian supplies following Russia’s invasion of Ukraine. The invasion has intensified the “dash for gas” and European governments and industry are redoubling efforts to extract and export fossil fuels from Africa. These plans carry multiple risks, including potential for substantial stranded assets, especially since Europe has speeded up its decarbonisation journey.
The World Bank estimates that Africa was home to 40 percent of natural gas discoveries between 2010 and 2020.
Gas drawbacks
The pro-gas narrative fails two tests—environment and economics.
Developing gas-fired stations will thwart global attempts to reduce global greenhouse gas emissions, worsening climate change. Fossil fuels—coal, oil and gas—are by far the largest contributor to global climate change, accounting for over 75 percent of global greenhouse gas emissions and nearly 90 percent of all carbon dioxide emissions.
African countries are most vulnerable to the wildly changing weather patterns and least adapted to the effects including frequent and severe floods, storms, droughts and heatwaves. It would be foolhardy for the continent to worsen a situation from which it stands to lose the most.
Secondly, investing in natural gas is not economically prudent given that the investment will commit African countries to long-term fossil fuel infrastructure that would have to be repaid over a prolonged period. Meanwhile, the prices of renewable energy technologies, such as solar panels, wind turbines and batteries, continue to register significant declines.
Average global costs of solar PV and onshore wind have more than halved in the past decade. Over the same period, fossil fuel prices including natural gas have fluctuated wildly, most recently roughly doubling due to the Russia-Ukraine war.
Subjected to a cost-benefit analysis, gas would simply not make economic sense for most African countries.
For Nigeria, for instance, it would take decentralised solutions such as solar-powered mini-grids and standalone home systems if the country is to achieve universal power access especially in the northern parts of the country largely cut off from the national grid.
Lighting up these rural states using gas-fired electricity would require large investments in grid expansion, an exercise that could take decades if not longer. Nigeria should instead make better use of the gas that has historically been flared from its oilfields.
Renewable energy, Africa’s development answer
African leaders should pursue energy strategies that avoid locking their countries into outdated, centralised, fossil fuel-based energy systems. Such fossilisedfossilized systems risk generating stranded assets, perpetuation of debts, unhealthy concentration of ownership, and a worsened environment and climate. The leaders can ill-afford to pile their countries with more debt, coming at a time when most of them are near debt distress levels.
Africa has a unique opportunity to leapfrog the dirty and obsolete energy systems of the past and pivot towards more modern, people-centred integrated energy solutions that combine the advantages of both centralised and decentralised approaches powered by green energy sources.
Because gas is a globally traded commodity, its price everywhere is driven at least partly by global supply and demand regardless of whether a particular country has domestic gas resources or not. Moreover, unlike renewable power, whose cost can be largely fixed at the point of deployment, gas power costs often fluctuate to reflect movements in fuel prices.
For the majorityFor majority of African governments, embracing fossil fuels as the basis for development essentially locks them into dependence on globally traded commodities.
It should be noted that energy supply is not the only challenge in most parts of Africa. High tariffs, due to global price volatility of fuels, poses an equally big challenge. Underdeveloped networks also means large parts are cut off from the national grid.
Volatility of fossil fuel costs also directly impacts energy security and economic stability since fossil fuel imports are for most African countries the single largest import item, meaning that shifts in fuel pricesprice immediately show up in all prices as inflation.
Conversely, once installed, renewables are a localised asset whose energy production costs only vary modestly with costs of maintenance.
With abundant renewable energy sources, Africa can lead the sustainable energy transition curve to become energy secure. To do this, African leaders need to negotiate more with developed countries and investors to unlock investment flows to Africa.
Only two percent of global investments in renewable energy in the last two decades were made in Africa.
With development highly concentrated in major towns and cities, much of sub-Saharan Africa would find extending national grids to all remote villages too expensive, a process that could take another century if not longer. This means that without the off-grid power interventions, most communities would still remain in the dark even with gas-fired power additions to the central grid.
The good news is that decentralised solar solutions continue to record cost decreases and can be deployed and installed quickly to ensure energy access for all.
Renewable energy investment is Africa’s energy and development answer. Not gas.
