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21 April 2021
By Vera Songwe, UN Under-Secretary-General and 9th Executive Secretary of the Economic Commission for Africa (ECA)
While most of the world’s largest economies and many leading companies have announced plans to bring their carbon emissions down and reach net-zero by 2050, much remains to be done to translate the ambitious targets into reality.
For the young girl in an urban African city, or Africa in general, where some 600m people still live without electricity, providing access to any source of power will take priority whether the source is green or not. Moreover, with the continent’s 17 per cent of the world’s population currently producing less than 4 per cent of global emissions, “carbon-cutting” goals have limited relevance, with most African nations focused instead on creating jobs and economic growth.
Africa can increase energy access, create jobs and keep carbon emission low. A recent analysis[1], undertaken by the Economic Commission for Africa based on country case studies done with Oxford University and Vivid Economics, has shown that job creation and gross value addition are dramatically stronger when a low carbon investment pathway is taken.
In South Africa green investments built around renewable energy, sustainable transport solutions and nature-based rehabilitation could deliver 250 per cent more jobs and 420 per cent more value added in the economy compared to traditional fossil fuel investments[2]. Meanwhile, in the Democratic Republic of Congo, renewable investment focused on connecting the population to the electricity grid, nature-based solutions around agro-forestry and improved urban transport solutions could bring 130 per cent more jobs and 280 per cent more value added in the economy compared to traditional fossil fuel investments[3].
A post COVID recovery plan, if built around sustainability objectives, delivers more growth for more and faster. Africa today is putting in place the right policy framework at the continental, regional and national level to take advantage of this new reality. The Sustainable Development Goals (SDGs) of the UN 2030 Agenda for Sustainable Development and the goals of the continent’s Agenda 2063 provide a good anchor for all its plans.
Africa’s power infrastructure financing deficit is estimated at between $40 and 45bn per annum [4] and is expected to grow with rapid urbanisation. Public finances are already constrained by a COVID-induced economic downturn. Thus, private finance will need to be mobilised, utilising innovative financing instruments and incentives. Private finance will need to bet big on renewables, given the potential for clean energy in Africa. The continent possesses 1,475 GW of renewable energy generation potential, almost 10 times total current electricity generation. To achieve its SDG goals in relation to energy, Africa needs to double its generation capacity by 2030 and multiply it fivefold by 2050[5].
This would stimulate faster deployment of large-scale solar, wind and hydropower to enable greater electrification across the continent. This is challenging. Investment in low-carbon energy systems in Africa has lagged behind. Global climate finance commitments of $100bn per year that could have helped stimulate prove sector investments have not been met. Meanwhile, the commercial cost of finance for African countries remains prohibitive, with persistent high-risk perception, even though project finance defaults on the continent are the lowest globally.
However, Africa’s low base starting point and the challenges of energy storage and intermittency, mean that a transition energy such as natural gas may need to be paired with investments in wind and solar to enable the energy transition required. The option of natural gas for this transition is logical due to its availability on the continent.
Private capital investment in renewable energy options will be essential. An anticipated $141bn in private financing is expected to enter the African energy market by 2028 and a pipeline of bankable projects will be critical to investment in renewable energy ventures[6].
These investments need to also be de-risked as a means of rendering them more affordable. The ECA’s proposed Liquidity and Sustainability Facility (LSF) is a mechanism which aims to reduce the cost of finance for African countries for investments that will be channelled into projects to respond to the immediate COVID19 emergency and address climate resilience.
If the appropriate finance is sourced, rapid investment in the energy sector can change the development trajectory of the continent by opening up new opportunities to use digital technologies, expand development of MSMEs, enhance inclusion of women and girls and boost employment.
Alongside these energy investments, Africa has huge potential to mitigate global GHG emissions through its forests and wetlands ecosystems. The recent discovery of an additional 30bn tonnes of carbon in Cuvette Centrale peatlands in the central Congo basin, covering 145,500 sq km, means that the peatlands of the Congo Basin presently lock in just over 90bn tonnes of carbon (equivalent to 3 years of emissions), making the region one of the most carbon-rich ecosystems on Earth.
ECA estimates suggest that carbon off-sets, while using the current low global carbon prices of well below $5 per tonne, can generate almost $4b annually, increasing renewable energy by 22per cent, and providing another 4.5m people with access to clean cooking ability[7]. If the global price on carbon is increased to at least $50 per tonne to meet the goals of the Paris Agreement, up to $30bn can be generated per annum[8]. The young girl can cook safely, connect from home to work and feel safe in a world that allows for this. By bridging the energy-gap we will not only create prosperity on our continent but will reset the dynamic for development globally.
About Vera Shongwe
As Executive Secretary of the ECA, Vera Songwe’s reforms, focusing on “ideas for a prosperous Africa”, have brought to the fore critical issues of macroeconomic stability, development finance, private sector growth, poverty and inequality, the digital transformation, trade and competitiveness.
Recently listed as one of Africa’s 50 most powerful women by Forbes, named as one of the ‘100 Most Influential Africans’ by Jeune Afrique in 2019, ‘100 Most Influential Africans’ by New African Magazine in 2020 and one of the ’25 African to watch’ by the FT in 2015, Vera Songwe is acknowledged for her long-standing track record of providing policy advice and her wealth of experience in delivering development results for Africa. She has written extensively on development and economic issues including on debt, infrastructure development, fiscal and governance issues. She is well-published and contributes to the development debate across a broad spectrum of platforms including in the Financial Times.
[1]UNECA. 2021 Building forward for an African Green Recovery, https://www.uneca.org/53rd-session-of-the-economic-commission-for-africa/reports-and-case-studies
[2] Ibid
[3] Ibid
[4] UN-OSAA. 2015. Financing Africa’s Infrastructure Development. https://www.un.org/en/africa/osaa/pdf/policybriefs/2015_financing_infrastructure.pdf
[5] UNECA, 2021, Team Energy Africa. https://www.uneca.org/sites/default/files/Africa-Business-Forum/4/Team-Energy_Africa_Brochure.pdf
[6] Expert Eye: The Need for Private Sector Investment into Renewable Energy. https://www.africaoutlookmag.com/industry-insights/article/1192-expert-eye-the-need-for-private-sector-investment-into-renewable-energy
[7] Dahlberg, 2020, Green Livelihoods: Enabling Post-Covid Recovery by Enabling Green Livelihoods in the Green Economy
[8] UNECA. 2021 Building forward for an African Green Recovery, https://www.uneca.org/53rd-session-of-the-economic-commission-for-africa/reports-and-case-studies