COP27: Why it is in Africa’s best long-run interests to abandon fossil fuels

News of severe flooding in Australia is just one more reminder of the ravages of climate change. The affliction and what to do about it, given that the world is not mitigating or adapting fast enough, will be the subject of heated debate at the Conference of the Parties (COP27) in Cairo in November.

The scientific evidence strongly suggests that leaving all remaining fossil fuels in the ground is imperative for limiting warming to manageable levels.

But at the close of last week’s Africa Energy Week, various African energy ministers vowed to speak against this position. Their message was that African countries should not be hindered from monetising their oil and gas reserves.

A 2021 article published by Nigerian Vice-President Yemi Osinbajo in Foreign Affairs provides a thorough articulation of what is fast emerging as the united African position in 2022. Given the minuscule proportion of greenhouse gas emissions that African countries contribute (less than 4% of the total), divestment from fossil fuels — gaining traction in capital management circles — is cast as hypocritical and destructive.

A similar argument would have been defended at the Financial Times Africa Summit in London last week by NJ Ayuk, executive chairperson of the African Energy Chamber. His brief was to support the motion that “Africa should ignore the world’s green agenda and make full use of its fossil fuels”.

Wealthy countries, whose production and consumption patterns created the environmental destruction with which we all live, now preach from a posture of comfort and affordability.

The onus, therefore, rests on wealthy countries to ensure a just transition if they are to meet the 2015 Paris Agreement targets in a way that avoids pushing African countries deeper into poverty, especially in the wake of the inflationary effects of the Russian war in Ukraine and debt difficulties with the United States Federal Reserve’s interest rate hikes.

But it is not entirely true that divestment imperatives consistently fail to consider the vital role some fuels play in powering the growth of developing economies, as Osinbajo put it. Nigeria, by way of example, is rich in natural resources but still energy poor. It is correct to argue that the transition to net-zero emissions must not come at the expense of affordable and reliable energy for people, cities, and industry.

Less right, though, is the idea that continued reliance on fossil fuels will help to aid such a transition, even if the preference is predominantly for natural gas rather than oil per se. This position was well articulated by James Mwangi, founder of the Climate Action Platform for Africa, at the Financial Times Africa Summit. Mwangi’s position was compelling.

Missing from too many just transition analyses is an acknowledgement of why countries like Nigeria and Angola remain energy poor despite being oil wealthy. Both countries failed to translate their prodigious oil wealth into inclusive and sustained development.

Clean energy is central to the Nigerian government’s plan to transition to net-zero emissions. The goal to electrify five million households through the Solar Naija programme by 2023 is admirable.

Osinbajo nonetheless contests that Nigeria’s “citizens cannot be forced to wait for battery prices to fall or new technologies to be created in order to have reliable energy and live modern, dignified lives” and that gas-fired power remains preferable to renewables in the short run.

We address three factors in the debate:

First, solar and wind projects, strategically positioned, need not rely on centralised grid infrastructure. Microgrids should be a major focus for African countries in the years ahead.

Precisely because they do not rely on the establishment of expensive transmission grid infrastructure, these systems are ideal for overcoming energy poverty. Centralised grid networks should largely be abandoned in a world that has to wean itself from fossil fuels. Moreover, distributing electricity over vast distances is subject to significant energy (and rent) leakage, rendering the system inefficient.

While developing countries have concerns over being locked into expensive arrangements entailed in renewable energy projects, innovative arrangements can be found that are less costly than being locked into dirty alternatives.

Second, the pro-gas argument presupposes that gas is cheap and renewables are prohibitively expensive. But all recent research points to the sheer speed of simultaneous improvements in quality and decrease in costs of solar grids and batteries. A June 2020 report by the University of California, Berkeley, noted that the US could derive 90% of its power without greenhouse gas emissions at lower electricity tariffs.

Gas-fired power stations still take a long time to build, and mega-projects of any kind are subject to unproductive rent-seeking. The idea of natural gas as a bridge towards a green economy sounds plausible in theory, but the practical governance risks are material. By the time a gas-fired power station is built, renewable energy and battery storage costs will probably have decreased further.

Third, continued investments into fossil fuels — the exploration, production and burning of them — have two destructive economic effects.

First, it comes at the opportunity cost of allocating resources towards building local industries that can improve and expand renewables. Foregoing the latter risks leaving African countries even further behind their industrialised counterparts.

Second, it locks countries into destructive path dependence because mega-projects typically exhibit sunk-cost fallacies. South Africa’s two newest coal-fired power stations, for instance, are still not fully operational and have incurred significant cost and time overruns.

African countries have an opportunity to leapfrog traditional industrialisation paths by tapping into global value chains associated with the transition to clean energy.

On the grounds of justice, it is technically true that African countries should not be denied the opportunity to exploit their natural gas reserves. But there are practical moral barriers to such arguments. Past experience, for instance, strongly suggests that fossil fuels are unlikely to suddenly transform energy poverty into wide­-scale electrification.

Justice is ultimately about ensuring that we entrust a better world to our children and grandchildren. The divestment movement provides an opportunity to truncate the negative historical relationship between environmental degradation and income per capita.

African countries have vast quantities of minerals and metals that the world requires for global transport and energy revolutions, along with other new technologies. African countries’ focus should be on exploiting those in ways that develop our capabilities to optimally tap into the global value chains associated with new products such as solar panels, electric vehicles, batteries, and wind turbines.

The idea of justice in the context of an energy transition places a moral imperative on all countries — developed and developing — to be assessed under the same rules. At the core of arguments made by Osinbajo and Ayuk is that the approach of developed countries to the energy transition is hypocritical. For instance, Germany and other European countries returned to the use of fossil fuels after Russia’s invasion of Ukraine having previously led the charge to shift away from fossil fuels.

Additionally, clean energy does not address the problem of historical emissions, which will continue to affect everyone. Therefore, carbon capture and storage, carbon sequestration and a carbon tax must form part of plans for a global just energy transition.

Ultimately, the key to ameliorating the climate change problem lies in exploiting the opportunities involved in clean energy technologies. There is no silver bullet, but countries stuck in fossil fuel dependency need to break the cycle of rent and energy inefficiency.

It will be crucial for countries to come out of COP27 with a collectively agreed-upon taxonomy for the energy transition to bolster the existing rules defined by the 2015 Paris Agreement.

It would be a real shame if the conversation at COP27 was orientated around African countries’ “rights” to use their fossil fuels instead of appropriate mechanisms by which to finance a justly attainable low-carbon transition.

After all, one can be right and still lose; we only have one shared planet.

This article first appeared in the Mail & Guardian.