April 21, 2024

Africa’s priority is poverty reduction, not net zero policies push, needs its oil, gas to achieve SDG 1 – Ayuk, Energy Chamber  

 

Oredola Adeola

 

Africa is desperate for cheap energy and the solution lies on its very doorstep ­— its abundant oil and gas reserves ­— but the Western corporations, governments, and multilateral financial institutions (MFIs) headquartered in the developed world are pursuing policies that will deny continent the chance of prosperity, this was the comment of NJ Ayuk, Executive Chairman, African Energy Chamber (AEC) in a statement obtained by EnergyDay on Friday.

 

 

According to him African countries require economic growth of 6-7percent year in- year out, and they would need to explore their natural gas reserves if they are to lift their people out of poverty.

 

 

Ayuk said, “Almost half of the continent’s 55 countries have proven natural gas reserves — the region as a whole has around 9% of the world’s total gas reserves. Some 17 African countries already produce natural gas but their combined production is only around 6% of total global production.

 

 

“The continent has 125.3bn barrels of crude oil reserves and 17.55trn standard cubic metres of natural gas reserves. Almost 40% of global new gas discoveries in the last decade were in Africa, mainly in Senegal, Mauritania, Mozambique and Tanzania.

 

 

“During the past two years, an estimated 11bn barrels in oil reserves have been found off Namibia’s coast, as well. Furthermore, Africa is still relatively unexplored in terms of oil and gas,” the Chairman of AEC said.

 

 

Ayuk further noted that in March 2023, Antonio Guterres, the UN’s secretary-general, said that he was launching an “all-hands-on-deck acceleration agenda”, which “starts with parties immediately hitting the fast-forward button on their net zero deadlines to get to global net zero by 2050”, calling on leaders of developed countries to reach net zero “as close as possible to 2040” and said emerging economies should aim for 2050.

 

 

The Chairman of AEC, however cautioned that the reality of poverty in Africa is more complicated than what Guterres suggested.

 

 

According to him the Western governments and organisations are now denying the region the chance to exploit their hydrocarbon resources and condemning hundreds of millions of people to extreme poverty.

 

 

 

“Oil and gas have been the bedrock of global development for hundreds of years. Why shouldn’t Africa be allowed to benefit in the same way?” Ayuk demanded.

 

 

He said, “Western investment in hydrocarbons in Africa is drying up. Western energy companies and corporations are being browbeaten into pursuing environmental, social and governance (ESG) policies that do not take into account poverty reduction in Africa.

 

 

“A vociferous fossil-fuel divestment campaign in the West has led MFIs to do the same. A new ‘project fear’ has emerged not only around climate change but also around ‘stranded assets’, defined as assets that have suffered from unanticipated or premature write-downs, devaluation or conversion to liabilities.

 

 

“Western economists are counselling investors against backing oil and gas projects in Africa, suggesting that their value will have to be written down in the future as the world decarbonises. But that is far from certain.

 

 

“Many Western organisations are advocating ‘degrowth’ policies or a ‘circular economy’ but Africa needs economic growth and lots of it. At the same time, Western companies and governments want to carry out mining in Africa and to exploit the continent’s abundant minerals for the green energy transition.

 

 

“Europe also increased the amount of coal it imported to 15m metric tones during the first eight months of last year, the highest amount of any region. A lot of the talk in Europe nowadays is about energy security but Europeans do not seem too concerned about Africa’s energy security. That is rank hypocrisy.

 

 

“Namibia’s oil discoveries could potentially double the size of that country’s economy. Up to $55bn is being invested in liquefied natural gas (LNG) projects in Mozambique, almost three times the country’s GDP ($20bn). Up to $30bn is being invested in LNG projects in Tanzania, one-third of that country’s GDP ($85bn). Should these countries be denied these economic windfalls?

 

 

“Critically, fossil fuel development and renewable power are not mutually exclusive. If Africa triples its use of natural gas, it is estimated that it will be able to increase its use of renewable energy eight-fold. Reliable forms of energy such as gas can be used to stabilise a grid powered by intermittent sources such as wind and solar.

 

 

“Many African countries are already using a lot of renewable energy in the form of hydropower. To add any other kind of renewable energy to their grid, African countries need baseload energy to stabilise it. The only energy sources that can do this effectively are heavy oil fuel, gas or hydro. Of these three, gas and hydro are the cheapest. Replacing hydro or natural gas backup on a large scale with battery storage is just not feasible.

 

 

“Africa does not have to choose between renewable energy and hydrocarbons. It can adopt both energy sources to maximise its economic development. The continent has the greatest potential for renewable energy of any region globally but the lowest investment in renewables worldwide. It accounts for less than 3% of the world’s installed renewables-based electricity generation capacity and only 2% of global investment in renewable energy during the last two decades.

 

 

“Africa’s gas assets, in particular, are less likely to become ‘stranded’ in the future in the wake of the Ukraine invasion, as European countries are now seeking new, long-term supplies of natural gas. Algeria – currently, providing about 11% of Europe’s gas – is perhaps best positioned to see a boon in exports. Its gas exports to Italy jumped 76% to 21bn cubic metres during 2021 and it has the capacity to add a further 10bn cubic metres to exports.

 

 

“A debate must happen in Africa about what kind of industrialisation process is suitable for the region. Should it be centred around heavy industry, agri-food processing or light manufacturing? Should it be more services-oriented and focussed more on the knowledge and digital economies? It depends a lot on the country, of course, but Africa certainly requires a high level of industrialisation in one form or another and a lot of economic growth if the living standards of millions of people are to improve.

 

 

“Africa’s economy needs to be 16 times bigger than it is today to elevate the quality of life of its citizens to match the global average. Whatever industrialisation path is chosen, a great deal of cheap energy will be essential (even data centres use a lot of power, after all).

 

 

“For many African economies, cheap gas must be an important part of the energy mix. Sub-Saharan Africa’s current emissions would rise by only 0.6% if the region doubled its electricity production capacity using natural gas only. In many countries, the chance exists to construct LNG pipelines domestically and these pipelines must be extended across borders.

 

 

“This could reduce dependence on using road transport for distribution. A phasing out of this mode of transport would substantially reduce Africa’s CO2 emissions. Furthermore, transitioning low-income Africans to natural gas would reduce the need for wood-based biomass energy and help to protect the region’s forests and massive carbon sinks.

 

 

“The developed world has become fixated on net zero and has lost sight of one of the most pressing issues facing the planet — alleviating poverty. Western governments, corporations and MFIs must continue to finance gas exploration and production in Africa. They must also carefully consider funding gas pipelines across the continent and even subsidise small gas stoves for poor Africans.

 

 

“African countries should also put their money in African banks and not, as is often the case now, in non-African banks. The continent must develop its own financial institutions and finance its own construction of refineries and pipelines.

 

 

“Oil and gas are labour-intensive industries that have the potential to transform impoverished communities. Oil and gas discoveries in Africa could improve many lives if they are managed competently and with accountability. African governments must become more transparent about the way in which they manage the revenues generated. This would help countries to benchmark alongside each other in moving towards economic development goals through oil and gas extraction.

 

 

“A ‘just transition’ is not only about African countries receiving ‘climate finance’ from the Western world to transition towards renewables. It must also allow Africa to exploit its hydrocarbon reserves, so that the continent has a solid basis for industrialisation.

 

 

Ayuk therefore emphasised that a balance must be struck between cutting carbon emissions and reducing poverty in Africa.  He added that there is a place for renewable energy in the region but the continent needs hydrocarbons for baseload, for industrialisation purposes, for export revenues.

 

 

He said. “Africa’s priority must be poverty reduction, not pursuing net zero policies in a region that contributes a tiny amount to global greenhouse gas emissions.   People in the West — in particular, the heads of Western governments, corporations and MFIs — must examine their consciences. Are they happy to leave hundreds of millions of Africans in extreme poverty?

 

 

The Chairman of Energy Chamber further noted that poverty alleviation is the immediate concern, he added that a more sophisticated, nuanced debate must happen. He also noted that Western energy companies and organisations must start investing in hydrocarbons in Africa again.