Africa needs over $190 billion each year from 2026 to 2030 to achieve energy, climate goals

A new report says achieving Africa’s energy and climate goals would cost over $190 billion each year from 2026 to 2030, with two-thirds going to clean energy.

Published by the International Energy Agency (IEA), the report shows that there is a need to double energy investment this decade.

The report titled “Africa Energy Outlook 2022” sets out a path to bring modern energy access to all Africans this decade while creating new growth industries in critical minerals and green hydrogen.

Average annual energy investment in the Sustainable Africa Scenario, 2016-2030. Source: IEA Africa Energy Outlook Report 

According to the report, “Russia’s invasion of Ukraine has sent food, energy, and other commodity prices soaring, increasing the strains on African economies already hard hit by the Covid-19 pandemic. 

“The overlapping crises are affecting many parts of Africa’s energy systems, including reversing positive trends in improving access to modern energy, with 25 million more people in Africa living without electricity today compared with before the pandemic.” 

The report further highlights that, although having the least blame for the problem, Africa is already experiencing more severe climate change effects than most other parts of the world, including massive droughts.

“Africa accounts for less than 3% of the world’s energy-related CO2 emissions to date and has the lowest emissions per capita of any region.”

While reacting to the report, IEA Executive Director, Fatih Birol, said that based on the current energy crisis, Africa has gotten the raw end of the deal from the fossil fuel-based economy, obtaining the fewest advantages and the greatest drawbacks.

He said the new global energy economy promises Africa a brighter future, with great possibilities for solar and other renewables to power its development – as well as new industrial prospects in critical minerals and green hydrogen.

“The immediate and absolute priority for Africa and the international community is to bring modern and affordable energy to all Africans – and our new report shows this can be achieved by the end of this decade through annual investment of $25 billion, the same amount needed to build just one new LNG terminal a year,” Dr. Birol added. 

“It is morally unacceptable that the ongoing injustice of energy poverty in Africa isn’t being resolved when it is so clearly well within our means to do so.”

Setback in access to modern energy services

Both new grid and off-grid connections have halted as a result of the pandemic. This reflects a mix of logistical and financial challenges stemming from supply chain disruptions induced by lockdowns and other social restrictions, as well as financial difficulties faced by homes, utilities, and equipment suppliers as a result of the pandemic’s economic slowdown.

Share of people gaining access to electricity by technology in Africa in the sustainable Africa scenario (2022-2030). Source: IEA Africa Energy Outlook Report

In 2021, the number of persons without access in Sub-Saharan Africa is expected to rise by 4% compared to 2019, erasing all of the improvements gained in the preceding five years.

Africa’s climate pledges and NDC

For the first time ever, the climate commitments made by governments around the world at the 26th Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) in Glasgow in November 2021 are sufficient to keep global warming below 2 degrees Celsius – assuming they are met on time and in full.

As of May 2022, 53 African countries had filed a Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) which is a climate action plan to reduce greenhouse gas emissions and adapt to climate change.

If completely implemented, African NDCs will save over 550 million tonnes of carbon dioxide (Mt CO2) in 2030 relative to their own business-as-usual baseline scenarios, which is roughly 40% of the continent’s current emissions.

Climate finance commitments

Efforts to decarbonize Africa’s energy systems and execute the NDCs will require financial support from industrialized economies. The great majority of African NDCs include mitigation and adaptation goals that are contingent on international financial, technical, and capacity-building assistance. 48 African nations have asked for more than USD 1200 billion in foreign financial assistance to execute their NDCs by 2030.

Almost 60% of the funds will be used for climate mitigation, 30% for adaptation, and the remaining 10% unspecified or will be used for both mitigation and adaptation. Cameroon, Egypt, Ethiopia, Nigeria, Somalia, and South Africa contribute around 60% of the funding required for NDC implementation.

Nigeria’s Energy Transition Plan and Finance

Nigeria’s President Muhammadu Buhari signed the Climate Change Bill last year. The bill provides mainstreaming of climate change actions and establishes a National Council on Climate Change.

During the COP26 summit in Glasgow, the president pledged that Nigeria will cut its carbon emissions and reach net zero by 2060. He also underlined the crucial role of gas in the country’s energy transition roadmap, which is short on details.

However, experts have argued that the target is ten years behind the recommended deadline by the UN and what many climate scientists would like to achieve to stop global warming.

The country’s energy transition plan aims to lift 100 million people out of poverty and drive economic growth by bringing modern energy services to the full population. 

Sharon Ikeazor, Nigeria’s Minister of State for Environment, says the energy transition plan will create up to 840,000 job opportunities at the meeting of the high-level inter-ministerial committee on climate change.

The president had also announced last year that the country would need more than $400 billion to reduce dependence on fossil fuels and successfully implement an energy transition.

Policy Recommendations

The report noted attaining universal access to electricity will improve dependability, boost power company balance sheets, and integrate fourteen times more solar PV and wind capacity by 2030.

For oil and gas companies, it’s a matter of balancing near-term signals to boost output with dwindling export revenue until 2030, as well as dedicating enough to capture new markets for low-carbon hydrogen and essential minerals.

To meet domestic demand, it is important to increase energy investment and shift finance flows to renewable energy.