The dilemma: How can Africa industrialise and reach net zero?

Africa’s greatest challenge is how to industrialise but not increase carbon emissions significantly at the same time – otherwise, hundreds of millions of people will be condemned to a life of poverty.

The whole of Africa accounts for only 2–3% of the world’s CO2 emissions from energy and industrial sources, according to the UN. It is roughly the same proportion as Germany and a lot lower than China (27%), the US (15%) and India (7%). Africa’s per capita emissions of CO2 were 0.76 tonnes (t) in 2018 compared with 4.4t globally, according to the World Bank (in the US it was 15.52t and in Australia 17t). Africa’s total population is around 1.3 billion people compared with China’s 1.4 billion, but China’s total carbon emissions are ten to 14 times higher than Africa’s.

The reality is that many African nations are already at net zero. More than 640 million Africans have no access to energy, corresponding to an electricity access rate of just over 40%, the lowest in the world, according to the African Development Bank (AfDB). Globally, around 87% of the population have access to electricity. Per capita consumption of energy in sub-Saharan Africa (excluding South Africa) is 180 kilowatt-hours (kWh), compared with 13,000kWh in the US and 6,500kWh in Europe. Around 900 million Africans also lack access to ‘clean cooking’, the use of modern stoves and fuels.

Agriculture, forestry and other land use accounted for 57% of Africa’s total carbon emissions in 2016 (agriculture was at 21% and land use change and forestry at 36%), up from 45% in the year 2000, according to the AfDB. Energy made up 36% of emissions in 2016, down from 49% in the year 2000. Waste and industrial processes each made up 4% of emissions in 2016 (up from 3% each in the year 2000).

In 2018, electricity demand in Africa was 700 terawatt-hours (TWh) and the North African economies and South Africa accounted for more than 70% of the total, according to the International Energy Agency (IEA). In North Africa, gas already meets around half of the sub-region’s energy needs, but in sub-Saharan Africa gas only makes up approximately 5% of the energy mix.

At 39%, natural gas constituted the biggest element in Africa’s electricity generation mix in 2019, followed by coal (29%), hydro (15%) and oil (10%), according to the African Energy Chamber (AEC). While nuclear energy accounted for another 2%, the share of renewables in the mix (5%) is growing, albeit at a slower pace than in other regions. Most renewables growth came from solar, wind and geothermal power plants and is expected to continue into 2030. Africa had 830MW of geothermal, 5,748MW of wind and 7,236MW of solar installed capacity in 2019, increases of 17.4%, 26.1% and 60.2%, respectively, since 2010.

Fossil fuels will power two-thirds of Africa’s electricity in 2030

The Oxford Smith School of Enterprise and the Environment (OSSEE) forecasts that the share of non-hydropower renewables in African electricity generation will likely remain under 10% by the year 2030. It predicts that fossil fuels will account for two-thirds of all generated electricity across Africa and a further 18% of generation will come from hydropower projects by the end of this decade.

Only two African countries – South Africa and Malawi – have pledged to reach net zero by the year 2050. Egypt has committed to ensuring that between 30–40% of its energy mix is renewable (solar and wind) by 2035 and is on track to meet this target.

Africa is the region of the world most vulnerable to the impact of climate change, according to the UN. Already experiencing temperature increases of roughly 0.7°C over much of the continent – and with predictions that temperatures will rise further – it is facing a wide range of impacts, including more frequent droughts and floods. The UN predicts that climate change will contribute to decreases in food production, floods and inundation of its coastal zones and deltas, the spread of waterborne diseases and the risk of malaria, and to changes in natural ecosystems and the loss of biodiversity in the near term. Total available water in the large basins of Lake Chad and the Niger and Senegal rivers has already nosedived by 40–60% and many climate models project declining mean precipitation in the already-dry regions of southern Africa.

“Certainly, carbon emissions will rise in Africa [during the next ten years] particularly amongst fossil fuel-producing countries,” says Dimieari Von Kemedi, managing director of Alluvial Agriculture, a block farming start-up based in Nigeria. “They will want to utilise cheaper sources of energy and buy up the internal combustion engines other countries will be phasing out.”

He adds that higher carbon emissions from fossil fuels will be necessary for the industrialisation and urbanisation of many African economies because of the comparatively higher cost of clean energy.

“African countries will come from behind and with time build capacity to invest in clean energy,” he says. “Renewable industry is critical for Africa. Much of global growth over the next 50 years will happen in Africa and this will need energy, including nuclear energy.”

Galina Alova, a researcher at the OSSEE, said in a recent report: “Africa’s electricity demand is set to increase significantly as the continent strives to industrialise and improve the well-being of its people, which offers an opportunity to power this economic development through renewables. There is a prominent narrative in the energy planning community that the continent will be able to take advantage of its vast renewable energy resources and rapidly decreasing clean technology prices to leapfrog to renewables by 2030, but our analysis shows that overall it is not currently positioned to do so.”

Africa requires energy to reduce poverty

Africa needs energy to drive its economic growth and to reduce poverty – the big question is where will that energy come from during the next ten to 20 years? How Africa meets its growing energy needs is crucial for the region’s economic future.

Sub-Saharan Africa’s population is growing at 2.7% a year, more than twice as fast as South Asia (1.2%) and Latin America (0.9%). The number of people in the region is expected to almost double to 2.5 billion by 2050. In Nigeria, the continent’s most populated country today with around 205 million people, the population is forecast to double to around 400 million by that year.

Africa is also the fastest-urbanising region in the world with an average annual urbanisation rate of 3.2%, well ahead of the global average of 2%, according to Frost & Sullivan Africa, a research company. In 2020, 472 million people lived in African cities and this number is expected to jump to 810 million by 2035. This is the equivalent of adding a city the size of Lagos to the region every year for the next 15 years.

Growing urban populations mean rapid growth in energy demand for industrial production, cooling and mobility. With the growing appetite for modern and efficient energy sources, Africa is also expected to emerge as a major force in global oil and gas markets.

The IEA expects the global population without access to energy to become increasingly concentrated, with 90% of those globally without access to electricity and almost 50% without access to clean cooking living on the African continent in the year 2040. The UN estimates that 660 million people will still lack access to electricity in 2030, most of them in sub-Saharan Africa.

The 20 countries with the worst rates of access to clean cooking account for 81% of the global population without access to clean fuels and technologies. Of these 20 countries, ten are located in sub-Saharan Africa: the Democratic Republic of the Congo, Ethiopia, Ghana, Kenya, Madagascar, Mozambique, Niger, Nigeria, Tanzania and Uganda.

Among these countries, the Democratic Republic of the Congo, Ethiopia, Madagascar, Mozambique, Niger, Tanzania and Uganda had less or equal to 5% of their populations with access to clean cooking.

Only 7% of South Sudanese have access to electricity

All 20 countries of the world with the smallest share of the population with access to electricity in 2019 were located in sub-Saharan Africa, underscoring just how big an issue it is in the region. At 7%, South Sudan had the lowest access to electricity globally, while countries including Chad, Burundi, and Malawi had slightly higher access rates but still at under 20%.

Among the 20 countries with the largest electricity access deficits, two African countries – Kenya and Uganda – have showed the greatest improvement since 2010, thanks to annual electrification growth rates in excess of three percentage points, driven largely by an integrated approach that has combined grid, mini-grid and on-grid solar electrification.

In 2018, Africa’s annual electricity demand was 700TWh, with the North African economies and South Africa accounting for over 70% of the total. The IEA expects other sub-Saharan Africa countries to see the fastest growth through to 2040. It expects energy demand to shoot up to between 1,600TWh and 2,300TWh under various scenarios by 2040, with most of the additional demand stemming from productive uses and emerging middle and higher-income households.

The region’s electricity generation capacity has expanded at an average of 4.8% a year since 2008, compared with 2.7% globally, according to the AEC. Nonetheless, Africa’s share of global electricity generation has been approximately 3% since 2000. In terms of sectoral electricity consumption, the industrial sector remains the region’s largest user (41%) followed by residential (33%), commercial and public services (18%) and agriculture (4%). Transport consumes a small proportion (around 1%) while the remaining 3% was accounted for by other sectors.

In September 2015, world leaders agreed to Sustainable Development Goal 7 (SDG7) as part of the 2030 Agenda. Its three core targets are: to ensure universal access to affordable, reliable and modern energy services by the year 2030; to increase substantially the share of renewable energy in the global energy mix; and to double the global rate of improvement in energy efficiency.

The problem for Africa is that it is hard to achieve universal access while at the same time markedly increasing the share of renewable energy, creating a conundrum for African leaders. The issue is exacerbated by sub-Saharan Africa’s high fertility rate at 4.62 births per woman in 2019 against a global average of 2.4 births. This fast-expanding population needs additional energy.

Africa wants to become a global powerhouse by 2063

Africa has its own blueprint and master plan for transforming the region into a global powerhouse of the future, called Agenda 2063. Adopted by the heads of state and governments of the African Union in 2015, it is incorporated in the national planning framework of over 30 countries. Under the blueprint, faster economic expansion is accompanied by the full achievement of access to electricity and clean cooking in line with SDG7.

In the case of electricity, this would require tripling the average number of Africans gaining access every year from approximately 20 million today to more than 60 million. Grid extension and densification is the least cost-option for almost 45% of the population gaining access by 2030, mini-grids for 30% and stand-alone systems for around a quarter. Liquefied petroleum gas is used by more than half of those gaining access to clean cooking in urban areas across sub-Saharan Africa, while improved cookstoves are the preferred solution in rural areas. Electrification, biogas, ethanol and other solutions also play important roles.

Africa’s electricity sector requires far greater investment in generation and grids, for which it currently ranks among the worst in the world, according to the IEA. Despite being home to 17% of the world’s population, the region accounts for just 4% of global power supply investment. Achieving reliable electricity supply for all Africans would require an almost fourfold jump in investment to around $120bn a year through to 2040. The IEA says that mobilising this sum is a big undertaking but can be done if policy and regulatory measures are put in place to improve the financial and operational efficiency of utilities, many of which are state-owned. These steps would also facilitate a more effective use of public funds that could act as a catalyst to private capital. Nurturing Africa’s own financial sector is also critical to ensure a sustained flow of long-term financing to energy projects.

“Africa is simply tired of being in the dark,” said Akinwumi Adesina, president of the AfDB, in a report. “It is time to take decisive action and turn around this narrative: to light up and power Africa – and accelerate the pace of economic transformation, unlock the potential of businesses and drive much-needed industrialisation to create jobs.”

Jean-Paul Adam, the director for technology, climate change and natural resources management at the UN Economic Commission for Africa (Uneca), agrees. “Africa requires a ‘just’ energy transition,” he says. “Access to electricity must be the number one priority of African countries. The region has the biggest energy deficit in the world, the scale of the challenge is huge. Additional coal use is not the solution. Coal-fired plants involve high upfront capital costs and the assets are likely to become stranded in the future as global energy supply chains move towards cleaner energy sources. In many countries coal-fired plants are also contributing significantly to negative health outcomes among populations. We encourage every African country to look at the right energy mix for itself and to make itself future-proof. It is important that they ensure future base generation capacity. Solar and wind are ill-suited to doing this on their own and need to be paired with other energy sources.

“Hydro-electricity is vulnerable to climate change. Recently, we have seen a number of droughts in southern Africa that make hydro less dependable than in the past. Natural gas is likely to play an important role in the coming decade as a transition fuel. It is the cleanest fossil fuel and is a good way of generating baseload energy, which allows additional renewable energy to be brought online. It can easily be used for other purposes, including clean cooking, as well. Gas can be used for base generation and solar and wind as intermittent forms of energy.”

He adds that doubling electricity generation from gas in Africa would allow the multiplication of solar and wind investments by 38 times. The corresponding increase in global emissions would be less than 1%.

Experts say that coal is not an issue in Africa, except in South Africa, where significant resources are needed to transition away from coal as it is a huge employer in the country.

Natural gas could be the transition fuel

In North Africa, gas already meets around half of the region’s energy needs, but in sub-Saharan Africa it has been a niche fuel. The share of gas in the energy mix is around 5%, the lowest in the world, according to the IEA. However, it could become a lot more important in the near term. There have been a series of major discoveries in recent years in Egypt, East Africa (Mozambique and Tanzania), West Africa (Senegal and Mauritania) and South Africa, which collectively accounted for over 40% of global gas discoveries between 2011 and 2018.

“These developments could fit well with Africa’s push for industrial growth and its need for reliable electricity supply (constraining the expansion of more polluting fossil fuels),” said the IEA in Africa Energy Outlook 2019. “Much will depend on the price at which gas becomes available, the development of distribution networks (including small-scale liquefied natural gas (LNG) distribution), the financing available for infrastructure and the strength of policy efforts to displace polluting fuels.”

In 2018, Mozambique had an estimated 204,747 billion cubic feet (bcf) of natural gas resources while Tanzania had 114,915bcf, Nigeria 91,973bcf, Angola 32,790bcf, and Equatorial Guinea 14,300bcf, according to Uneca. Nigeria had the biggest gas production at 1,653bcf, followed by Equatorial Guinea at 337bcf, Angola at 197bcf, Mozambique at 152bcf and Tanzania at 53bcf.

Natural gas could become a lot more important to African countries in the future, but it would require a massive investment in gas pipelines between countries. Furthermore, a number of the region’s ports would need to be expanded so that they could accommodate huge ships carrying LNG from the likes of Mozambique and Tanzania.

“There is no easy way of saying it, but Africa has the raw end of the deal at the moment,” says Daniel Kavishe, Africa economist at RMB, the South African investment bank. “The time when the traditional forms of energy – fossil fuels – could be used to drive industrialisation has passed. The region must find a way of industrialising that is a lot more dependent on renewable forms of energy.”

This could be an exciting moment for the region economically. The African Continental Free Trade Area, the world’s biggest free trade area with 54 participating countries, came into force on 1 January this year. It could spur much greater trade within the region and stimulate industrialisation, but a great deal of power will be needed for it to work.

African countries embrace renewables at slower pace

There are strong subregional differences in the pace of the transition to renewables, with southern Africa leading the way. South Africa alone is forecast to add almost 40% of Africa’s total predicted new solar capacity by the year 2030. Namibia is committed to generate 70% of its electricity needs from renewable sources, including all the major alternative sources such as hydropower, wind and solar generation, by 2030.

“This is a difficult moment for financing Africa’s industrialisation,” says Elena Ilkova, investment strategist at RMB. “African countries do not have sufficient internal financing to do so and more Western investors are looking at energy projects in the region with an environmental, social and governance (ESG) lens. This really impacts what they are prepared to invest in and will affect the region’s economic development.

“I think in an African context, it is important that investors put a lot more emphasis on the ‘S’ in ESG; the region’s massive social issues must be tackled. It is not clear that Western investors are prepared to back fossil fuel projects, including natural gas as well as oil and coal. They are keen on renewables, which creates a big opportunity for African countries to include renewables as part of their energy mix. However, I think we will see a shift to a greater use of natural gas in the region. It does not always involve laying long pipelines – gas stoves can be used in cooking, for example, replacing wood burning.”

It is not only Western investors that are becoming less enthusiastic about investing in fossil fuels, in particular coal. In October, for example, China also said it would no longer finance overseas coal-fired power plants. In June, China’s biggest bank, the Industrial and Commercial Bank of China, dropped plans to fund a $3bn, 2,800MW coal-fired power plant in Zimbabwe.

“Africa’s industrialisation has to be different from Europe’s,” says Dorsouma Al-Hamdou, acting director, climate change and green growth department at the AfDB. “We can now see that the developed world’s industrialisation was not right, it resulted in high carbon emissions. Africa must have a cleaner industrialisation. One of the region’s biggest issues is deforestation because most people need wood and charcoal for cooking. If we can move towards clean cooking, deforestation rates will decline.

“The correct balance must be struck between poverty reduction and net zero. Most of Africa is already at net zero, so talking about a transition to net zero does not make any sense. The region’s priority must be economic development, but it has to take into account the climate change dimension.”

Africa has abundant resources of oil and the associated revenues could be an important motor for development. However, changing global energy dynamics mean that resource-holders cannot assume that their oil resources will translate into reliable future revenues.

Africa is home to ‘transition metals’

The region is also home to many of the mineral resources that are critical in driving the global clean energy transition, so-called ‘transition metals’. The Democratic Republic of the Congo accounts for two-thirds of global cobalt production and South Africa produces 70% of the world’s platinum, for example. Rising demand for the minerals that can support global energy transitions offers an opportunity for minerals-rich countries in Africa. The region also has some of the world’s largest resources of bauxite, the world’s primary source of aluminium – it is predominantly mined in Ghana, Guinea and Mozambique.

Flows to developing countries in support of clean and renewable energy reached $14bn in 2018, with only 20% going to the least-developed countries, which are the furthest from achieving the various SDG7 targets. An increased emphasis on “leaving no one behind” is required in the years ahead, according to the World Bank.

In 2009, wealthy nations committed to collectively mobilise $100bn a year between 2020 and 2025 to help developing countries cut their emissions and adapt to climate impacts. Rich nations were $20bn short of the target in 2019, according to the Organisation for Economic Co-operation and Development. Based on recent trends, it was almost certainly not met in 2020 either. One of the key goals of COP26 will be to try to ensure that wealthy nations meet this pledge.

Lazarus Chakwera, the Malawian president, told ITV News recently: “Fulfil your pledge. I am talking to those developed nations north of us. Ten years ago, $100bn was pledged. We (in the developing world) need that support in order for us to do more solar and wind and hydropower production.”

Africa has enormous carbon sinks in the Congo basin, the world’s second-biggest river basin at 3.4 million square kilometres after the Amazon (seven million square kilometres). It is essential for global carbon emission levels that the international community helps African countries to preserve them.

Africa’s priorities are different from the rest of the world’s. Economic growth north of 6% is needed to reduce poverty significantly in the region. Environmental concerns are extremely important but must be weighed against improving the standard of living of hundreds of millions of people. As Africa’s population grows and the region industrialises, natural gas will become more critical, particularly during the next ten to 20 years. If foreign investors shun investments in all fossil fuel projects in the region because of ESG considerations, the continent is likely to remain extremely poor. There must be a huge effort to mitigate carbon emissions from land use, agriculture and forest conservation. Renewable forms of energy can be added to the energy mix over time, but natural gas must play a vital role in base generation.

This article is part of a series that GlobalData Media is publishing in the run-up to the next big UN climate conference, COP26, in Glasgow, from 1–12 November 2021. Our focus is on the opportunities and challenges for business of the transition to clean energy and net-zero greenhouse gas emissions. Other articles in this series include: