Africa is currently locked with the global energy system in an intense debate about what role its vast gas resources should play in the global energy transition.
Beyond that is the wider question about what comes first – development or transition?
The West-led industrialized world is leading the argument that, with the risk of irreversible rise in global temperatures, and the disaster it could bring, the world must roll back the use of carbon emitting fuels, including natural gas. Instead, everyone must embrace greener alternatives like solar and wind, and any investment in extractive hydrocarbons must increasingly be short term.
As President Joe Biden’s climate ambassador, John Kerry led the charge for this line of argument, prior to the inauguration of Donald Trump, who scuttled the American renewable energy initiative.
“Can a conversation be held around accelerating mass adoption of LPG as domestic gas in exchange for deforestation in sub-Saharan Africa with firewood and other biomass, with all the conflicts it produces? Afterall, the reality is that as Africa’s rising population is increasing emissions by felling more and more trees for firewood. How can such resource utilization swaps be quantified and readied for as a case for investment, with what guarantees, and by whom? That is the line that needs to be pursued.”
Mr. Kerry toured the African continent, spreading a warning: even if gas were to serve as a transition fuel for Africa, any investment with a time horizon beyond ten years would not be viable and should be abandoned. To African environment ministers gathered in Senegal in September 2022 he said: “We are not saying no gas. (But) we do not have to rush to go backward, we need to be very careful about exactly how much we are going to deploy, how it is going to be paid for, over what period of time and how do you capture the emissions.”
Yet, it’s not just one voice that is calling for the commercialization of Africa’s 625Trillion cubic feet (Tcf) gas reserves before it’s timed out by the transition to lower carbon fuels. A world economic Forum report in 2021 sums it up, quoting Fatih Birol, Executive Director of International Energy Agency: “If we make a list of the top 500 things we need to do to be in line with our climate targets, what Africa does with its natural gas does not make that list. New long lead time gas projects risk failing to recover their upfront costs if the world is successful in bringing down gas demand in line with reaching net zero emissions by mid‐century.”
At the other end are energy poor, less developed nations, many of which are in Africa. With most of hydrocarbon resource-rich Africa just beginning to exploit its natural resources, and very far behind in global development goals, many feel that it is only fair that Africa is allowed to leverage its gas for economic development. For instance, it would provide electricity, without which schools, homes and factories cannot do what is needed to roll back poverty, Goal 7 of the UN Sustainable Development Goals is : “Ensure access to affordable, reliable, sustainable and modern energy for all.”
Currently, Africa lags all other regions on this universally charted goal despite its enormous natural gas reserves, which make up nearly 15% of the world’s volume. The continent’s leaders therefore argue that, since gas is less of a polluter, it could play the role of a transition fuel, a midway between carbon-heavy fuels like coal and crude oil on one hand and on the most desirable end of the green spectrum, renewables. The point is made that, yes, the environment may be at risk, but in Africa, people are at graver risk of basic survival.
The International Energy Agency estimates that despite the abundance of natural gas on the continent, more than 600Million, or about half of the people in Africa, do not have access to electricity, a utility that people in the developed world take for granted. This is a disproportionate 72% of such energy poor people in the world.
“Unfortunately, African gas owning nations did not sufficiently leverage the gas-panic in Europe to negotiate substantial gas development financing in Africa. Nigeria for instance has barely even recognized this opportunity, least of all exploit it. It is a prime role of industry thought leaders such as the Nigeria Gas Association to nudge policy makers towards what is achievable, rather than what is not.”
To understand what this means at country level, take Nigeria for example. Here’s what the World Bank recently reported: “85Million Nigerians don’t have access to grid electricity. This represents 43% of the country’s population. It makes Nigeria the country with the largest energy access deficit in the world. The lack of reliable power is a significant constraint for citizens and businesses, resulting on annual economic losses estimated at $26.2Billion (₦10.1Trillion) which is equivalent to about 2% of GDP. According to the 2020 World Bank Doing Business report, Nigeria ranks 171 out of 190 countries in getting electricity and electricity access is seen as one of the major constraints for the private sector.”
Regarding the debate about Africa’s energy paradox, the transition versus development challenge, we’ve been this way before. Remember the debate about whether the world should embrace computers, for fear that devices could replace humans and a global loss of jobs and livelihoods would follow if computers became ubiquitous and robots took over offices and shop floors. More recently, we all remember the battle about globalization, whether nations ought to allow their corporate citizens to relocate production activities – read jobs – to countries where labour is cheaper, then repatriate the finished goods to the home market where the purchasing power is stronger. Time has answered these debates, and the answer is the same: economy trumps politics when the chips are down.
It’s no different on the energy front. In an age when transition economics has gained momentum and is accelerating towards greener energy, Africa can only succeed in leveraging its immense gas resources, through pragmatic engagement of the rest of the world, not through sentimentalism. This is especially so because gas peculiarly requires a large outlay of capital to develop, produce, transport, and deliver, and must be traded across all over the world with buyers who must enter long term commercial commitments. Even for domestic applications such as power generation a certain quantum of funded demand and capital investment in infrastructure is required to make gas to power projects viable.
How then must Africa begin the effort to successfully position gas a transition fuel and development driver? Africa must first recognize that energy is a strategic resource not a transactional commodity nor a pure political tool, then go from there.
How so? Africa must, one, build a compelling continental consensus about gas as a transition tool, which implies a recognition that transition is an imperative. Two, the continent must develop workable frameworks to translate such a consensus into a commercial engagement with itself and the global energy system (suppliers and buyers). Three, Africa must collectively develop a viable model for accommodating the role of other energy types including the smaller spectrum of the extractive hydrocarbons and non-hydrocarbon derivative fuels such as nuclear and hydrogen, all the way to biofuels and renewables such as solar.