EU proposal a game changer for Africa’s natural gas push

Nairobi. Africa’s push for a just energy transition has been given fresh impetus after the European Union drafted a proposal to classify natural gas projects as “green energy” investments.

This would mean that for several decades more, natural gas-endowed states in Africa could plough billions from the sale of the commodity into their economies, create jobs and invest in clean energy.

Natural gas and nuclear projects could soon be included in the European Union’s “sustainable finance taxonomy” after Brussels announced plans to label the two energy sources as ‘green’ investments.

“Taking account of scientific advice and current technological progress, as well as varying transition challenges across Member States, the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future,” the European Commission said in a press statement released on January 1.

According to the Commission, gas and nuclear projects will be considered green if they produce emissions below 270g of CO2 equivalent per kilowatt-hour (kWh).

While the EU’s move has elicited a backlash from climate change activists who accuse the commission of “greenwashing” dirty fuels, the proposal could be a game-changer in Africa.

Vijaya Ramachandran, director for energy and development at the Breakthrough Institute in Berkeley, California told bird that the Commission’s decision was a step in the right direction but should be followed through with action.

“If the EU acts in a fair manner, it will afford Africa a just energy transition by enabling investments in natural gas just as it does for its member countries,” she said. “However, it may decide to follow one set of policies at home (classifying natural gas as green) while still opposing the financing of natural gas by the World Bank and the European Investment Bank. If this is the case, these actions can be termed immoral and unjust; a form of green colonialism.”

At Cop26, 20 countries and five development banks had pledged to stop approving finance for fossil fuels by the end of 2022. They included the US, Canada, the World Bank, most of Western Europe and six African states.

On the sidelines of the event, Nigeria’s foreign minister Geoffrey Onyeama in a joint press conference with US Secretary of State Anthony Blinken, lambasted the move as ill-advised and appealed for gradual de-carbonising of fossils industries in Africa.

“This would really be a huge blow for countries such as ours that want to see gas as a transition fuel and to have time in which to work towards net zero… but in the meantime to be able to also continue to use gas and exploit the gas that we have at our disposal.”

Already, African states were struggling to attract fresh investments into the oil and gas sector.

The EU’s move would be music to the ears of states like Nigeria, Algeria and Mozambique - all countries which, with adequate investments, will be able to profit from their vast deposits of natural gas.

As of 2020, Africa had over 630 trillion cubic feet in natural gas reserves, according to the data research firm, Statista.

Statista figures show Nigeria accounts for the bulk of the continent’s natural gas deposits, boasting more than than 200 trillion cubic feet in natural gas reserves.

Algeria and Mozambique followed, with 159 trillion cubic feet and 100 trillion cubic feet, respectively.

According to S&P Global Platts, nearly 40 per cent of global new gas discoveries in the last decade were in Africa, mainly in Senegal, Mauritania, Mozambique and Tanzania, with 17 countries already producing gas with seven net exporters and seven net importers, according to the African Energy Commission.

“Over 45 percent of African natural gas production is exported” said the energy and commodities data company.

In her recent essay in the Foreign Policy, Ramachandran argued it is “not true that Africa’s energy development will sabotage the world’s climate rescue plan.”

“Not a single African nation is planning a long-term future dominated by fossil fuels. Kenya, Zambia, and Ethiopia already generate more than 50 per cent of their power from renewables (versus just 20 per cent for the United States),” she wrote in part.

“Nigeria’s population is on track to surpass the United States by 2050, but it currently has less than 1 per cent as much power capacity. So what is Nigeria’s energy transition plan as presented in Glasgow? Grow electricity capacity about eightfold by 2050 using mainly solar power.”

Africa contributed just 4 per cent of greenhouse gas emissions between 1990 and 2017 despite constituting 17 per cent of the world’s population, making it the least polluter. Opinion is divided on whether Africa can afford to strand its fossil fuels. New discoveries of oil and gas signal possible fortunes – but at what cost?

The AfDB notes that a “renewable energy revolution could unlock Africa’s social and economic development. However, a change in the political economy is needed to move away from the current preoccupation with big power projects, centralised electricity production and a heavy reliance on coal.”

OPEC Secretary-General Mohammed Barkindo and his counterpart at the African Petroleum Producers Organisation (APPO) Omar Farouk Ibrahim have insisted that only a dual carriageway will propel Africa’s energy agenda –– where fossils and renewables are ingredients in the continent’s energy cocktail.

At a meeting in Brazzaville, Congo last year, the two industry captains pushed for an adaptive and market-driven approach in the energy transition, where hydrocarbons are not excluded or eradicated.

“We will not allow billions of barrels of oil to go to waste and we will not be bamboozled into projects that we don’t need – ones which will not address energy poverty. We need to sit down and have an honest conversation about the energy transition,” Ibrahim said. Those sentiments were echoed by Barkindo.

“We in OPEC also categorically reject the narrative that the energy transition is from hydrocarbons to renewables because this narrative is completely misrepresenting science,” Barkindo reiterated.

“We believe that all sources of energy are required today and in the future to meet the challenges of climate change and future energy demand. According to our World Oil Outlook at OPEC, energy demand will grow by a minimum of 25 per cent between now and 2045. Therefore, we have to promote all energy resources in an efficient and sustainable manner. Our industry, therefore, is part of the solution to climate change.”

As the least contributor to greenhouse emissions, players in Africa’s petroleum industry feel they are justified in pushing back.

OPEC and APPO argue that the global south and especially Africa should be given leeway to power their economies with hydrocarbons just like the West did.

Petroleum firms argue that industrialised countries were able to overcome others in wealth and power by tapping into fossil fuels hence Africa should do so too.

International climate policy expert Mohamed Adow noted that the UK for decades funded and profited from the expansion of fossils in Africa. “While it was reaping the benefits of decarbonising its own energy system it was shackling poorer nations with dirty fossil fuel infrastructure, which the world must now move away from,” he pointed out in an Op-Ed in the Independent.

He further argues that if rich polluters want Africa to leapfrog the dirty development path and harness clean energy –– then it must pay for it. But the bill is huge.

In July 2021, South Africa’s national power utility firm, Eskom Holdings SOC Ltd, put forward a 10 billion US dollars plan to multilateral banks and agencies to help it transit to renewables.

Eskom emits nearly 213 million tonnes of CO2 equivalent a year, making it one of the biggest fossil fuels emitters in Africa. (Bird)

With the cost still sky high and nobody willing to pay, OPEC and APPO argue that Africa’s energy transition should be gradual.

But the oil and gas industry is facing growing opposition from a public greatly concerned with the environmental impact of fossil fuels and ever-more sceptical investors.

With 16 trillion dollars in expected investment in the next decade, the case for decarbonising the continent is stronger.

Countries in Africa are already positioning themselves as recipients of some of that huge renewable energy spend and some African countries are already turning themselves into frontrunners in the global clean energy transition.

South Africa and Morocco are both touting their technological innovations around green hydrogen, while many countries on the continent are making or enabling large investments in solar PV and wind generation.