Thursday, September 09, 2021 / 4:15 PM / by Prof. Yemi Osinbajo / Header Image Credit: Britannica
In April, seven European countries, including France, Germany, and the United Kingdom, announced that they would halt public funding for certain fossil fuel projects abroad. A little less than one year prior, Norway's sovereign wealth fund, the largest in the world, sold out of positions in major mining and energy companies because of environmental concerns. And in 2018, Ireland became the first country to pledge to entirely divest from fossil fuels.
Related Link: COP26: A More Ambitious Climate Agenda
After decades of profiting from oil and gas, a growing number of wealthy nations have banned or restricted public investment in fossil fuels, including natural gas. Such policies often do not distinguish between different kinds of fuels, nor do they consider the vital role some fuels play in powering the growth of developing economies, especially in sub-Saharan Africa. As development finance institutions try to balance climate concerns against the need to spur equitable development and increase energy security, the United Kingdom, the United States, and the European Union have all taken aggressive steps to limit fossil fuel investments.
The World Bank and other multilateral development banks are being urged by some shareholders to do the same. The African Development Bank, for instance, is increasingly unable to support large natural gas projects in the face of European shareholder pressure. Even UN Secretary-General Antonio Guterres has called on countries to end all new fossil fuel exploration and production.
Although all countries must play their part in the fight against climate change, a global transition away from carbon-based fuels must account for the economic differences between countries and allow for multiple pathways to net-zero emissions. For countries such as my own, Nigeria, which is rich in natural resources but still energy poor, the transition must not come at the expense of affordable and reliable energy for people, cities, and industry. To the contrary, it must be inclusive, equitable, and just-which means preserving the right to sustainable development and poverty eradication, as enshrined in global treaties such as the 2015 Paris climate accord.
Little Gain, Much Pain
Curbing natural gas investments in Africa will do little to limit carbon emissions globally but much to hurt the continent's economic prospects. Right now, Africa is starved for energy: excluding South Africa, sub-Saharan Africa's one billion people have the power generation capacity of just 81 gigawatts-far less than the 108-gigawatt capacity of the United Kingdom.
Moreover, those one billion people have contributed less than one percent to global cumulative carbon emissions. In Nigeria, for instance, the average person emits just 0.6 metric tons of carbon per year, a fraction of the 4.6 tons per capita global average and even less than Europe's 6.5 tons per capita and the United States' 15.5 tons per capita.
Put another way, energy use and emissions are so low in sub-Saharan Africa that even tripling electricity consumption through natural gas-which no one is proposing-would add just 0.6 percent to global emissions.
But limiting the development of fossil fuel projects and, in particular, natural gas projects would have a profoundly negative impact on Africa. Natural gas doesn't make sense in every African market. But in many, it is a crucial tool for lifting people out of poverty. It is used not only for power but for industry and fertilizer and for cleaner cooking. Liquified petroleum gas is already replacing huge amounts of hazardous charcoal and kerosene that were most widely used for cooking, saving millions of lives that were previously lost to indoor air pollution. The role of gas as a transition fuel for developing countries, especially in Africa, cannot be overemphasized.
Yet Africa's progress could be undone by the rich world's efforts to curb investments in all fossil fuels. Across sub-Saharan Africa, natural gas projects are increasingly imperiled by a lack of development finance. Institutions such as the U.S. International Development Finance Corporation and the World Bank's International Finance Corporation were specifically created to help spur high-impact projects in countries where private capital is not yet filling the gap.
Gas pipelines and power plants in the most energy-hungry markets need development finance to attract other capital and enable such projects to proceed. In Nigeria, a consortium of international finance agencies helped build the Azura-Edo power plant, which by itself boosted our national capacity by ten percent. But many more such power plants are needed to deliver electricity to our people, to power our industry and growing cities, and to balance intermittent solar power. A blanket ban on finance for all fossil fuels would jeopardize those objectives.
Efforts to restrict fossil fuel investments in Africa are even harder to stomach because many of the wealthy countries behind them-including Japan, the United Kingdom, and the United States-include natural gas in their own multidecade plans to transition to clean energy. Belgium, for example, has doubled its gas use since 1990 and has plans to build even more gas-to-power capacity in the coming years.
Germany insists on burning coal until at least 2038 and is building the Nord Stream 2 gas pipeline to secure its own energy security. Some of the biggest private European and U.S. firms are even developing natural gas in Africa-in Ghana, Mozambique, Nigeria, and Senegal, among other countries for export to Asia and Europe. Yet at the same time, their governments seek to choke off financing to gas projects for domestic use in Africa.
Fueling a Greener Future
In Nigeria, clean energy is central to our government's plan to transition to net-zero emissions. Our flagship Solar Naija program, for instance, aims to electrify five million households by 2023, leveraging solar minigrids and standalone systems. But off-grid renewables are only one part of the solution. For Nigeria and most other sub-Saharan nations, weak traditional grids will continue to hamper wind and solar penetration long into the future.
Gas-fired power can be quickly ramped up or down to meet demand, thereby helping balance Nigeria's energy mix and enabling greater use of variable sources, such as wind and solar. And because the expected operating life for natural gas plants of the kind Nigeria needs is between 25 and 30 years, we will have time to transition to an even cleaner energy system by midcentury.
But our citizens cannot be forced to wait for battery prices to fall or new technologies to be created in order to have reliable energy and live modern, dignified lives. Nigeria and other African countries are committed to a net-zero future, not least because of our acute vulnerability to the adverse effects of climate change. We have expressed our commitment to the Paris accord through our nationally determined contributions. But our commitment to climate action cannot be separated from our energy needs.
A just global energy transition must include Africa, and it cannot deny our people their right to a more prosperous future. Instead of hampering the continent's economic development, the rich world should help Africa's energy producers secure financing for vital natural gas projects that can serve as a bridge to net-zero and for renewable projects and the modern grids required to handle them. Climate action shouldn't mean strangling all fossil fuel projects but rather facilitating the flow of capital to the countries that need it most.
About the Author
Professor Yemi Osinbajo is the Vice President of Nigeria.
Related Link: COP26: A More Ambitious Climate Agenda