What are the prospects for low-carbon growth in Africa?

4 April 2017

Green energy in Africa is in the spotlight this week as the Clean Energy Summit gets underway in Ghana, where discussions will range from mitigating climate change to finance for renewables and business growth. Last month as part of my work on low-carbon development I participated in SOAS' sixth annual African Development Forum 'Energy and Agency: Fuelling Africa’s Development'.

IDS Researcher Ana Pueyo speaking at SOAS event on green energy in Africa

Ana Pueyo on the panel at the SOAS African Development Forum (Photo credit: SOAS)

There as part of the Climate Change Panel, I had four main messages:

  1. Africa's Green House Gas (GHG) emissions are not irrelevant
  2. Renewable energy is key for making poverty eradication compatible with climate stabilisation in Africa
  3. Renewable energy will only experience mass deployment in Africa if it becomes cheaper than fossil fuels
  4. Renewables are only competitive with fossil fuels under circumstances that most Sub-Saharan Africa (SSA) countries don't meet.

GHG emissions in Africa are insignificant now, but are posed to rise dramatically

We often hear from African leaders that they are not responsible for climate change but they are the most vulnerable to their consequences. Their emissions are insignificant at a global scale and, as Africa's bigger impediment to growth is energy, they should be allowed to develop using oil, coal, gas and large dams as wealthier countries have done in the past.

The argument is correct in many ways. Africa's carbon footprint is very small. SSA emits only 2% of global CO2 emissions but it hosts 18% of the population. Furthermore, delivering universal access to modern energy by 2030 would have a tiny impact on global GHG emissions, due to the very low demand of poor rural population currently without access.

However, this narrative takes a static perspective of Africa's role in the climate and development debate. It assumes that Africa will remain poor, or at least poorer than the rest of the world. In fact, if Africa does not choose low carbon pathways as it grows wealthier, it will be extremely difficult to achieve climate stabilisation. The emissions from Least Developed Countries (LDC) - most of them African countries- are expected to triple between 2010 and 2050. By 2050 they will account for half of the world's carbon budget required to keep temperature increases below 2°C .

Energy consumption will become more important as a source of GHG emissions. At the moment, globally, energy accounts for around 70% of GHG emissions, but in Sub-Saharan Africa, agriculture and land use changes are the main emitters and energy accounts only for around 15% of emissions.

Not only the amount of energy consumption will increase, but its profile will change dramatically. At the moment biomass (mainly charcoal and fuelwood for cooking) accounts for more than 60% of total energy use in SSA. Electricity constitutes 7% of final energy consumption, or only 4% if we exclude South Africa. Fossil fuels, mainly for transport would complete the mix. Compare this to the situation of the UK, where electricity accounts for 18%, petroleum products, mainly for transport, account for 47% and natural gas for 29% of emissions.

What does the future hold for African GHG emissions?

Without a readily available, cheap green alternative to oil, transport emissions will soar as African countries close their infrastructure gap by building more roads and railways.

The importance of electricity in the energy mix will also grow. As poor households incomes rise, they will get an electricity connection, buy electric appliances and use ICTs. Challenges for climate change mitigation will not just come when every African household gets a refrigerator, but when they get smartphones. Small as they may look, our smartphones consume more electricity than energy-efficient refrigerators.

Many foresee that the change of paradigm towards the 4th industrial revolution based on the digitalisation of the economy (the internet of things, cloud computing, cyberphysical systems), could make Africa the next great leapfrogging success story, bypassing an industrialisation model based on manufacture. But that would also see electricity requirements rise exponentially.

How can this growth in electricity consumption be made compatible with climate stabilisation?

Renewable energy will be essential to make poverty reduction compatible with climate stabilisation goals. Improving energy efficiency is also a key ingredient of decarbonisation, but in the past it has not been enough to compensate for the fast growth in income per capita and population in developing countries.

At the moment, Africa's electricity sector is heavily reliant on large hydropower and fossil fuels, mainly coal in Southern Africa, and gas in Western Africa. But Africa is also rich in renewable energy resources. It has world class wind, solar, geothermal and hydro resources, but these remain underutilised. There a perception in Africa that renewable energy is “expensive” and that under a development-first approach, Africa should be exploiting lower cost fossil fuels. African countries will not follow the path of renewable energy if this is more expensive than traditional fossil fuels and therefore in conflict with poverty reduction targets.

On the other hand, we often hear that renewables are the cheapest alternative in many markets, where they no longer require subsidies for financial viability. For the first time in 2015 developing countries invested more than developed countries in renewable energy (pdf). In the same year, more renewable than fossil fuel based capacity was added to the global generation mix.

So is the high cost of renewables in Africa then just a "perception"? The truth is the spectacular cost reductions experienced by some developing economies, such as China, India, South Africa, Brazil or Uruguay, were enabled by conditions non-existent in most SSA countries, mainly: a large demand, credible policies and access to low cost, and patient capital.

There are also technical constraints that particularly affect SSA, such as the mismatch that often exists between where vast energy resources are located and where the significant demand is located. This requires large investments in transmission lines to transport the energy, but there is little finance or political will to invest in the network elements of the electricity system.

In many cases, there is not enough demand in the whole country where the renewable resource is located and cross-border trade is then key for the financial viability of large renewable energy projects. International trade can also provide a back-up when national demand is high but the wind is not blowing or the sun not shining. Countries like Denmark in Europe, for example, keep a large share of wind capacity by exporting excess generation to its Nordic neighbours when the wind blows, and importing hydro power when it does not.

Developing regional power pools would strongly contribute to the decarbonisation of the African power system, as advocated by the International Renewable Energy Agency with its Africa Clean Energy Corridor initiative. But African electricity markets remain small and fragmented and policymakers stay reluctant to rely on their neighbours for the supply of electricity.

Countries leading the way in renewables

In spite of these constraints, there are many positive experiences in Africa that can pave the way forward for the continent. These include the fast dissemination of off-grid solar systems in East Africa, reaching rural areas that would have taken decades to be connected to the grid; or the successful experiences of Kenya's geothermal, or South Africa's renewable energy auctions. Africa offers the opportunity to leapfrog to decentralised renewable generation for vast rural areas currently underserved. Also, because the generation gap is so large, the competition between fossil-fuel based incumbents and non-fossil generators is not as intense as in countries with a stagnant demand.

In conclusion, Africa needs four key ingredients for the mass deployment of renewable energy technologies: patient capital, macroeconomic and policy stability and regional collaboration. Getting these conditions right could dramatically reduce the cost of renewable generation and be a game changer for the regions’ low carbon growth prospects.

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