1.1 Introduction: Aim of the Book
The world is transitioning to a low-carbon economy. How are African countries responding to this transition? The book, āEnergy Transitions and the future of the African Energy Sector: Law, Policy and Governanceā, aims at addressing the key concerns for African countries with respect to energy transitions. There have been initiatives on the African continent to embrace this transition as evidenced in not only these countriesā commitment to the 2015 Paris Agreement on Climate Change, but also various efforts in deploying renewable energy and energy efficiency technologies. The transition is already happening in other parts of the globe, including Europe and North America, and it is also partly visible in some African countries. However, many African policymakers are concerned about the decline in investments in fossil fuels. Fossil fuels undoubtedly have a crucial role to play in these countriesā economic development. Additionally, fossil fuels are vital for tackling energy access challenges on the continent. Goal 7 of the United Nations Sustainable Developmental Goals (SDG) advocates for access to affordable and clean energy for all.1
Although access to modern energy such as electricity is crucial to addressing other global challenges such as poverty, famine and gender inequality2: data shows that 3 billion people which is more than 40% of the world population, are still relying on polluting and unhealthy fuels for cooking.3 The figures are worrying in Africa as reports show that 600 million people do not have access to electricity, and around 900 million people lack access to clean cooking facilities.4 Although the African continent is endowed with massive renewable energy sources including wind, solar and hydropower: the anticipated urbanisation and population growth will necessitate the utilisation of all the available energy resources, including fossil fuels. The International Energy Agency (IEA) data reveals that the African continent will become the most populous region by 2023, as one-in-two people added to the world population between today and 2040 are set to be African.5 The anticipated boom in population growth, urbanisation and industrialisation will necessitate an increase in energy demand and consumption on the African continent. Albeit, energy, especially fossil fuels, are the main contributor to climate change as it produces around 60% of greenhouse gases.
African policymakers are therefore faced with the dilemma of addressing the energy and economic challenges on the continent and at the same time addressing the climate change challenges. As evidenced in the data, by 2040 the continent will require more energy including fossil fuels to meet the growing energy demand, and yet, the UN Intergovernmental Panel on Climate Change (IPCC) issued a warning in 2018 that humanity had just twelve years to limit global warming to below 2 Ā°C.6
Energy transitions are, therefore focused on the need to address climate change by shifting from fossil fuels to renewable energy sources. There is no doubt that fossil fuels have powered the industrialisation and economic development of many developed countries, and it would only be fair for developing countries such as those in Africa to benefit from these resources.7 However, it is no longer a question of fairness but rather preparedness. The global efforts to transition to a low-carbon economy is associated with both positive and negative impacts, and African policymakers have to be well-equipped with effective policies and strategies to respond to the energy transition and its associated effects. Positively, a transition to a low-carbon economy presents an opportunity for us to tackle climate change; new jobs will also be created. However, negatively, the transition is likely to escalate energy access challenges and poverty on the African continent, mostly due to reduced levels of finance for fossil fuel energy projects.8
The need to tackle climate change and the lowering costs for renewable technology have in recent years made many companies and financial institutions to question their investment plans in fossil fuels. In Norway, for instance, there has been a halt in fossil fuel investments. In June 2020, the Norwegian parliament recommended that the Sovereign wealth fund sells off more than $10 billion of stocks in companies related to fossil fuels.9 This, in practice, implies that the country is shifting from fossil fuels to clean energy. In this respect, the Wealth Fund can no longer invest in companies that mine more than 20 million tonnes of coal annually or generate more than 10,000 MW of power using coal.10 Besides Norway, in November 2019, The European Investment Bank (EIB), approved a policy to ban funding for oil, gas and coal projects at the end of 2021. Since 2013, the EIB has funded ā¬13.4bn of fossil fuel projects, and in 2018 alone, it funded about ā¬2bn worth of projects. With the ban, however, no more fossil fuel projects will be funded after 2021, although gas projects could still be funded as long as they are utilising clean technologies such as carbon capture and storage, combining heat and power generation, or mixing in renewable gases with the fossil natural gas.11 Besides the reduction in fossil fuel funding, climate activists have also put massive pressure on investors. For instance, in June 2019, Kenya halted the Lamu coal power project due to environmental concerns.12 Protests against coal projects have also been evidenced in European countries such as Germany.13
Besides the decline in fossil fuel investments, a transition to a low-carbon economy is also becoming more attractive due to the lowering costs for renewable energy. Data has emerged that shows that renewable energy is becoming more cost-effective compared to other sources of energy, even in the absence of subsidies.14 This is mainly due to the decline in the costs of installation and maintenance of renewables.15 Despite all these developments, we have seen that amid a pandemic such as the Coronavirus disease (COVID-19), countries have taken drastic measures to respond to energy security, including making massive investments in fossil fuels. For instance, in June 2020, China expanded its coal plant capacity to respond to the negative impacts of the COVID-19 pandemic. Statistics indicate that China approved the construction of more coal power plant capacity in the period to mid-June than in all of 2018 and 2019 combined.16 Additionally, most African countries are still reliant on fossil fuels to meet their energy demand. In South Africa, for instance, most of the electricity is powered by coal. However, the countryās coal-fired fleet is ageing, and as such, there are efforts to diversify the power mix by introducing natural gas and renewables, including concentrating solar power (CSP).
Taking stock of the above, we note that there are mixed signals concerning energy transitions. With the global energy transition debate, African countries are not only worrying about a decline in fossil fuel investments; but they must plan for decommissioning. The future of the African energy sector in the Energy Transition era, therefore, requires African countries to set up strategies, revise their energy laws and policies to comply with the energy transition developments. This book, therefore, highlights the key considerations for African countries concerning developing their extractive sector in the energy transitions era. The book also introduces the energy progression discussion as an alternative to energy transitions, especially for African countries.
1.2 The Future and Role of Fossil Fuels in Africa in the Energy Transition Era
One of the main barriers to energy transition...