# How can we ensure that Africa’s energy transition aligns with its development ambitions?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-12-02
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Unlocking Africa's Renewable Energy Potential
Meta Description: Discover the challenges and opportunities Africa faces in transitioning to renewable energy, as discussed by Martin Soderberg and industry leaders.
URL: https://financedigest.com/how-can-we-ensure-that-africas-energy-transition-aligns-with-its-development-ambitionshtml

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_By_ **_Martin Soderberg,_** _Partner at SPEAR Capital_

With renewable energy cheaper and faster to bring to market than ever before, there is an understandable global push for countries to make the transition away from fossil fuels. That’s as true for Africa as it is for the rest of the world, even though the continent’s total emissions are [lower than the top 40 listed companies](https://www.bloomberg.com/opinion/articles/2021-11-03/the-stock-market-s-earnings-rally-was-great-shame-it-s-over) in Europe. Perhaps the strongest signal for the shift in emphasis to renewable energy came recently, with news that South Africa will [receive US$8.5-billion](https://www.reuters.com/business/environment/us-eu-others-will-invest-speed-safricas-transition-clean-energy-biden-2021-11-02/) from the US, EU, and UK to speed up its shift away from coal.

For years, the biggest counter to this push to renewable power is that it could handicap the growth ambitions of African countries, something the continent can ill afford as it looks to bounce back from the economic ructions that COVID-19 brought about.

But rather than being an obstacle to development, could Africa use the energy transition to push for new forms of development and leapfrog more [developed countries in much the same way](https://www.financedigest.com/3-impactful-ways-that-leaders-can-contribute-to-the-independent-development-of-their-employees.html "3 Impactful Ways that Leaders Can Contribute to the Independent Development of Their Employees") it did with mobile phones?

**[Africa’s growth](https://www.financedigest.com/addressing-the-credit-gap-to-unlock-economic-growth-in-africa.html "Addressing the credit gap to unlock economic growth in Africa") dilemma**

Before looking at how that might work, it’s worth digging a little deeper into the dilemma Africa faces. At present, it accounts for [less than three percent](https://www.energyforgrowth.org/blog/what-happens-to-global-emissions-if-africa-triples-down-on-natural-gas-for-power/) of global CO2 emissions. If you subtract South Africa and its heavy polluters ( [most notably Eskom](https://www.bloomberg.com/news/articles/2021-10-05/eskom-is-now-world-s-biggest-sulfur-dioxide-emitter-crea-says)), that number drops to around one percent. At the same time, the continent has long struggled when it comes to providing people with access to electricity. In fact, the 20 countries globally with the lowest levels of electricity access are [all located in Sub-Saharan Africa](https://www.brookings.edu/blog/africa-in-focus/2021/06/18/figure-of-the-week-increasing-access-to-electricity-in-sub-saharan-africa/). With the continent’s population set to [double by 2050](https://www.economist.com/special-report/2020/03/26/africas-population-will-double-by-2050), that’s simply unsustainable.

Yet it will also [face greater challenges when it comes to climate change](https://www.financedigest.com/the-changing-face-of-peer-to-peer.html "THE CHANGING FACE OF PEER-TO-PEER") than almost anywhere else on the planet.

Balancing the [need for growth and development with the climate](https://www.financedigest.com/analysis-global-climate-coalitions-need-safer-harbour-from-antitrust-turbulence.html "Analysis-Global climate coalitions need safer harbour from antitrust turbulence") reality is challenging. As Sumaila Zubaira, president of the African Finance Corporation (AFC), pointed out at the recent Nordic-African Business Summit (where SPEAR Capital was a regional partner), “We [live with climate change every day](https://www.financedigest.com/pensions-awareness-day-could-you-get-by-on-less-than-living-wage.html "Pensions Awareness Day: Could you get by on less than living wage? "). We have the lowest greenhouse gas emissions per capita, yet we are the most [impacted by climate](https://www.financedigest.com/climate-impacts-heading-to-uncharted-territories-of-destruction-un-chief.html "Climate impacts heading to ‘uncharted territories of destruction’ -UN chief") change. But then we have this massive [energy](https://www.financedigest.com/energy-bill-support-pushes-uk-budget-deficit-to-february-record.html "Energy bill support pushes UK budget deficit to February record") deficit.”

He also pointed out that not addressing this deficit means that, unless they are given alternatives, a [growing number of Africans will be forced to turn to the continent’s forests for fuel](https://www.financedigest.com/bank-finance-for-cleaner-energy-grows-but-still-lags-fossil-fuels-report.html "Bank finance for cleaner energy grows, but still lags fossil fuels – report"), eroding one of the globe’s great carbon sinks.

“Our view is that the energy transition needs to be balanced and just and consider the fact that most African countries rely on fossil fuels for revenue and that there’s a need to [continue to develop](https://www.financedigest.com/southampton-development-continues-to-excite-local-investors.html "SOUTHAMPTON DEVELOPMENT CONTINUES TO EXCITE LOCAL INVESTORS") fossil fuels, especially natural gas, which is quite clean,” he added. “For us to have the baseload we need, we need to balance [renewables](https://www.financedigest.com/ges-investors-seek-solutions-to-renewable-energy-supply-chain-challenges.html "GE’s investors seek solutions to renewable energy, supply chain challenges") with more traditional forms for energy.”

Backing up this line of thought was Tellef Thorleifson, CEO of Norfund, the Norwegian [Investment Fund for developing](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") countries.

As well as reiterating the emission and baseload arguments, he pointed out that there is a moral argument to be made for allowing Africa to take a more balanced approach to its energy transition.

“Norway has become incredibly rich, very much because of oil. Why shouldn’t Africa be [allowed to explore](https://www.financedigest.com/new-tool-allows-you-to-explore-the-entire-british-coastline-from-your-sofa.html "New tool allows you to explore the entire British coastline from your sofa") its riches, when we still do it in Europe and the US?” he asked.

**The opportunity**

That need for [growth and development](https://www.financedigest.com/brand-metrics-continues-on-steep-growth-trajectory-with-appointment-of-vp-business-development-in-the-us.html "Brand Metrics continues on steep growth trajectory with appointment of VP Business Development in the US") does not, however, mean that Africa should shy away from the energy transition.

As former director of the UN Environment Programme (UNEP), Dr Erik Solheim, pointed out, “There are enormous opportunities for investing in [green](https://www.financedigest.com/britains-tax-take-risks-blowing-green-energy-off-target.html "Britain’s tax take risks blowing green energy off target") energy.”

As evidence of this, he pointed to US president Joe Biden’s trillion-dollar-plus push for green energy in the US, the expanded number of jobs in the green energy sector, and the announcement by Chinese president Xi Jinping that China would no longer [invest in new coal projects](https://www.financedigest.com/investing-trends-and-projections-for-2023.html "Investing Trends and Projections for 2023"), favouring a shift to renewables.

“Green is gold,” he added. “Africa should adopt this attitude. There’s not a [cost to going green](https://www.financedigest.com/green-initiatives-cut-self-storage-business-space-stations-energy-costs-by-75.html "Green initiatives cut self-storage business Space Station’s energy costs by 75%"), but an enormous opportunity for jobs and to leapfrog into the new green future.”

**A** [level playing field](https://www.financedigest.com/using-agility-to-resist-economic-instability-and-level-the-playing-field.html "Using agility to resist economic instability and level the playing field")

Ultimately, however, what may [level the playing field](https://www.financedigest.com/eu-u-s-eye-level-playing-field-for-eu-electric-cars-in-u-s-market.html "EU, U.S. eye level playing field for EU electric cars in U.S. market") is cost. While it’s true that some forms of [fossil fuel](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035") are currently still cheaper per kilowatt-hour than solar and other forms of renewable energy, costs are coming down all the time.

“I’m a technology optimist,” said Elsbeth Tronstad, a former executive at SN Power and former state secretary for Norway’s Ministry of Foreign Affairs. “Looking back at how the [energy sector](https://www.financedigest.com/switzerlands-engineering-sector-urges-country-to-start-energy-saving-now.html "Switzerland’s engineering sector urges country to start energy saving now") has developed over the past 20 years is amazing. Renewable technology is moving fast and [things](https://www.financedigest.com/4-things-to-do-if-you-run-into-problems-with-your-leased-car.html "4 Things to Do if You Run Into Problems With Your Leased Car") like battery technology will help solve the baseload problem.”

Africa undoubtedly has immense carbon-based resources, but it also has massive potential when it comes to renewable energy. If this type of [energy becomes more affordable than fossil-fuel energy, not just in the long term but in the immediate sense, then it will no longer be a case of balancing the energy transition with Africa’s development needs](https://www.financedigest.com/swedish-energy-minister-need-to-decouple-gas-from-electricity-price.html "Swedish energy minister: need to decouple gas from electricity price"). The transition will, in fact, fuel [growth and development](https://www.financedigest.com/high-quality-low-voltage-motors-market-recent-industry-developments-and-growth-strategies-adopted-by-players.html "High Quality Low Voltage Motors Market: Recent Industry Developments and Growth Strategies Adopted by Players").

For now, however, [countries in the developed world](https://www.financedigest.com/richest-countries-in-the-world.html "Richest countries in the world") should focus their energies on dramatically reducing their carbon emissions without making demands on Africa they could not hope to keep themselves.


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