Can the world prevent catastrophic climate change while building the energy systems needed to sustain growth, create jobs and lift millions of people out of poverty? That question goes to the heart of the defining development challenges of the 21st century, and is the focus of this year’s report.
Unlocking this “win-win” will not be easy. It will require decisive action on the part of Africa’s leaders, not least in reforming inefficient, inequitable and often corrupt utilities that have failed to develop flexible energy systems to provide firms with a reliable power supply and people with access to electricity. Tackling Africa’s interlocking climate and energy problems will also require strengthened international cooperation. The major summits planned for 2015 – on finance, the Sustainable Development Goals and climate – provide an opportunity to start the change.
Our report shows that Africa’s energy challenge is substantial. Over 600 million people still do not have access to modern energy. It is shocking that Sub-Saharan Africa’s electricity consumption is less than that of Spain and on current trends it will take until 2080 to for every African to have access to electricity.
Modern energy also means clean cooking facilities that don’t pollute household air. An estimated 600,000 Africans die each year as a result of household air pollution, half of them children under the age of five. On current trends, universal access to non-polluting cooking will not happen until the middle of the 22nd century.
The December 2015 talks on a new global climate treaty are approaching fast. Africa is already experiencing earlier, more severe and more damaging impacts of climate change than other parts of the world. Left unchecked, it will reduce agricultural productivity, create conditions for mass hunger and reverse human development.
Africa’s lack of energy means it has a tiny carbon footprint. African leaders have every reason to support international efforts to minimize greenhouse gas emissions. At the same time, they urgently need more power to boost and transform their economies and to increase energy access. Their challenge is to embrace a judicious, dynamic energy mix in which renewable sources will gradually replace fossil fuels.
Africa has enormous potential for cleaner energy – natural gas and hydro, solar, wind and geothermal power - and should seek ways to move past the damaging energy systems that have brought the world to the brink of catastrophe.
The waste of scarce resources in Africa’s energy systems remains stark and disturbing. Current highly centralized energy systems often benefit the rich and bypass the poor and are underpowered, inefficient and unequal. Energy-sector bottlenecks and power shortages cost the region 2-4 per cent of GDP annually, undermining sustainable economic growth, jobs and investment. They also reinforce poverty, especially for women and people in rural areas. It is indefensible that Africa’s poorest people are paying among the world’s highest prices for energy: a woman living in a village in northern Nigeria spends around 60 to 80 times per unit more for her energy than a resident of New York City or London. Changing this is a huge investment opportunity. Millions of energy-poor, disconnected Africans, who earn less than US$2.50 a day, already constitute a US$10-billion yearly energy market.
What would it take to expand power generation and finance energy for all? We estimate that investment of US$55 billion per year is needed until 2030 to meet demand and achieve universal access to electricity. One of the greatest barriers to the transformation of the power sector is the low level of tax collection and the failure of governments to build credible tax systems. Domestic taxes can cover almost half the financing gap in Sub-Saharan Africa. Redirecting US$21 billion spent on subsidies to wasteful utilities and kerosene to productive energy investment, social protection and targeted connectivity for the poor would show that governments are ready to do things differently. I urge African leaders to take that step.
Additional revenues can be mobilized by stemming the haemorrhage of finance lost through illicit financial transfers, narrowing opportunities for tax evasion and borrowing cautiously on bond markets. Aid must play a supportive, catalytic role. Global and African investment institutions already see the growth and revenue prospects of African infrastructure in a world where demand is slowing in developed countries.
Reforming energy utilities is also key. Long-term national interest must override short- term political gain, vested interests, corruption and political patronage. Energy-sector governance and financial transparency will help bring light in the darkness. Energy entrepreneurs can join the reformed utilities in investing revenues and energy funds in sustainable power that saves the planet and pays steady dividends. Some countries in the region are already at the front of the global trend of climate-resilient, low-carbon development, including Ethiopia, Ghana, Kenya, Nigeria and South Africa.
Better and more accessible energy can also power up Africa’s agriculture. Governments should take advantage of “triple-win” adaptation opportunities that integrate social protection with climate-smart strategies to raise agricultural productivity and to develop rural infrastructure, including crop storage, agro-processing and transport, cutting poverty while strengthening international efforts to combat climate change.
Actions taken by African leaders are essential, and so are actions by the world. The 2015 summits provide a platform for deepening international cooperation and providing a down-payment on measures with the potential to put Africa on a pathway towards an inclusive low-carbon energy future and the world on a pathway to avoid climate catastrophe. All countries stand to lose if we fail to achieve the international goal of restricting global warming to below 2˚C above pre-industrial levels. Africa will lose the most.
Governments in the major emitting countries should place a stringent price on emissions of greenhouse gases by taxing them, instead of continuing effectively to subsidize them, for example by spending billions on subsidies for fossil-fuel exploration. The political power of multinational energy companies and other vested interest groups is still far too strong.
Unlocking Africa’s energy potential and putting in place the foundations for a climate- resilient, low-carbon future will require ambitious, efficient and properly financed multilateral cooperation. As we show in this report, the current global climate finance architecture fails each of these credibility tests.
The window of opportunity for avoiding climate catastrophe is closing fast. The only promises that matter at the Paris climate summit are those that are kept. Africa’s leaders must rise to the challenge. They are the voice of their citizens in the climate talks – and that voice must be heard. Social movements, business leaders, religious leaders of all faiths and the leaders of the world’s cities can join governments and create an irresistible force for change to win the war against poverty and avert climate catastrophe.
Future generations will surely judge this generation of leaders not by principles they set out in communiqués but by what they actually do to eradicate poverty, build shared prosperity and protect our children and their children from climate disaster.
Let us act now and act together.