The Contradictions of the African Transition and Opportunities for a New Energy Order

Francesco Sassi

7 mins - 19 de Abril de 2023, 07:05

Southern Europe, facing the Mediterranean, has tragically rediscovered the centrality of relations with African countries regarding a new, urgent matter, that of resolving the energy crisis. Too often overlooked, or more simply misunderstood, Africa's complex role in both transition processes and the strengthening of energy security has not escaped the attention of the main European governments. However, the extreme political, economic, and social heterogeneity of African countries makes it very difficult to establish a single European approach that can combine support for energy resource import projects with initiatives that could lead Africa out of the very energy crisis, where today Europe is the focus. Moreover, at a time of extreme market volatility, Africa's vast energy resources, until now little exploited, provide an incentive for countries seeking their own independent place in the new world energy order.

With a truly laughable per capita energy consumption and an energy intensity far below that of the rest of the world, the African continent is responsible for less than 3% of global CO2 emissions. This does not mean that it is less exposed to climate change phenomena and, in fact, according to the UN Intergovernmental Panel on Climate Change, it is one of the most vulnerable continents. In 2022, devastating floods hit from Mauritania to South Africa, even reaching Nigeria, Chad and Sudan. Drought has made food security even more precarious for more than 12 million people in Ethiopia and Niger, while violent storms have claimed the lives of hundreds of people in Madagascar, Mozambique and Malawi. A massacre all too often glossed over in Europe, which struggles too miopically with its own ills.

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International authorities fear that, in the very near future, Africa's population growth will be accompanied by an uncontrolled explosion in energy demand. This would have obvious consequences for the fight against climate change and the achievement of the net-zero emissions target, to which a dozen African countries have already agreed.

The global energy crisis has not left Africa indifferent. The disruption of national energy systems and rising prices have meant the loss of access to electricity for millions of people, in a continent where 43% of the entire population is already deprived of any electricity service at all. A context further aggravated by the start of the Russian invasion of Ukraine. The impact of tensions between the West and the Russian Federation on European energy markets is well known. In Africa, market turmoil has aggravated the financial difficulties of electricity companies and increased the risks of blackouts and rationing.

In South Africa, the financial and institutional crisis of the state-owned monopoly Eskom, unable to solve the structural problems of its power plants, has destabilised the country's economy. With more than 80% of electricity produced from coal, making South Africa the largest CO2 emitter in Africa, the ongoing shutdowns have condemned the economy to stagnation by 2022. Eskom's management now faces an internal struggle over the succession of its CEO, who resigned months ago and recently pointed to deep corruption in government and the majority party as the cause of the company's own crisis. Scarce tax competition, the risk associated with new technology-related energy sources in the South African mix, and the aforementioned corruption have been the main obstacles to the implementation of several projects intended to accelerate the transition of the continent's most industrialised economy.

It is certainly not the best calling card for South Africa, which presented itself at the last COP27, through the words of its President Ramaphosa, as the world's 'Champion of the South' in terms of reducing emissions. In fact, the country has launched a transition plan for the next five years, whose exorbitant cost the government itself estimates at $97 billion. The plan envisions increasing solar and wind power, which today account for only a small part of the energy mix, and enabling the country to reduce its emissions to zero by 2050. The $8.5 billion fund from the EU and the US acts as a catalyst for investment, counting on support also from the governments of the UK, France, and Germany.

Two thirds of the investments in the South African plan are earmarked for renewable generation and around 20% for social measures and investments to support the decommissioning of the entire coal-fired power plant fleet. The remainder is earmarked to accelerate the construction of a new electricity transmission and distribution network. The latter will form the essential backbone of a new energy system and provide access to the grid for the 10 million South Africans who remain disconnected. 

Despite good intentions, President Ramaphosa recently declared a state of national disaster in response to the electricity crisis that has intensified over the past year. Two considerations are necessary at this point. Some initial transition projects have been launched with the support of international institutions. For example, the World Bank has financed the decommissioning of the Komati coal-fired power plant and its replacement with renewable power plants for some $500 million. The costs include minimising the socio-economic impact on villagers whose economies depend on coal mining.

While only 4% of Western aid to South Africa will come in the form of loans, the rest will have to facilitate the country's access to foreign funds and international loans. This is despite growing indebtedness, which is difficult for public finances to bear, not least because of the huge amounts of money the government has pumped into Eskom's reserves to cover its losses. In South Africa, the opportunities for a transition to clean energy are obvious. Due to optimal conditions, especially in the western regions, the wind energy sector has great potential here. However, several projects have been stalled by the operator's inability to connect them to the grid, while some wind farms will instead provide the energy needed to power Eskom's own coal mines, increasing electricity production from this source, with the aim of reducing blackouts that now have become systemic.

However, South Africa's energy crisis does not stop within its borders. Indeed, the country is an exporter of electricity to its neighbours, including Mozambique, Namibia, Zambia, and Zimbabwe, and the latter three countries have been experiencing rolling blackouts for months. The drought has reduced the capacity of the Lake Kariba hydroelectric power stations, which generate electricity for much of Zambia and Zimbabwe's energy consumption, while Namibia, which imports electricity from both Zambia and South Africa, finds itself without any viable Plan B in the short term. Nor is it surprising that both Namibia and Mozambique, where major European companies such as France's TotalEnergies and Italy's ENI have invested in hydrocarbon exploration and production, are aiming to exploit their own natural gas fields to secure sufficient energy for domestic consumption and a lucrative new business in exporting LNG to world markets, including European countries in the frantic search for alternatives to Russian gas. In the absence of stability in the main regional energy producer, which acts as a system anchor for the whole area, the interdependence and energy order of sub-Saharan Africa is already moving, on its own, towards a new balance that can respond, hopefully in the shortest time possible, to the double challenge of energy security and energy transition.

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