Based on this, a report of the PwC Africa Energy Review
2021, has stressed the need for increased international financing from
developed nations, to enable African countries meet up with the estimated cost
of $2.8 trillion to transit Africa’s current energy base to zero-net emission
by 2050.
According to the report, a clear contrast would be evident
when considering Africa as home to 17 per cent of the global population,
producing less than five per cent of global annual emissions and accounting for
only three per cent of global cumulative emissions.
The report however said that among the majority of Africa’s
54 countries, about 35 have made commitments towards net-zero emission, but at
an estimated cost of $2.8 trillion just to transit Africa’s current energy base
by 2050, notwithstanding that the required investment levels are largely
unaffordable to most countries.
The report further said a clear message had been given at
COP-26 in Glasgow, through calls for increased international financial support
from developed nations.
The PwC review outlined a double challenge for Africa’s
energy transition as well as addressing energy poverty, in line with
Sustainable Development Goals. What scenarios could play out in Africa’s energy
transition and what is the risk of Africa being isolated from global markets
and increasingly becoming stranded, including trends and patterns across fossil
fuels and renewables, were highlighted in the report.
Analysing the report, PwC Africa Oil and Gas Industry
Leader, Pedro Omontuemhen said: “The energy sector in Africa is diverse and
characterised by different demands and needs in each country. While the energy
journey for each country may be different, an overall perspective is needed on
common issues in the bid to reduce the energy deficit on the continent. While
the importance of global decarbonisation and a sustainable planet is foremost,
the journey to achieve net zero is clearly highlighting the risk of further
entrenching economic winners and losers.”
Highlighting the challenges of a net-zero transition in
Africa, the report added that Africa would need to invest an estimated $2.8
trillion in a clean energy mix and reduce its current annual CO2 emissions of
1.62m kilotons of CO2, in order to achieve net zero by 2050.
The report said investment in low-carbon energy systems in
Africa lags global pace, but despite global climate finance commitments from
developed economies aimed at $100 billion per annum, the allocation to Africa
falls significantly short of what the continent requires to meet global
targets.
It added that the fiscal constraints being experienced
across Africa, would create a challenge for the continent to move with pace on
its net-zero journey. Private partnerships, public-private partnerships (PPPs)
and blended finance are becoming increasingly important and will need to be
deployed together with strong public sector governance and innovative financing
instruments to overcome these challenges, the report further said.
PwC Director for Energy Strategy and Infrastructure, James
Mackay, said: “Ensuring a sustainable planet is not a cost-benefit assessment.
Africa must carefully consider the economic impact of a transition away from
fossil fuels and associated revenues in context of the affordable pace of
development and growth of the renewable energy sector. More than a third of
African nations are very dependent on fossil fuel commodities for state
revenue, foreign currency reserves and local economic activity.
“An unfunded and rapid shutdown of this sector would place
significant fiscal strain and hardship on Africa. On the other hand, too slow a
transition may see Africa lag global markets and emissions reductions targets.
Developed economies must play an active role in Africa to ensure a global
win-win outcome.”
The report highlighted some economic benefits and
opportunity costs of the energy transition, adding that the adoption of
renewable energy has the potential to boost employment opportunities on the
continent with the creation of new skills and skills capacity.
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