As the world scrambles to avert climate disaster, momentum towards a green energy transition is growing. Countries that have relied on fossil fuels to power their homes and economies for more than a century are investing in a new kind of future: one where access to clean technologies gives an economic advantage to those that deploy them first. Build back better – or build back greener – is about changing the paradigm in a world that is already disrupted.
Can African countries take advantage of this moment? There has been a sound argument that Africans – many of whom lack access to electricity - should not have to pay for the damage to the planet wrought by the industrial world. Is this thinking still useful as new technologies come into view? Could investing in a green recovery help Africa to hustle into position during this realignment of energy and geopolitical power? Put differently, can green power help Africa to leapfrog over both traditional ways of supplying access to energy and jump to the forefront of 21st century techno-economies?
Let’s look first at the energy access challenge. 580 million people in Africa still lack access to electricity. Although progress has been made in a handful of countries in recent years, the pace is likely to slow without a commitment to off-grid solutions. The International Energy Agency (IEA) has determined that for more than half of those that remain without access, grid connections are more expensive that the renewable alternative. Beyond households, the lack of access has deep impacts on rural livelihoods: only 4% of cultivated areas is irrigated, compared to 37% in Asia. 30-40% of post-production food is lost due to lack of cold storage and transportation – more than US $1 trillion. The numbers tell us that the potential for impact from investment in renewable is great and African governments have a large incentive to address it. One solution is to exploit natural gas findings to power agriculture. Surely, gas does have a role in the near to medium future. But it is likely that the economic argument for gas is limited to areas where distribution is easy – geospatial analysis would be able to show us clearly where those limits are.
On the other hand, green technologies can be deployed at the site of generation, powered by local resources. Green power could simultaneously support rural economic development and become a driver of industrialization. Currently, international companies are seeking to make inroads in these markets, and investors are supporting them. But these companies have met with roadblocks as they try to innovate in unfamiliar terrain. The opportunity for African countries to take a leading role in innovation is great.
Although the manufacturing activity in African countries is currently at a relatively low level, governments are keen to increase the share of manufacturing to spur economic development and have ambitious goals. Incentives to attract private sector investment in manufacturing has been concentrated in areas such as agri-processing, cement, garments and minerals. Incentives for local manufacturing do not target the electronics and solar areas.
Sanjoy Sanyal and Beryl Ajwang from the World Resources Institute (WRI) explored the enabling environment for local manufacturing in the solar sector and identified the barriers that could be addressed to include solar in industrialization policy. These include the adoption of tariffs and regulations that don’t disadvantage locally produced products, developing enforceable quality standards, improving incentives, and a clear electrification road map for the off-grid sector. In this way, public policy could stimulate job creation, reduce imports and hence save on foreign exchange, and promote economic growth. Employment from manufacturing can in turn lead to improved standards of living and poverty alleviation while enhancing the robustness of the agriculture sector.
In short, the choice between energy access and green power may have become a false one. We have the methodologies now to calculate where clean off-grid options are the least cost, and which communities will be left behind if these investments are not made. The benefit of these investments will extend beyond local impacts to boost national economies and give teeth to the African lions.
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