Clean Energy, Climate Change and Poverty Reduction: Part I
It is human nature to always think and believe that we know it all, but it is really interesting to note how much we don’t know when we continue reading, researching and dreaming of solutions for sustainable development. In one of my routine habits of searching for new and emerging issues, I was privileged to stumble across and learn more about the work of one of the highly regarded panels on the African continent. This is none other than the Africa Progress Panel (“APP”) chaired by former Secretary General of the United Nations, the highly respected Dr. Kofi Annan. The APP consists of ten distinguished individuals from the private and public sector who advocate equitable and sustainable development for Africa. The Panel makes policy recommendations for African political leaders and civil society who collectively have the primary responsibility for spurring Africa’s progress. In light of the continent’s dynamic links with the rest of the world, the APR also highlights critical steps that must be taken by leaders in the international public and private sector. I had heard of APP, but I was not astute enough to have followed their great work. I am amazed by the great insight that we can gain from the APP as we develop infrastructure financing solutions for Africa.
The APP produces an annual Africa Progress Report (“APR”), its annual flagship publication. The 2015 APR focuses on clean energy, climate change and poverty reduction and how Africa can take a leadership role in the World in progressing the renewable energy agenda to power Africa whilst reducing poverty and inequality. It is a profound report with some startling discoveries and statistics about the state of power in Africa and how fast our environment is degrading if we do not make conscious and sustained interventions. Developing renewable energy is certainly an area where Africa can take the lead as it has a competitive advantage being at early stages of energy development to power Africa where she certainly can adopt, adapt and innovate. The report paints a great picture about where Africa is in terms of energy demand and supply, the challenges and makes recommendations on what African Governments should be focusing on to progress the renewable energy agenda. The team at National Standard Finance will in this and the next one or two other articles unpack the 2015 APR.
The 2015 APR highlights some very interesting statistics. In terms of global carbon dioxide emissions, Africa accounts for only 2.3%. In comparison, the EU emits 12%, the US 16% and China 25%. The APP contends that Africa must take a leadership position and curtail carbon emissions from Africa at this low level by developing more renewable energy. Africa’s energy systems can leapfrog onto low-carbon pathways where renewables replace fossil fuels and could become the global leader in low-carbon development. The APP recognizes that it will take time and concerted effort, but it must be done and Africa must start now. The 2015 APR makes profound statements noting that “so great are the energy challenges and so severe the climate risks that it is easy to lose sight of the opportunities”. “As well as posing risks, climate change provides Africa with opportunities to play a global leadership role”, the report says. It notes that now, as never before, Africa must be part of an international community that delivers multilateral solutions to shared global problems, recognizing that it is time to move the debate on Africa and international cooperation well beyond the restrictive confines of aid. These insights require action from African leaders.
The 2015 APR highlights Africa’s energy gap and the associated inequalities by giving some sobering statistics: (1) 621 million Africans do not have access to electricity; (2) 60% of Sub-Saharan Africa’s energy is consumed by South Africa; (3) 93 million Nigerians lack access to electricity, with Ethiopia sitting at 70 million and DRC sitting at 60 million people; (4) 80% of the population in Africa, approximately 730 million people, rely on solid biomass, mainly fuelwood and charcoal, for cooking; (5) 0.6 million Africans are killed by air pollution caused by the use of solid biomass for cooking every year and the number is rising such that it is estimated that it will potentially be the major killer ahead of HIV/AIDS, Tuberculosis and Malaria by 2030 ; (6) In 9 African countries, more than 80% of primary schools have no electricity (7) In Africa, the poorest households spend 20 times more per unit of energy than the wealthiest households with a connection to the Grid; and (8) On current trends, it will take Africa until 2080 to achieve universal access to electricity. These statistics paint a picture about the state of affairs. The absolute number of people with no access to electricity is set to rise, with estimates that by 2030 Africa’s share of the world’s population without electricity will rise from 47.6 per cent to 66.6 per cent, and the share without clean cooking facilities will rise from 26.3 per cent to 34.8 per cent. Most of these people are in the rural areas. This calls for swift action and such action must be closely aligned to renewable energy to power Africa.
The final set of statistics that are interesting from the 2015 APR relate to the size of the energy market from poor households in Africa, those spending $2.5 per day, estimated at $10 billion per annum. This compares to $0.15 billion in the UK and $0.12 billion in the US for a similar group of people. This size of market points to the fact that Africa’s poorest people are paying among the world’s highest prices for energy, paying 20 times more on average. Comparisons are made where a woman in rural northern Nigeria pays 60 to 80 times more than a resident of Manhattan, and the same woman in rural northern Nigeria pays 30 times more than a resident of Lagos. This is a massive market that points to great opportunities for investment and household savings, suggesting that the focus must be on reducing prices, increasing access and empowering households. The APR notes that reducing energy costs by investing in modern energy could create investment opportunities, increase household savings and reduce poverty. There is certainly a lot of work to do and African Governments must certainly pay attention.
Michael Tichareva is Principal & Managing Directorof Africa operations at National Standard Finance, LLC. Mr. Tichareva can be reached at MTichareva@NatStandard.com.
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