Africa should strike balance between climate action and economic growth

This year marks a key timeline for signatories of the Paris Agreement for submitting updated nationally determined contributions. Therein, countries communicate their carbon emission reduction efforts and how they are adapting to climate change.

Although, the second highest emitter of carbon emissions, the US has also been a significant contributor to the Green Climate Fund. Its withdrawal from the Agreement will significantly impact global efforts towards climate action. Emissions are anticipated to increase, with Africa expecting a reduction in climate finance.

There is a likelihood of renewed interest in Africa’s oil and gas exploitation activities. However, Africa needs to reflect on its medium and long-term pathways for economic development.

Development is powered by energy, making affordability and accessibility paramount. According to International Energy Agency October 2024 report, Africa’s population growth is expected to increase by more than one billion people by 2050 and its economy by 4.0 percent annually.

Sixteen percent rise in clean energy investments in 2023 was concentrated in a few countries. That notwithstanding, pragmatic decision making in favour of harnessing renewable energy resources and critical minerals over its fossil reserves is key for various reasons.

The long-term risk outweighs the benefits of exploiting oil and gas reserves. For instance, demand for Africa’s gas and the prices have been on the rise in a bid to meet EU’s demand occasioned by Russia-Ukraine war and the disruptions caused in the Middle East by Israel’s war in Gaza.

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The EU, however, continues to develop its clean energy infrastructure. This means Africa is satisfying EU’s short-term need. Noting the lengthy gas project development timelines, new producers might lose out when demand declines on project completion. The risk of remaining with stranded assets is therefore high.

Developing domestic markets would only be beneficial when prices make sense to international oil and gas companies coupled with attendant infrastructure. Such is only possible when backed up by regulations and policies, as subsidies would be needed for products to be domestically affordable.

The continent has therefore remained a net importer of crude oil and refined products despite the start-up of an oil refinery in Nigeria.

It is in Africa’s best interest to develop green industries through clean energy. The EU’s carbon Border Adjustment mechanism (CBAM) will impact the competitiveness of exports from fossil-dependent countries.

CBAM aims to encourage cleaner industrial production in non-EU countries, putting a fair price on the carbon emitted during the production of carbon-intensive goods that are entering the EU.

While insufficient finance flow into Africa remains a challenge, a resolve to sustainably develop portends greater benefits for the continent in the long term. Alliances and partnerships towards harnessing its renewable energy resources and critical minerals will be of utmost value.

The writer is an energy lawyer and director at energy and climate policy firm