Beyond Davos: An Africa perspective in the Global energy debate
Two weeks ago, global leaders convened at Davos to discuss the biggest global challenges of our time. The state of oil and gas continued to be a focal point of debate.
Unsurprisingly, leaders emphasised the need to intensify the shift toward renewable sources and sustainable practices. On global stages, like Davos, leaders all too often represent the interest of the world’s most developed nations, neglecting the true implications for Africa. We need to ensure that Africa’s voice is heard.
Introducing a balanced and fact-based approach by those who possess a deep understanding of Africa is crucial to ensure that we develop tailored solutions, which not only seek to advance a global agenda, but also ensures that Africa’s unique and significant challenges are accounted for.
In adopting a balanced approach, we should keep in mind that Africa contributes 4% to global carbon emissions despite having 18% of the global population, whereas the United States, ranking as the second-largest emitter, is responsible for 11% of emissions with only a 4.68% share of the global population.
The Energy Trilemma presents energy security, affordability, and sustainability as global challenges to be addressed. Africa stands at the centre of all facets of this Trilemma with the most significant need for energy security at an affordable rate, coupled with the available resources to contribute to global energy sustainability. Africa accounted for 40% of natural gas discoveries worldwide between 2010 and 2020. Its proven oil, representing 7.8% of global reserves, has grown by 150% since 1980. These discoveries have not only brought a wealth of domestic opportunities, but has seen the world (led by Asia), turn increasingly towards the continent. As nations continue their search for an energy security hedge against global crises, the future of oil and gas will centre in Africa.
The IEA forecasts global oil and gas demand to peak by 2030. In the near-term, fossil fuels remain an essential part of the energy mix, offering security and grid stability. Despite this estimation, for as long as demand outpaces renewable generation, the hard reality is that hydrocarbons will continue to play a vital role.
Acknowledging Africa’s wealth of renewable resources, including vast solar, hydro, and wind potential, is equally crucial. Modelling by McKinsey suggests that achieving a 45% reduction in Africa’s carbon emissions by 2050, would require $2.9 trillion in cumulative capital – just short of its entire combined GDP. The question arises: Who will finance this transition? Can developed nations, still navigating their own transitions, be relied upon, or should Africa, grappling with increasing income disparity and energy insecurity, foot the bill?
To facilitate a permanent and just transition, I argue that Africa must be allowed to undergo development and industrialisation on its own terms. This unique path will require oil and gas, and the gradual building of renewable infrastructure to create an optimal energy mix conducive to Africa’s long-term growth and development.
Africa’s trajectory holds global implications. With a current population of 1.4bn and UN projections for that to reach 2.5bn by 2050, the continent is set to be home to over 25% of the world’s population in the next three decades. This marks the beginning of the African Century – a demographic transformation that will reshape the global energy landscape. This surge in human strength must be nurtured and allowed to flourish. Innovation and enterprise must be powered by the resources which our continent has in abundance.
Ahonsi Unuigbe is an investment-banker by training and is the Founder & CEO of Petralon Energy. He is also Chairman of the Board of Nigeria Exchange Ltd.
