Uplifting Africa – The Natural Gas (R)evolution

Africa is the world's second-largest and second-most-populous continent– often, many refer to it as one would to a single country. Still, Africa is a continent fragmented by 54 different sovereign interests and political/geopolitical issues, which, often, are difficult to bring under one identifier we call “Africa”.

Africa is the most energy-deficient continent , as it is home to 75% of the world’s population without access to electricity.

Over 640 million Africans need access to modern energy. Per capita consumption of energy in sub-Saharan Africa (excluding South Africa) is 180 kWh, compared to 13,000 kWh per capita in the United States and 6,500 kWh in Europe.

Almost three-quarters of Africa’s population does not have access to clean cooking facilities and, as shocking as it may be to read this, the cost of premature deaths from air pollution is estimated to be almost 9% of Africa's GDP.

For instance, Nigeria has 90 million people without access to electricity. The country has the highest level of absolute energy poverty in the world and accounts for 12 per cent of the global energy access deficit.

The DRC has one of the lowest energy access rates in the world —just 20 percent of its population is projected to have access to modern energy by 2030. It is home to the third-largest population in the world without electricity access.

And yet, despite all of these shocking data for many of us who are so dependent on energy in all its forms and used to say “Alexa, switch on the TV”, there is an entire continent out there – only 8 hrs by plane from Europe, USA and Asia – that largely lacks the most basic of human entitlements: switching on the light.

To add insult to injury, suddenly, we demand and totally expect Africa to “decarbonise” its energy system, reach “net zero”, switch to “renewables” and all the usual narrative of the day.

My questions are very simple: what energy system? Switch to “net zero” from what???

It’s high time we discussed matters as they are and understand that what works in Europe – Brussels, or USA – New York does not work nor apply to 54 countries who, many of them, are on the brink of having their entire financial systems collapse as the average debt-to-GDP ratio in sub-Saharan Africa nearly doubled between 2013 and 2022, from 30 per cent to 60 per cent of GDP.

In 2023, the debt servicing costs reached 17% of government revenues —the highest in 24 years. This has drastically reduced the public finances available for improvements to the energy sector across the African continent.

As it is currently estimated that USD 400 billion of investment will be required to increase electricity transmission and distribution in Africa by 2050 alone, why are we even talking about “decarbonisation” of the African energy system since to have an energy system at all, the first step would be that of having an energy infrastructure that, as a minimum, can provide electricity across the continent? ?

Africa only received 2.4 per cent of global renewable energy investment between 2010 and 2020 —of which three-fourths was concentrated in South Africa, Morocco, Egypt, and Kenya.

However, while energy poverty is dramatic across the African continent, few may be aware that Africa is still exceptionally energy resource-rich: it was home to nearly 40 per cent of global gas discoveries between 2011 and 2018. This includes the discoveries in Mozambique, Tanzania, Egypt, Senegal, and South Africa.

Today, Africa holds roughly 13 per cent of the world’s natural gas reserves . Africa’s natural gas industry has significant untapped potential, with over 5,000 billion cubic meters of natural gas discovered but not yet approved for development.

Africa exports 45 per cent of its natural gas. For example, Mozambique has 100 trillion cubic feet of proven natural gas reserves —the third-largest natural gas reserves in Africa. In 2022, Mozambique sent its first shipment of liquefied natural gas to Europe, despite gas contributing just 1 per cent to the country’s electricity supply.

Leveraging natural gas is the first, the most important, or the fundamental first step towards solving Africa’s energy crisis and its path towards decarbonisation, as the simple switching from coal to natural gas results in 50% less CO2 emissions: in the first eight months of 2024 alone, Africa imported almost 10 million metric tonnes of coal!

By providing a poverty-alleviation platform for underdeveloped and developing economies, from clean cooking to national industries, these economies can scale rapidly to meet their geographical and social potential, using an energy source much cleaner and more sustainable than coal or wood, ensuring that wild and endangered habitats remain protected.

I worked in Africa (East and West) for many years. I understand the struggles of the daily life in Africa and the hurdles the African economies face every day, including a severe lack of access to finance: African-owned or otherwise.

Financing oil and gas projects, especially in the exploration phase, has become almost impossible today as we need to “decarbonise”.

Of course, we do, but there is a huge difference between the “energy transition” and the “just transition”. The latter allows the energy systems to gradually decarbonise, meanwhile the “energy transition” is expected to happen “no matter what”.

It doesn’t work like that, not in the real world, anyway. There is a clear alignment between countries with low levels of energy access and limited ability to mobilise private capital and those that perform poorly on the World Bank’s Doing Business rankings.

Deregulation of the energy sector, the creation of public-private partnerships, and the adoption of legal and regulatory reforms can play a critical role in mobilising private capital for Africa’s rise from its current energy poverty.

Today, oil and gas investments are almost “no go” subjects. They shouldn’t be because the evolution of the global energy systems cannot happen without the support of conventional fuels, especially without that of natural gas.

And when raising capital, both private and public, ESG financing and project data are fundamental in doing that. Which bank, if the business case for a project is watertight, would say no to financing a project which can demonstrate an immediate reduction in CO2 emissions by switching to natural gas?

Which bank would say no to financing a project that allows entire villages to switch from burning wood to cook, to using gas? Do we want to protect natural habitats and threatened species? And I could continue …

Tragically, it has taken the Russian invasion of Ukraine to stimulate a rational debate on the role of gas, in particular during the transition and in light of the need for resilient and reasonably priced supplies.

With governments struggling to balance strategic considerations (not buying Russian oil and gas) with providing energy to their populations, whilst scrambling to boost investment in renewables and fast-track legislation and fiscal policies to encourage the private sector to join them, the discussion on the role of hydrocarbons during the transition has moved centre stage.

The inclusion of certain gas and nuclear activities within the EU Taxonomy (as “green” activities), CCUS-enabled gas projects are now accepted as a valid use of ESG capital, and more ESG-branded funds investing in the energy majors means that ESG investments can really help to increase the pace and scale of transition.

Reducing net carbon emissions to zero by 2070 — and thus keeping global warming to 2 degrees Celsius above pre-industrial levels — will require investment of nearly USD ?$75 trillion , according to Goldman Sachs Research.

Gas is essential to human progress and global growth, and sustainability — in any form — cannot be realised without energy security and affordability.

A “feedstock” to critical industries, natural gas boosts economic growth, employment, and production of strategically vital products such as medicine, pharmaceuticals, food production, biotechnology, fertilisers, steel, cement, hydrogen and others.

By increasing the gas use across all industrial and private applications, enhanced sustainability and public health benefits can be obtained by tackling poor air quality and health problems deriving from dirtier fuels, as air pollution is one of the greatest environmental risks to health.

It easy, too easy to dictate to others from a position of power – let’s stop telling Africa what it needs, for a change; let’s let Africa tell us what we can do to help.

By Ella Minty - Director, Communication; International Gas Union