IEA’s Africa Energy Outlook 2022 sets out path to bring modern energy access to all Africans this decade while creating new growth industries in critical minerals and green hydrogen.
Today’s crippling spikes in energy prices underscore the urgency and the benefits for African countries of accelerating the scale up of cheaper and cleaner sources of energy, the IEA says in a new special report released on 20 June.
Russia’s invasion of Ukraine has sent food, energy and other commodity prices soaring, increasing the strains on African economies already hard hit by the Covid-19 pandemic. The overlapping crises are affecting many parts of Africa’s energy systems, including reversing positive trends in improving access to modern energy, with 25 million more people in Africa living without electricity today compared with before the pandemic, according to the Africa Energy Outlook 2022.
Despite having contributed the least to the issue, Africa is nonetheless already experiencing more severe effects of climate change than most other regions of the world, including extreme droughts. Africa has the lowest CO2 emissions per person of any continent, contributing less than 3% of global energy-related CO2 emissions to date.
Despite these obstacles, the report concludes that the global transition to clean energy holds new promise for Africa’s economic and social development, with solar energy, other renewable energy sources, and emerging sectors like critical minerals and green hydrogen offering significant growth potential if properly managed. A new direction for the global energy sector is being established by increased international objectives to reduce emissions in the face of falling clean technology costs and changing global investment trends. African nations are well-positioned to gain from these trends and draw growing amounts of climate finance.
“Africa has had the raw end of the deal from the fossil fuel-based economy, receiving the smallest benefits and the biggest drawbacks, as underlined by the current energy crisis,” said Fatih Birol, the IEA Executive Director. “The new global energy economy that is emerging offers a more hopeful future for Africa, with huge potential for solar and other renewables to power its development – and new industrial opportunities in critical minerals and green hydrogen.”
“The immediate and absolute priority for Africa and the international community is to bring modern and affordable energy to all Africans – and our new report shows this can be achieved by the end of this decade through annual investment of $25 billion, the same amount needed to build just one new LNG terminal a year,” Dr Birol added. “It is morally unacceptable that the ongoing injustice of energy poverty in Africa isn’t being resolved when it is so clearly well within our means to do so.”
The Sustainable Africa Scenario is examined in the Africa Energy Outlook 2022, in which all of Africa’s energy-related development goals are met completely and on schedule. By 2030, everyone will have access to modern energy services, and all African climate commitments will have been fully carried out.
As demand for energy services is expected to increase quickly throughout Africa, guaranteeing affordability is a top responsibility. This requires greater energy efficiency because it lowers the need to import fuel, relieves pressure on the infrastructure already in place, and keeps consumer bills manageable.
In this scenario, expanded and enhanced electricity networks, which are increasingly fueled by renewable energy sources, serve as the structural foundation of Africa’s future energy systems. Although only 1% of the world’s solar PV capacity is now located in Africa, the continent is home to 60% of the finest solar resources. Solar is expected to surpass all other sources of energy on the continent by 2030, where it is already the least expensive source in several regions of Africa. According to the Sustainable Africa Scenario, over 80% of new power production capacity added by 2030 will come from renewable sources, such as solar, wind, hydropower, and geothermal energy.
Africa’s electricity industry is being driven by renewable energy sources this decade, but the industrialization of the continent also depends on rising natural gas use. In Africa, there are now more than 5,000 billion cubic meters (bcm) of untapped natural gas deposits that have not yet received development approval. By 2030, these resources might be able to provide an additional 90 bcm of gas annually, which might be crucial for the local fertilizer, steel, cement, and water desalination industries in Africa. Over the following 30 years, the utilization of these gas resources would result in approximately 10 billion tonnes of CO2 emissions. If these emissions were included in Africa’s current cumulative total, their contribution to world emissions would only be 3.5 percent.
Africa’s vast resources of minerals that are critical for multiple clean energy technologies are set to create new export markets but need to be managed well, with Africa’s revenues from critical mineral exports set to more than double by 2030.
A number of low-carbon hydrogen projects are underway, focused primarily on producing ammonia for fertilisers, which would strengthen Africa’s food security. Africa has huge potential to produce hydrogen using its rich renewable resources. As much as today’s energy demand could be produced at internationally competitive price points by 2030.
Achieving Africa’s energy and climate goals means more than doubling energy investment this decade. This would take it over USD 190 billion each year from 2026 to 2030, with two-thirds going to clean energy.
“Multilateral development banks must take urgent action to increase financial flows to Africa for both developing its energy sector and adapting to climate change,” said Dr Birol. “The continent’s energy future requires stronger efforts on the ground that are backed by global support. The COP27 Climate Change Conference in Egypt in late 2022 provides a crucial platform for African leaders to set the agenda for the coming years. This decade is critical not only for global climate action but also for the foundational investments that will allow Africa – home to the world’s youngest population – to flourish in the decades to come.”