MechChem Africa January-February 2024

Achieving the energy future Africa needs In the light of the real effects of the climate crisis and of the opportunities offered by COP28, Nadja Haakansson, Managing Director for Africa at Siemens Energy, outlines the opportunities available to Africa for establishing energy security and a just energy transition.

sources in the UAE. Its intention is to support African energy transition strategies, includ ing enhanced regulatory frameworks and a master plan for developing grid infrastruc ture, integrating both supply and demand. To kickstart a pipeline of bankable clean energy projects in Africa for 15 GW of clean power by 2030, $4.5 billion will be deployed to catalyse an additional $12.5 billion from multilateral, public and private sources. In making the announcement, COP28 President-Designate Dr Sultan Al Jaber said climate change now contributed to a fifth of Africa’s people being hungry, and the displace ment of African citizens tripling in the past three years, dragging Africa’s GDP growth down by at least 5% every year. Urgent inter vention is therefore not just for the sake of the climate, it is a socioeconomic imperative too. He announced that support to address these issues would be available to any African government with “clear transition plans, robust regulatory frameworks and a real commitment to putting the necessary grid infrastructure in place”. Africa needs to achieve energy security, along with a clearly established just energy transi tion. The funding side of the equation is gain ing attention, though not yet solved. Another piece that needs to fall into place is gover nance. African governments need to make more effort to improve climate governance and policy frameworks, to address corruption, curb emissions and enable investment in clean energy solutions and infrastructure. Regional governments must reassess how they operate and recognise that energy is not a commodity but the foundation for social development, economic growth, and prosper ity. The energy transition must be embraced as the most significant socio-economic and environmental transformation since the Industrial Revolution. African countries have never stepped into a COP28 with more solid opportunities to accelerate energy transition. Our African governments now need to take the necessary concrete action to unlock the monumental support they finally have access to. This is the tipping point and a time for action! www.siemens.com/za Next steps to build the energy future Africa needs

and collective action that turns information sharing, marketing, and vague recommenda tions into tangible action plans. Regional and global development finance institutions, global energy decision-makers, governments and companies all need to commit to supporting Africa in building the energy future it needs. Recognising today’s challenges Although Africa accounts for a fifth of the global population, the region has attracted only 2-3% of global energy investment. A ma jor reason for this has been that, historically, the overall risk profile for projects in Africa made it significantly more expensive to finance than those in advanced economies. This was exacerbated by higher borrowing costs due to the Covid-19 pandemic and Russia’s war in Ukraine. Despite Africa’s immense green energy potential, developers often abandoned projects because they could not see their vi ability. The AfDB and IEA propose the easing of financing costs to unlock a wave of clean energy spend in Africa. Currently, the cost of capital for energy projects in African countries is at least two to three times higher than in advanced economies and China. To deliver modern energy to all Africans by 2030, we will need to double the current energy investment in Africa. That means over $200 billion in spending per year, of which two-thirds will need to be directed to clean energy, according to the report. Two important recent announcements may go a long way to help mitigate climate fi nancing challenges. The first is the African Development Bank’s announcement in late September that it would provide $25 billion in climate finance by 2025. As part of this, $20 billion will go to the Desert to Power pro gramme to develop 10 000 MW of solar across eleven countries of the Sahel zone of Africa to provide electricity for 250-million people. The second significant recent funding an nouncement for Africa is the COP28 finance initiative between the United Arab Emirates (UAE) and Africa. In strategic partnership with Africa 50 – an infrastructure investment platform with African governments as share holders – the initiative brings together public, private and development capital from various Commercial case for an African just transition

I n 2022, global emissions reached a record high of 36.8-billion tons of CO 2 . During 2023 several months broke global warm ing records and scientists at the European Union’s climate change service are now forecast ing that it could be the warmest year ever logged. With global energy demand expected to surge and emissions expected to continue to grow, we face energy poverty in combination with climate impact, with the most vulnerable populations in the world most at risk. Globally, 775-million people still lack access to the most basic means of electricity, of which 600 million are in Africa. The continent, which accounts for just 3% of total emissions globally, loses US$7 to $15 billion annually from climate change impacts and this is projected to climb to $50 billion by 2030. Africa also faces a climate finance gap of $213 billion between now and 2030, according to the African Development Bank (AfDB). Adding more urgency to the situ ation, Africa has the fastest-growing popula tion in the world, which is expected to reach 2.5 billion by 2050. COP28 was required to deliver the will Globally, 775-million people still lack access to the most basic means of electricity, of which 600-million are in Africa.

30 ¦ MechChem Africa • January-February 2024