Africa Needs Natural Gas to Meet 27th United Nations Climate Change Conference (COP27) Commitments
The 27th United Nations Climate Change Conference, or the Conference of the Parties of the UNFCCC (COP27), held in Sharm El Sheikh, Egypt, in November 2022, featured a slight philosophical shift from where mindsets had been just the year before.
COP26 saw Africa under pressure to accept that its fossil fuel resources should remain underground. During the conference, representatives from wealthier nations made efforts to cast our continent as the recipient of undue climate change impacts deserving of financial compensation and the impetus to accelerate their own green agendas.
This year, the failure to deliver on those compensatory commitments, paired with Russia’s invasion of Ukraine, the subsequent effect on global energy prices, and a more unified voice of opposition from African leadership, managed to direct discussions toward another direction.
While some of the messaging shared at COP27 regarding Africa remained much the same as the previous year — that the focus should remain on moving away from reliance on coal and inefficient fossil fuel subsidies — the proposals supporting those sentiments showed a noticeable change. The conference more readily acknowledged both the economic benefits of leveraging African natural gas and the role that it could play in easing Africa’s eventual energy transition to renewables.
Commitments We Can Keep
It was also heartening to see African policymakers take the proactive step of committing to climate actions that are both feasible and have the potential to improve the lives of millions of Africans. As noted in our soon-to-be-released outlook report, “The State of African Energy Q1 2023,” two of COP27’s most significant developments were the launch of the Africa Carbon Markets Initiative (ACMI) and the Africa Just and Affordable Energy Transition Initiative (AJAETI).
With sponsorship from the Global Energy Alliance for People and Planet, Sustainable Energy for All, The Rockefeller Foundation, and the UN Economic Commission for Africa, ACMI aims to harness carbon markets and produce 300 million carbon credits (the equivalent of 300 million tonnes of CO2 reduction) per year by 2030 and 1.5 billion credits per year by 2050. In addition to providing support for over 110 million jobs in the same time frame, commitments to this initiative could generate more than USD120 billion in revenue, helping to expand energy access across the continent while protecting our biodiversity.
AJAETI focuses on transition, first to clean cooking and then eventually to green energy from renewable electricity generation. Aligned with the United Nations Sustainable Development Goal 7.1, AJAETI hopes to see 300 million Africans gain access to affordable energy and transition to clean cooking fuels and technologies within the next four years. Furthermore, the initiative also hopes to see a 25% increase in electricity from renewables by 2027 with a long-term goal of developing a fully renewables-based power sector by 2063.
Though one might not make the connection initially, the measures that the African Energy Chamber (AEC) endorses, including dramatically increasing Africa’s use of its natural gas resources, would actually support and even accelerate progress toward the longer-term goal of eventually transitioning away from fossil fuels. As examined in our Q1 2023 Outlook Report, estimates for African upstream emissions are expected to reach 795 million tonnes of CO2 equivalent between now and the end of the decade. These emissions would rank Africa in fifth place behind North America, the Middle East, Asia, and Russia and account for only 9.5% of global upstream emissions. However, half of these extraction-related emissions would result from gas flaring — the act of burning natural gas as a byproduct of oil extraction in place of preservation and distribution. If left unchecked, African gas flaring will account for nearly 20% of global flaring-related emissions. By simply capturing resources that are currently going to waste, Africa can contribute to a sizeable reduction in atmospheric CO2 levels.
Realizing Our Potential
In hard numbers, current estimates for African holdings include 74.365 billion barrels (Bbbls) of recoverable liquids and 82.875 billion barrels of oil equivalent (Bboe) of recoverable natural gas resources. At present, only half of these liquids and just a third of the natural gas resources connect to producing facilities. With the production rates of these tapped resources in terminal decline, Africa must secure the necessary investments to ramp up infrastructure development if we are to achieve any outcome greater than mere stabilization.
Getting back to hard numbers, the realistic dollar values at play here are an initial USD65 billion invested in greenfield projects over the next two years, followed by further investments totaling USD225 billion by 2030. To fully achieve the goals we have set for Africa, continued investment over the subsequent decade would bring this figure up to USD485 billion. However, current commercial forecasts project that investments between 2031-2040 will amount to only USD55 billion. As stated in our Q1 2023 Outlook Report, this disparity could represent “a potential deathblow to Africa’s oil and gas aspirations” and severely impact the future of numerous fossil-fuel export-dependent economies across the continent. Considering that Africa expects to still rely on coal for 9% of its power mix even beyond 2040, this diminished investment rate would also cripple the hope of expanding access to electricity and reversing African energy poverty by using natural gas as a transition fuel.
A Clear Path Forward
As more developed nations transition away from fossil fuels, the international oil and gas industry must recognize Africa’s potential as a future global energy supplier. While it is reassuring to witness what might be the early stages of a sea change in environmental policy, as evidenced by the sentiment at COP27, the AEC will continue to advocate passionately for energy development in Africa. Though Western powers and even some climate activists have finally acknowledged that oil and gas will continue to play a necessary role well into the future, we have much more work to do. For Africa to realize its goal of offering universal access to electricity and clean cooking, the industrialized world must also recognize Africa as the next energy frontier.
African resources offer a two-way path toward a greener and more prosperous future. Through international partnerships and infrastructure development, investment in Africa will support the remaining fossil-fuel needs of the rest of the world while providing for its own, and an infusion of capital to our continent will diversify our economy, produce millions of new jobs, and, in turn, provide the funding for our own eventual transition to a renewables-based energy network.