New scramble for Africa: Closure of Russian gas pipeline brings debate over African fossil fuel use into sharp focus

11 Sep 2022

Campaigners argue that a plan by African leaders to use gas as an economic driver will lock the continent into stranded assets and long-term use of infrastructure that is ultimately environmentally and economically damaging.

The Executive Council of the African Union developed an “African Common Position” on energy access and resource development in June this year, which saw fossil fuels playing a crucial role in expanding African economies and energy access.

This, as European leaders, including German Chancellor Olaf Scholz, push African nations to develop their gas reserves for export as the world adjusts to a sharp reduction in supplies from Russia, a retaliatory move by Vladimir Putin in protest at continuing sanctions on Moscow for its invasion of Ukraine.

The European Union recently voted in favor of a new rule that will consider fossil gas and nuclear projects as “green”, making them eligible for lost-cost loans and subsidies.

African campaigners are concerned that the position will fail to achieve its own objectives of ensuring energy access and a just transition. They have also expressed concerns that it could have drastic consequences for Africa’s future prosperity, locking in massive stranded asset risks and damaging development prospects, while prioritising exports to Europe and the Global North.

Lorraine Chiponda, Africa Coal Network coordinator, said that in addition to African leaders pushing for gas and threatening millions of people battling droughts, hunger and extreme weather events, the acceleration of gas projects in Africa is another “scramble for and partition of Africa” by energy corporations and rich countries.

“Fossil fuel projects have not solved energy poverty in Africa, where 600 million people are affected, nor have they brought socioeconomic justice to Africa’s people.”

The AU technical committee – made up of energy ministers – will be proposing the African Common Position technical paper for adoption by African Heads of State at the upcoming COP27 (UN Climate Conference) in November this year.

Despite UN Secretary-General António Guterres saying that investing in new fossil fuel infrastructure is “moral and economic madness”, the AU’s technical paper proposes that, “in the short to medium term, fossil fuels, especially natural gas, will have to play a crucial role in expanding modern energy access in addition to accelerating the uptake of renewables”.

The paper notes that over 600 million Africans lack access to electricity, and to address this, “Africa will continue to deploy all forms of its abundant energy resources, including renewable and non-renewable energy, to address energy demand”.

The AU’s technical paper says the COP26 call for measures to phase out coal and oil – and to strengthen emission targets to align with the temperature goal of the Paris Agreement – has left Africa in a “disadvantaged position”.

Is gas a fair trade?

Many African nationals argue that because Africa is the least responsible for the climate crisis – having contributed the smallest amount of greenhouse gases, especially compared to the West – they shouldn’t have to pay the same penalties and miss out on the economic opportunities offered by fossil fuel exploration.

Plus, many nations – including the EU – now consider gas to be a bridge while greener forms of energy become available in the just transition towards cleaner and more equitable energy solutions.

In August 2021, Nigerian Vice President Yemi Osinbajo said in Foreign Affairs, “After decades of profiting from oil and gas, a growing number of wealthy nations have banned or restricted public investment in fossil fuels, including natural gas.

“A global transition away from carbon-based fuels must account for the economic differences between countries and allow for multiple pathways to net-zero emissions… the transition must not come at the expense of affordable and reliable energy for people, cities and industry.”

Closer to home, Minister of Mineral Resources and Energy, Gwede Mantashe, is a strong supporter of gas.

During the Budget Vote speech for his department in May, Mantashe said: “Gas is going to be a game-changer in the economy… even the EU now is labelling gas and nuclear as part of the green transition.”

Minister of Forestry, Fisheries and the Environment, Barbara Creecy, isn’t opposed to gas either, telling Daily Maverick at a tourism investment summit in March that gas “is recognised internationally as a transition fuel”.

Creecy said the situation was complex, but that gas as a transition fuel could help SA to reduce its emissions before 2030.

“What scientists are saying is that between now and 2030, we need to reduce emissions by half, so that’s a quick way... If you substitute gas for coal, in certain environments,” said Creecy.

“The question of the environmental impact is, how are you investing in gas? And that’s a complicated question. Because you want to ensure that you are investing in such a way that it’s a short to medium term investment.”

But according to African NGOs, this type of thinking – and the EU's “common position” on fossil gas and nuclear energy – will be at the expense of African countries.

Charity Migwi, Africa Regional Campaigner at 350.org, said: “As a concerned African citizen, it is totally unacceptable for African leaders to prioritise gas while millions, hardest hit by the unfolding climate crisis, are struggling to adapt to the devastating realities of climate change.

“The development of gas would not only lock African nations into fossil fuel production, but would also undermine any plans to rapidly cut greenhouse gas emissions in a bid to keep global temperatures under 1.5°C, in order to avert even more catastrophic climate impacts.”

Africa Coal Network’s Lorraine Chiponda said: “The 2022 IPCC clearly warns that the world needs drastic cuts in carbon emissions to prevent catastrophic climate impacts. The globe already has seen temperature rise, and we will exceed 1.5ºC and suffer an increase in intensity and frequency in climate disasters.”

Ubrei-Joe Mariere Maimoni, climate justice and energy project coordinator of Friends of the Earth Africa, said: “Fossil fuels and extractivism, especially on the continent of Africa, have brought tales of sorrow, tears and blood.

“Communities have been made to unjustly sacrifice their lands, livelihoods and even their dignity, and humanity, to enrich developed nations, transnational corporations and African elites.”

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Would gas benefit Africa’s economy?

A 2022 report from the International Institute for Sustainable Development (ISSD) on gas-fired power in South Africa argues that, while in the past fossil gas was viewed as a necessary transitionary fuel to low-carbon energy or as part of an energy mix, the decreasing costs of renewable energy and battery storage now refute this logic.

Read more in Daily Maverick: "EXPLAINER: The real deal with renewable energy in South Africa — unpacking the suite of options"

The report argues that,”given the cost trends, it is likely that before significant new balancing capacity is needed, the costs of renewables and storage will have declined to the point that these technologies can provide more of the balancing function”.

Additionally, Goldman Sachs estimated that in 2020, the cost of capital for developing LNG projects globally had increased to around 10%, compared to 3% to 5% for renewables.

Locked into gas

Barbara Creecy told Daily Maverick: “If we’re talking about a transition enabler, then the concept of transition means its short to medium term. So how do you ensure that you don’t move from coal, which is at risk of becoming a stranded asset, to gas stranded assets?”

Creecy said there is research being done in her department to answer this question, and how we can use gas as a transition enabler in a way that doesn’t put massive infrastructure investment into it.

However, the ISSD report said that gas won’t always be seen as a short to medium term solution as, even after gas assets become stranded, “they may continue to operate even when cheaper, superior alternatives are available, because the capital is already sunk.

“This type of lock-in can result in pressure from workers, investors and companies on the government to introduce subsidies to protect the incumbent industry.

“These subsidies divert funds from other projects with better socio-economic metrics and cause an industry to persist even when it is economically unviable. This is already happening with Eskom, which is locked in to an uneconomic and unsustainable coal fleet and still receives bailouts.”

According to Carbon Tracker, “fossil fuel-reliant countries could see a drop of 51% in government oil and gas revenues in a shift to a low-carbon world over the next two decades”, meaning that with the world trying to meet their carbon targets, the market is changing.

They predict that countries reliant on fossil fuels could have government revenues that are $9-trillion lower over the next 20 years under a low-carbon scenario. DM/OBP

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Is gas a fair trade?

Would gas benefit Africa’s economy?

Locked into gas