All Africans – whether living in urban or rural areas – need access to affordable, clean, efficient, reliable, climate-proof and renewable energy for both residential and productive uses to achieve the UN's Sustainable Development Goals (SDGs). Here we set out a comprehensive and actionable roadmap for Africa’s zero-carbon energy transformation by 2050, with most advances achieved by 2030. Natural resource management in minerals, fossil fuels and land sits at the core of the strategy.
Starting from a simple and transparent model of the annual investment volumes needed to provide continent-wide access to electricity based on renewable sources, our research addresses various imperatives and challenges regarding Africa’s energy planning and financing, and outlines recommendations for immediate implementation of the strategy from 2022.
There are four overarching ideas in our vision for Africa’s energy future.
• The world economy is going to decarbonise. The oil companies do not necessarily believe it today, but we are convinced they will soon understand and act accordingly. Just like in the rest of the world, many pending oil and gas projects in Africa will become unbankable in the coming years as decarbonisation proceeds.
• Africa needs to front-load its investments in green electrification and digitalisation. Africa should borrow heavily, at very concessional rates, in order to build infrastructure and achieve other crucial SDGs (such as quality education for all children). Debt relief may also be helpful in increasing the fiscal space for green and digital investments.
• The international community, guided by the African Union, should dramatically increase the capacity of the African Development Bank and other African banks to front-load investments in infrastructure.
• Africa should use its vast continental resources (renewable energy, strategic minerals, biodiversity and human skills) to develop African productive capacity at all points in the renewable energy supply chain, including a massive scaling-up of strategic minerals mining and African supply chains for photovoltaics; electric batteries; hydrogen and other green fuels; electric vehicles (such as electric motorcycles); and digital services (e-education, e-health, e-payments and others). In this transition, gas infrastructure should be planned carefully to provide flexibility while awaiting further cost reduction of storage technologies and green fuels for industry.
The main strategic recommendations are as follows:
• Rapid socio-economic development in Africa will depend on the massive scaling-up of investment in three key areas: zero-carbon electrification, digital access and education.
• Africa’s scale-up of zero-carbon electrification should aim for 100% household coverage by 2030 in line with SDG 7 (universal access to modern energy services).
• Africa has very high stakes in pushing for the global success of stopping human-induced climate change. African countries should show a united front through continent-wide institutions, including the African Union and the African Development Bank, and urge developed and emerging economies to lead a rapid global transition to renewable energy and decarbonisation. Africa’s historical contribution to greenhouse gas emissions has been minuscule, and, as such, the continent is incurring net damages from climate change that are hugely disproportionate to Africa’s contribution. To ensure a just transition to zero-carbon, sustainable economies and societies, Africa has the right to receive significant international official financing for mitigating and adapting to climate change.
• Investments in zero-carbon electrification (as well as digital access and education) should be front-loaded and supported by large-scale, long-term, official concessional financing by development institutions (most importantly, the African Development Bank), private-sector investments and debt relief where appropriate.
• Urbanisation will occur naturally as agricultural output per worker rises, which, in turn, will shift new jobs from agriculture to urban-based industry and services. African governments and continent-wide institutions should also promote urbanisation as part of the overall African development strategy: it will dramatically lower the cost of providing electrification, digital access, education and other services compared with rural areas while making cross-subsidisation between urban and rural areas possible. However, existing and future slums associated with rapid urbanisation could hinder these efficiency gains and, therefore, urbanisation should be tackled with public policies for urban planning, housing, services, and jobs.
• Urbanisation and education will accelerate Africa’s demographic transition to lower mortality rates and lower fertility rates, which, in turn, will reduce the population growth rate and the youth dependency rate while increasing the proportion of the population at working age. The demographic transition will thereby create a ‘demographic dividend’ of economic growth and poverty reduction.
• The rapid scale-up of renewable energy will create millions of new jobs in Africa, directly through the construction of new energy facilities and indirectly through the jobs that electrification and digital access will induce. Africa should support its educational institutions to prepare the workforce for the new digital and renewable economy, leveraging the tremendous opportunities offered by digitisation and stimulating a reverse talents diaspora.
• Africa requires a vast increase in energy production and use, which should occur overwhelmingly through a massive increase in zero-carbon electricity from Africa’s plentiful renewable energy sources, including solar, hydropower, wind and geothermal, with a complementary role for sustainable biomass and synthetic fuels (such as green hydrogen) in displacing fossil fuels. The three components of the proposed strategy for Africa’s zero-carbon electrification are: one, centralised energy infrastructure; two, decentralised energy infrastructure; and three, the phase-out of fossil fuels on economic grounds.
• Centralised energy infrastructure will be needed to meet the energy needs of urban populations, industrial users and the transportation sector, whether directly (through electricity) or indirectly (through the production of synthetic fuels).
• Decentralised energy infrastructure includes solar-based mini-grids and solar home systems for the continent’s rural and other remote areas. They will be run by private companies.
• Demand for land will increase as the climate changes and the rollout of land-intensive climate and energy solutions accelerates. Governments must undertake careful land use and siting analyses that put people and the environment at the centre to avoid the uneven distribution of benefits and costs historically associated with large land-based projects.
• Several African countries will continue to produce and export oil and gas by 2050. These export earnings are essential for Africa’s growth and development. However, as the world transitions away from fossil fuels and toward zero-carbon energy, global prices for oil and gas are likely to remain low, opportunities for fossil fuel exports are likely to diminish, and more economic opportunities to achieve energy access and industrialisation are likely to arise from the declining costs of zero-carbon energy. Besides scaling up investment in zero-carbon electrification, we strongly urge Africa to carefully consider the risks of failing to plan for a phase-out of fossil fuel production and use by mid-century, and to prepare for the decline in oil and gas export earnings and the global zero-carbon energy transition. Increasing risks by mid-century include a shortfall in fossil fuel export earnings, high-cost access to electricity, lack of access to donor finance, continued social and environmental externalities, and stranded assets.
• The continent must also build local capabilities and operational means to progressively seed independence from foreign aid and shield against currency risk. In addition, they should not generate the power but rather orchestrate its generation, putting in place the necessary legal and regulatory frameworks for independent power producers (including mini-grids, solar home systems and large-scale units) and developing the core grid infrastructure.
• The African Development Bank should lead the overall financing effort, assisting African governments in this undertaking with blended financing, in which official financial institutions, especially the African Development Bank and other institutions, extend low-interest, long-term financing in conjunction with private-sector financing.
• Africa-wide investments in renewable energy should be in the order of $137bn per year, divided between power generation ($96bn) and power transmission and distribution ($41bn). While these are still rough numbers, they signal the approximate magnitudes that will be needed. Of the total outlays on the electricity system, roughly $377bn, or 32% of the total between 2021 and 2030, should be for rural (off-grid) power generation, and $795bn, or 68%, should be for urban and industrial (on-grid) power generation. Of the total new power generation, roughly 83% will be from solar power, 13% from hydropower and 3% from wind power, reflecting the resource endowment of the continent. While significant, these new investments are affordable as they represent on average 2% of the continent’s annual GDP. Taking the cost of the energy system for a household as measured by the Levelised Cost of Electricity, it represents 5% of annual GDP per capita.
• Africa’s GDP can and should, rise rapidly in the coming years, supported by front-loaded investments in energy, digital services and education. We envision the growth of yearly GDP per capita between 2020 and 2050 at the following average rates: north Africa, 7%; sub-Saharan Africa (other than South Africa), 8.4%; and South Africa, 6%. Because of rapid growth, Africa can absorb large amounts of low-interest, long-maturity debt to finance the rapid scale-up of power generation and power distribution.
• There is a need to increase annual climate finance mobilisation for energy systems, from multilateral development banks as well as co-finance, by 10 to 20 times to achieve zero-carbon mass electrification by 2030. The African Development Bank should be the lead institution in Africa for supporting the large-scale financing of the renewable energy scale-up. For that reason, the African Development Bank’s direct lending capacity for power generation and distribution should be scaled up to (at least) $20bn per year.
Jeffrey D. Sachs is the director of the Center for Sustainable Development at the Earth Institute at Columbia University. Perrine Toledano is director of research and policy of the Center for Sustainable Development in the Earth Institute at Columbia University. Martin Dietrich Brauch is a lead researcher at the Columbia Center on Sustainable Investment.
Read the full report at https://ccsi.columbia.edu/content/roadmap-zero-carbon-electrification-africa
This article first appeared in the December 2022/January 2023 print edition of fDi Intelligence. View a digital edition of the magazine here.