The African Economic Outlook for 2022 has as its central topic Africa’s Supporting Climate Resilience and a Just Energy Transition. The subject, which is similar to the one for the 2022 Annual Meetings, emphasizes how climate change is an increasing danger to people’s lives and means of subsistence in Africa. The Covid-19 pandemic’s aftereffects, Russia’s invasion of Ukraine, and the subsequent conflict, all of which potentially provide significant problems soon, are reported in the African Economic Outlook (CNBC Africa, 2022).
“Achieving Climate Resilience, and a Just Energy Transition for Africa was chosen to create a mechanism for the governors of the Banks to engage in sharing their insights in addressing climate change and energy transition concerns, as well as their policies and actions to cope with them. Secretary General Nmehielle stated that governments would be able to demonstrate what their nations have done in this regard. The celebration of the African Development Fund’s 50th anniversary, the Bank Group’s concessional loan division, was a standout moment during the Annual Meetings of the Bank Group.
The Africa Center put together a knowledgeable panel of climate financiers, NGO groups, and economists devoted to achieving sustainable growth and development to coincide with the release of the African Economic Outlook 2022 study. In preparation for and the lead-up to the 27th United Nations Climate Change Conference of the Parties, which will take place in Egypt later this year, this high-level group reviewed priorities and practical suggestions (Atlantic Council, 2022)
The Russia-Ukraine war and the epidemic might have a significant impact for several years, if not up to a decade, according to the African Economic Outlook. In the meanwhile, the epidemic caused the loss of roughly 22 million jobs in 2021 and the dire poverty of nearly 30 million Africans. In 2022, they may force an additional 1.8 million people on the African continent into abject poverty. In 2023, that number may increase by an additional 2.1 million. The increased finance requirements for the continent are projected to be $432 billion from 2020 to 22. And the tendency is anticipated to last until 2023 and the second half of 2022.
Up to 1.6 trillion will be needed between 2022 and 2030 to finance the nationally determined contributions—public commitments from nations on how they want to participate in post-2020 global climate action. Between 5% and 15% of the continent’s gross domestic product is lost due to climate change. Only $18.3 billion in total climate money was given to African nations between 2016 and 2019. This results in a $1288.2 billion yearly funding deficit for climate action from 2020 to 2030. (AEO, 2022).
In addition to the anticipated temperature increase in Africa exceeding the global average, there will likely be an increase in the frequency and severity of heatwaves, floods, and droughts, which will enhance the likelihood of an economic and social disaster. With predicted adaptation costs of at least $50 billion year by 2050, all of this threatens to undo the hard-won development achievements made over the last two decades. Conscious of the need to cut GHG emissions, several African nations signed on to the Nationally Determined Contributions initiative (AEO, 2022).
Africa continues to be one of the world’s most susceptible and least climate-resilient continents. This is noticeable in every region of the continent. Millions in the Horn of Africa are in danger as a record drought approaches. Because resources are becoming more limited in the Sahel, climate change is contributing to increased insecurity. And deadly rain and flooding are occurring in Southern Africa. Never requires action to be greater (Fal, 2022).
Africa’s limited access to modern energy is impeding its efforts to grow and strengthen its ability to adapt to climate change. The transition to low-carbon energy sources is crucial for lowering global greenhouse gas (GHG) emissions, but these efforts must also be compatible with the continent’s development goals and the unmet energy demands of its 600 million people.
In comparison to other worldwide areas, Africa’s energy mix has a comparatively low proportion of fossil-based energy sources (46% in 2020). Along with natural gas, which might be used as a transition fuel in nations with access to it, the continent has also boosted its renewable energy technology, which will enable it to progressively eliminate coal in its energy mix.
Low-carbon transitions in Africa differ per nation, but they might be revolutionary. Different natural zones, temperatures, habitation patterns, economic structures, resource bases, and government systems are reflected in these differences. The energy and mineral resources of Africa are abundant, including lithium, graphite, cobalt, nickel, copper, and rare earth minerals, all of which present new market prospects for the transition to a more sustainable economy.These potential might assist the continent in developing a climate-resilient and integrated sustainable energy economy given Africa’s minimal lock-in to fossil-based energy technology.
Policies should be inclusive, “leaving no one behind,” to achieve climate resilience and a fair energy transition in Africa. An equitable energy transition in Africa must take into account both previous emissions and how they influence present and future emission trajectories. Africa shouldn’t be denied the “carbon space” to expand its economy because it made little or no contribution to the accumulation of past emissions. True climate justice means that Africa is due roughly ten times more than what it has recently received in global climate money.
Action on regional climate adaptation and mitigation must be taken quickly if Africa is to have a bright future. For this reason, the African Development Bank is driving regional projects that connect sustainability, energy transition, and climate adaptation throughout the whole continent. These efforts are being incorporated by the Bank into its country and regional plans, where they are anchored by its High 5 goals and woven throughout each project that the Bank supports (Fal, 2022).
Bank finance has supported clean, renewable geothermal, solar, and hydropower projects in Kenya, Morocco, and the Democratic Republic of the Congo that supplies energy to underserved homes and small business sectors. These investments frequently enable power to flow across borders and promote the expansion of regional trade (Fal, 2022).
The African Development Bank is concentrating on modernizing and climate-proofing agricultural systems in the field of agriculture. Additionally, productivity is rising. More African nations are now pursuing sustainable practices and transitioning from subsistence to surplus economies as a result. Through these initiatives, habits, and blockages that continue to result in violence, displacement, and food insecurity are being addressed (Fal, 2022).
More generally, several African Development Bank projects are aiding in the establishment of strong regional value chains based on commodities that will guarantee food security in Africa. As an illustration, consider the Bank’s Technologies for African Agricultural Transformation (TAAT) program, the Special Agro-Industrial Processing Zones (SAPZs) project, and larger investments in physical infrastructure, logistics, information communications technology, and innovation. Additionally, these programs are assisting in the development of an extensive, profitable, and sustainable agriculture industry across the whole continent (Fal, 2022).
Dr. Kevin Kariuki, vice president for power, energy, climate change, and green economic growth, highlighted that the African Development Bank no longer supported new coal projects. “However, when it comes to gas, we do recognize that Africa must confront its energy poverty, and that to do so, all energy sources other than coal must be considered. Therefore, from our vantage point, the bank will invest in such gas power plants so long as a gas project has been included in a nation as part of Nationally Determined Contributions.” 2022) (Oghifo).
The $1.5 billion food plan, according to Dr. Martin Fregene, director of the Agriculture and Agro-Industry department, would take care of urgent demands brought on by the ongoing turmoil in Europe. In the upcoming wet season, which begins in the southern hemisphere around October, the plan will provide seeds and fertilizers to farmers to help them. The Bank also has a medium- to a long-term strategy called Mission 1 for 200 that will assist farmers in increasing production to 100 million tonnes of food to feed 200 million people (Oghifo, 2022).
If properly designed and implemented, building resilience may be highly cost-effective, with benefits that outweigh the expenses by a factor of many. Some of the steps done to increase climate resilience entail synergies with significant co-benefits related to mitigation. Examples for Africa include low-cost yet effective technology like water collection and small-scale irrigation techniques, land and water conservation and management tactics, and minimum or zero tillage agriculture with high net returns for farmers—and much higher when farmers employ complementing technologies (AEO, 2022).
Africa continues to be the least industrialized continent in the world, and the speed and extent of structural change are greatly facilitated by modern energy. Modern industrialized economies had exceptional increases in average per capita consumption due to increases in energy usage, which sped up their industrialization and eventually contributed to their high levels of affluence. In a wide range of nations, there is a significant relationship between GDP per capita and contemporary energy usage in the form of electricity (AEO, 2022).
Africa has a serious deficit in electricity production, which is a crucial component of contemporary energy systems. With 1.2 billion inhabitants, Africa had an installed power generation capacity of 244 gigawatts (GW), which was just a bit more than Germany’s 211 GW for 83 million people. In 2019, installed capacity in North Africa were around 110 GW, South Africa about 64 GW, and the remainder of Africa about 70 GW. This most recent number, which includes 47 nations, is lower than Turkey’s installed capacity. Productivity is greatly impacted by low energy inputs along the value chain for irrigation, automated production, storage, processing, and transport (AEO, 2022).
To eliminate inequality and give people more power via access to modern energy, Africa requires an energy transition that is fair and equitable and fosters inclusion and synergy. In addition to helping millions of Africans escape poverty—the transition must expand opportunities and strengthen the rights of those who are impoverished—affordable, dependable, and sustainable energy systems are essential for reducing climate vulnerability, enhancing climate readiness, and boosting climate resilience. To manage short-term energy security and create long-term trajectories that combine attaining low GHG emissions with accomplishing crucial goals for the population’s well-being, Africa must maintain a balanced energy mix (AEO, 2022).
A fair transition is being defined and framed throughout Africa. Since 2012, a fair transition has found a place in South Africa’s frameworks for climate policy. The 2012 National Development Plan acknowledged the need for a “judicious transition” to address the fact that poor and vulnerable people are likely to be disproportionately affected by climate change and associated policies due to the country’s dependence on energy-intensive sectors for employment and mining for revenue. A fair transition was described as an inclusive approach that would integrate “local and indigenous knowledge, gender issues, as well as social, economic, and environmental ramifications” in the Intended Nationally Determined Contribution from 2015. (AEO, 2022).
The energy transition offers a singular opportunity to redefine Africa’s energy systems to fulfill the goals of the SDGs, the Paris Agreement, and Agenda 2063 of the African Union. These systems must be built using technically sound, economically sensible, and feasible technology to function in the long run. By enhancing indigenous capability, resources, and expertise, they must also provide the greatest benefit for sustainable development in Africa (AEO, 2022).
An important tenet of Africa’s long-term energy sustainability goal is the integration of regional power systems. Connected markets may aggregate load patterns across borders and pool a variety of supply sources. Thus, it is anticipated that electricity trading will lower generating costs, maximize energy resources, and improve the flexibility of the power system. Although the size, administration, and performance of five regional power pools in Africa vary widely, they share similar difficulties in a market that is rapidly evolving (AEO, 2022).
An essential component of Africa’s potential for green growth is renewable energy as a product and the environmentally friendly goods it makes possible lower down the value chain. Contrary to fossil fuels, which are primarily subject to resource-oriented economics, renewable energy sources are subject to manufacturing economics, allowing African nations to enter the market as producers of components like bio-gasifiers, electrical equipment, and solar cells. Kenya’s expanding solar PV component manufacturing business is an example of the sector’s potential in Africa (AEO, 2022).
Precedence Research projects that the worldwide market for green hydrogen will expand at a compound annual growth rate of 54% from 2021 to 2030, reaching a value of almost $90 billion. A green hydrogen industry of $400–800 million tons and $0.8–$1.6 trillion annually is predicted to exist by 2050. Green hydrogen may be used for a variety of purposes, including heating, heavy-goods transportation by land, sea, and air, decarbonization in the steel and chemical industries, and flexible renewable energy-based generation in the power sector.
Due to its tremendous solar and wind capabilities, Africa has the finest potential in the world to create inexpensive hydrogen, but it is failing to seize this opportunity. Recent studies have demonstrated that practically speaking, Europe, for instance, cannot decarbonize its chemical sector without depending on green fuel imports due to the lack of renewable energy. These studies include Africa as one of their most potential sources of renewable energy (AEO, 2022).
Africa must be allowed the energy-transition and decarbonization policy space, as well as the time frame, to balance its development ambitions and climate objectives. Africa must shoulder its fair share of obligations to climate goals.
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