The Energy Sector
Rapid economic and demographic expansion in Africa, notably in the continent’s booming cities, will have far-reaching regional and global ramifications for the energy industry. With the lowering costs of major green technologies introduce new pathways for innovation and growth, the scene is set for a latest influx of vibrancy among African governments and business groups. The main task is to ensure that everyone has access to dependable, modern, inexpensive, and sustainable energy. The manner in which this is accomplished is a critical component of Africa’s Agenda 2063 strategy framework for the continent’s future. Another problem is maximizing the capacity of the continent’s natural gas and mineral resources.
The International Renewables Energy Agency(IREA) has revised and diversified its outlook for Africa predicated on in-depth, information, and country-specific characterization, five years after the World Energy Outlook’s first special report on the continent. The new research contains crucial policy recommendations to assist African energy stakeholders in achieving the continent’s long-term economic goals in a sustainable and equitable manner. It also looks at how the increase of conspicuous consumption in Africa may have an impact on global trends. Policymakers must address the continent’s continuing inaccessibility to electricity and clean cooking, as well as the unreliability of electrical supply, which have slowed its growth. Approximately 600 million can’t get access to power today, and approximately 900 million people can’t get access to clean cooking (IREA 2019).
Notwithstanding success in a number of nations, present and anticipated initiatives to expand access to sustainable energy are barely keeping up with population growth. 530 million people and over one billion people would still be without power and clean cooking in 2030. As a logical consequence, the worldwide population without access to energy will become increasingly concentrated, with 90 percent and almost half of the world’s population lacking reliable electricity and clean cooking in 2040, respectively.
For the case of electricity, it might need increasing the number of individuals who acquire access each year from the current level of roughly 20 million to over 60 million. By 2030, grid extension and densification will be the most cost-effective choice for roughly 45 percent of the population, mini-grids for 30 percent, and hang systems for around a quarter. In urban areas in Sub-Saharan Africa, LPG is utilized by around half of people who acquire access to clean cooking, whereas modernized cook stoves are the favored choice in rural regions. Light rail, bioenergy, ethanol, and other alternatives are also significant, reports the Agency.
According to the Africa Energy Outlook Report of 2019, Africa’s electricity consumption has surpassed 700 Terawatt-hours, with North African nations and South Africa controlling for more than 70% of the total. Demand is also fueled by productive usage and rising middle- and upper-income households. Africa has to significantly increase investment in energy generation and infrastructure, which is now among the world’s lowest. It is also vital to develop Africa’s financial sector in order to secure a steady supply of long-term finance for renewable technologies.
Gas already provides around half of North Africa’s energy demands, but it has remained a niche fuel in Sub-Saharan Africa. Gas makes up only 5% of the energy mix, which is the world’s lowest. There has been a slew of big finds in recent years, accounting for more than 40% of all worldwide gas breakthroughs between 2011 and 2018 (IREA 2019) These advancements may be compatible with Africa’s drive for industrialization and the need to limit the use of more harmful fossil fuels. Much will be influenced by the price at which gas would become accessible, the expansion of distribution networks, infrastructure finance, and the effectiveness of regulatory measures to replace hazardous energies.
The potential for hydrogen production in North Africa is more than speculative. The renewable energy resources in the region are vast. Export profits from fossil fuels are crucial for oil and gas companies’ financial stability, but consumption for fossil energy is predicted to peak and then plummet as the energy revolution continues. Europe, which is now reliant on fossil fuel imports, will virtually probably require renewable energy imports as it works toward net-zero energy by 2050. Thus, there is a strong shared interest in utilizing North Africa’s generating capacity to support the region’s energy transition, generate jobs, promote social and economic stability, and satisfy Europe’s clean energy needs, highlights the Agency.
The wind resource in the region is also substantial, with trade winds delivering high and frequently extremely consistent wind speeds. Morocco, for example, is thought to have a 200-gigawatt offshore wind potential, with typical wind velocity of 7.5-9.5 m/s in the south and 9.5-11.0 m/s in the north. Algeria outperforms all others, with the World Bank’s International Finance Corporation putting the country’s technical wind energy potential at 7,700 GW. To put this in context, Europe’s total wind capacity by the end of 2020 was little over 216 GW (IREA, World Bank…et al.)
As a producer, user, and exporter of natural gas, Africa is a prominent participant. According to the Stated Policies Scenario, Africa’s gas consumption will quadruple by 2040. Africa, headed by Mozambique and Egypt, emerges as a key exporter of LNG to global markets, with output growing far faster than demand. Natural resources abound in Africa, and the resulting profits might be a major driver of growth. However, due to shifting global energy dynamics, resource owners cannot expect their oil reserves to provide consistent future earnings.
Many of the natural resources that are crucial in fueling global energy transitions are also found in Africa. The Democratic Republic of Congo produces two-thirds of the world’s cobalt, whereas South Africa contributes 70% of the world’s platinum (IREA 2019) Market growth for minerals that may fuel global energy shifts presents an opportunity for Africa’s mineral-rich countries, but failing to meet demand might stymie not just Africa’s economic success, but also the scale of global energy transformations. It is critical to exercise responsible management over these resources. To guarantee that profits deliver visible beneficial effects for local people and that negative environmental consequences are avoided, robust regulation and supervision procedures would be required.
Africa’s contribution to global greenhouse gas emissions has been small. Until far, Africa’s energy-related emission have accounted for around 2% of total global emissions. Despite its tremendous economic development, Africa’s contribution to global Carbon emissions will only be 3% by 2040 (Statistical Review of World Energy 2021) Africa has the chance to adopt a far less carbon-intensive form of growth than many other regions of the globe, thanks to abundant natural resources and technological advancements. Across a varied continent, the problems and possibilities vary greatly. However, as Africa moves away from biomass, which presently accounts for over half of final energy consumption, renewables, along with natural gas, are poised to dominate the continent’s energy consumption boom in many places. Africa could be the first destination to accomplish an elevated amount of economic and industrial growth with cleaner energy sources playing a pivotal role than other economies in the past, with the right policies to support a strong expansion of clean technologies and enough emphasis on energy efficiency improvements.
The Blue Economy
In the African setting, the Blue Economy includes both aquatic and marine regions, such as oceans, seas, beaches, lakes, rivers, and subsurface water. Coastal states make up 38 of Africa’s 54 countries (United Nations Economic Commission for Africa, UNECA-Policy Handbook) More than 90% of Africa’s imports and exports are carried out by sea, and Africa is home to some of the world’s most critical economic gateways, highlighting the continent’s geopolitical importance. Africa’s aquatic and marine areas are becoming a more prevalent issue of political debate; its natural riches have mostly gone untapped, but they are now being acknowledged for their significant application to equitable and sustainable development. The wealth that can be created from the ocean is reasonably estimated to be worth US$ 24 trillion, with commodities and services accounting for $2.5 trillion yearly. According to the UNECA, if the seas were a country, they would be the seventh greatest economy on the planet.
The Blue Economy is based on concepts of equality, low-carbon development, resource efficiency, and social inclusion, and supports the protection of aquatic and marine ecosystems as well as the sustainable use and management of associated resources. The Blue Economy sectors are integrated through a socially integrated approach aimed at stimulating structural transformation in Africa, encouraging integrated development, and improving regional collaboration and coordination.
The Blue Economy offers a chance to improve current maritime, riparian, lacustrine, and river basin collaboration mechanisms. When fully realized, the partnerships have the potential to make a quantum leap forward in individual States’ economic growth as well as the extension of progress, peace, and prosperity throughout the continent. They can also assist solve specific States’ inherent financial, technological, and infrastructure deficiencies, which prohibit them from taking full advantage of their aquatic and marine resources. The delimitation of marine boundaries is a critical step in realizing the Blue Economy’s full potential. States are urged to use existing tools, such as third-party conflict settlement mechanisms such as international courts or tribunals, to resolve their problems.
It is critical to guarantee that the Blue Economy’s growth promotes the preservation of Africa’s immense cultural variety and rich cultural history. Thousands of indigenous groups continue to retain their lifestyle and traditional vocations while the continent is altered by rapid economic growth. For many, these jobs are more than just a source of cash; they are a part of who they are. Many are coastal and riparian fishermen or farmers who rely on essential water sources to keep their businesses afloat. Several of these settlements have been forcibly evicted or have lost their livelihoods and social cohesiveness as a result of land-use changes for big industrial operations in areas such as agriculture, energy, and mining in recent years. This has resulted in conflict and the extinction of ancient practices, including perennially valuable but continuously disregarded indigenous expertise.
According to a PricewaterhouseCoopers analysis, a 25% adjustment in port services could boost GDP by 2%. One of the main reasons of port bottlenecks is poor port performance. Another obstacle to African port development is getting adequate external investment. In addition, there is an imbalance between imports and exports. Import and export costs are complicated by the type of the items being imported and exported. Containerized cargo dominates imports to Africa, whereas raw materials and agricultural goods dominate exports, which are typically handled as bulk cargo.
The utilization of intermodal and multimodal transport, as well as logistical services, can boost port efficiency. The employment of various methods of transportation will promote a more efficient distribution network for all items. The emergence of more advanced freight forwarding will be aided by the expansion in retail trade in Africa.
Finally, it is now universally acknowledged that access to dependable, cheap, and secure energy is critical to Africa’s ongoing economic structural change. Because of the continent’s fast increase of energy capacity, all energy sources must be considered for development. Africa’s oceans and seas hold enormous potential for developing both non-renewable (oil and gas) and renewable (wind, tidal, and wave) energy sources, of which only a portion has been tapped to far. Between 2007 and 2016, the average annual value of African mining exports in oil and gas was $301 billion, while the continent’s overall exports were $481 billion. Over 90% of Africa’s imports and exports are carried out by sea. Oceans and aquatic areas provide a major portion of Africa’s petroleum and gas resources. The continent is believed to have around 30% of all confirmed world mineral reserves, with the majority of these resources concentrated in its interior and offshore marine zones. Its oil reserves account for 8% of global reserves, while its natural gas reserves account for 7% of global reserves (UNECA) These must be put to good use if Africa’s economic character is to alter.
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