The African Petroleum Producers Organizations states that the biased approach adopted by the International Energy Agency is a direct hinderance to inclusive economic growth in Africa.
The International Energy Agency (IEA) has published a report strongly advocating for an end to fossil fuel use and promoting unrealistic and unattainable approaches to achieving net-zero by 2050 as the Conference of the Parties (COP28) is upon us. The report shows a rapid decline in oil demand, urges an immediate transition to renewables, and states that carbon capture is merely an illusion. As the African Petroleum Producers Organization (APPO) rightfully states, the IEA approach poses detrimental impacts on Africa’s economies, representing a biased perspective that fails to take into account the needs and challenges of the continent.
Africa is on the precipice of rapid, economic transformation. The continent holds over 125 billion barrels of crude oil reserves and 620 trillion cubic feet of natural gas reserves, resources which stand to serve as catalysts for industrialization and economic development. These resources can provide the over 600 million people and 900 million people currently without access to electricity and clean cooking solutions, respectively, with affordable energy. Yet, at the same time, the continent faces the worst impacts of climate change and is being told to abandon its oil and gas resources, despite only contributing less than 3% of global greenhouse emissions.
The IEA’s “solution” dramatically overlooks the developmental needs of countries and ultimately restricts both economic growth and the energy transition. Firstly, the IEA states that global oil demand is expected to peak by 2030, thereafter falling sharply by 45% by 2050. Other forecasts show a vastly different scenario. The U.S. Energy Information Administration shows global energy consumption to increase through 2050 while McKinsey & Company highlights that by 2040, Africa’s energy demand is expected to be 30% higher than it is today, with demand essentially outweighing supply. Rapid population growth and industrialization are key factors. The United Nations projects Africa’s population to double by 2050, reaching upwards of 2.4 billion people, increasing two-fold once again by 2050 to reach 4.3 billion. In this scenario, how does the IEA honestly foresee energy demand falling?
By population growth alone, it is clear that Africa needs its oil and gas, and countries have been promoting investments into carbon capture, utilization and storage (CCUS) as a means to ensure the safe, clean and sustainable utilization of hydrocarbons in Africa. CCUS provides a strategic opportunity for countries to meet energy demand while reducing emissions. Yet, the IEA’s report paints a vastly different picture. The IEA suggests CCUS to be inadequate, promoting, rather, investments in renewables – resources which do not have the capacity to meet Africa’s industrialization needs.
IEA Executive Director Fatih Birol states that, “Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector. The industry needs to commit to genuinely helping the world meet its energy needs and climate goals – which means letting go of the illusion that implausibly large amounts of carbon capture are the solution.”
This statement is not only contradictory but fails to consider that the oil and gas industry can only fuel the transition to a clean energy future through the adoption of CCUS technology. How is the industry supposed to meet the world’s energy needs if it is being pushed to abandon the only fuels that can address this demand? How does the industry reduce its emissions and promote clean energy technologies if it being told to abandon carbon capture?
According to the APPO, the IEA has and continues to fail to come to terms with the global reality for phasing out oil and gas. Dr Ibrahim remarks that, “Only a couple of years ago, IEA posited that reaching net-zero will be virtually impossible without CCUS. It further argued that CCUS will need to form a pillar of efforts to put the world on the path to net-zero emissions.” What has changed?
Meanwhile, looking at financing, the IEA doesn’t consider that oil and gas makes up the majority of African nations’ revenues. Angola’s crude oil revenue in 2022 was approximately $39 billion; Nigeria’s was $45 billion; while Algeria’s was $50 billion. Without these vital streams of revenue, how is Africa supposed to finance its clean energy future? Between 2020 and 2030, Africa requires upwards of $2.8 trillion to meet its National Development Goals. Where is that funding supposed to come from?
“Over the years, we have seen significant financial commitments made by global partners. In 2009, developed nations pledged $100 billion in annual financing for developing countries, and yet, between 2016 and 2019, only $20 billion was provided to Africa. Commitments have shown to fall short of action, and the same can be said for other financial pledges made in the years since. In this scenario, Africa is not only being stripped of the resources to finance a transition but continues to be disappointed by empty global promises,” says Omar Farouk Ibrahim, Secretary General of APPO.
With COP 28 here, APPO strongly urges stakeholders to take into account the facts and unique challenges of Africa. For a continent which has supplied the world with the energy to develop and prosper, it is only right that Africa charts its own path towards a net-zero future.