Traveling to this year’s Extractive Industries Transparency Initiative (EITI) global conference, I had one big question on my mind: how can the initiative that successfully promoted transparency in mining and oil contribute to Africa’s transition to clean energy? When the EITI was set up 20 years ago, its primary focus was ensuring citizens in member countries benefited from the revenues accrued from their natural resource wealth. Why couldn’t that same approach to transparency help ensure that citizens benefit from the transition to a clean energy future?
With a rapidly evolving mandate, EITI marked its 20th anniversary in Dakar last month, under the theme “Transparency in transition.” Despite clear acknowledgement of the energy transition, I found a lot of questions around how it fits into EITI’s core mandate — and what it means for the EITI’s 50+ members. Here are my three key takeaways from the conference:
- Energy sector challenges remain a blind spot for many countries even though they mirror the same issues EITI members are facing in the extractive sector: opaque contracting, lack of competitive procurement and its associated challenges. Conversations at the conference highlighted the fact that the transition could be both a blessing and a “curse” as countries look to tackle climate change and strengthen energy access. Some participants expressed frustrations about the EITI expanding into issues which are not directly relevant to countries that have contributed very little to global carbon emissions. In my view, there’s a direct link to EITI’s original mandate because the energy transition is a potential means to add value to their extractive resources while meeting energy goals.
- The EITI needs to encourage implementing countries to start planning beyond the extractives for their energy needs. The 2023 Standard, launched at Dakar, acknowledges the need to include the energy transition and renewable energy plans by including reporting on company GHG emissions, accountability of fast-tracked licenses in mining projects, and increasing public understanding of energy transition policies. But the Standard is silent on countries’ reporting on contracting, procurement, and governance of actual energy projects. With the exception of Albania who is reporting on hydroelectric projects, most countries’ reports do not cover these issues. EITI is still debating how this will be implemented but outliers like Albania and the Zambia EITI — with whom the Hub has been engaging to build public support for greater disclosures in their power sector — are setting a good example for the rest of the pack.
- Data disclosure and availability remains a challenge. The complex and often transnational nature of extractives and energy projects means that markets will require different levels of information needed to judge value for money of these projects. Lack of data threatens future project investment because governments and investors may lack confidence in their ability to sign fair contracts that generate returns over the long term while providing affordable, efficient power to consumers. This could inevitably lead to deal backtracking or cancelations, contract renegotiations and market instability, as we’ve seen in many emerging markets. My recommendation to the EITI is to broaden the contract and data transparency provisions of the Standard or to identify implementing countries willing to pilot such reforms, which would inevitably raise the bar for citizens, policymakers, and private investors.
The energy — and development — needs of many countries hinge on their ability to scale up clean energy. The EITI approach provides the right setup to tackle contract transparency in the energy sector and the new Standard is a good start. EITI, its implementing countries, and participating companies can now bring their lessons of transparency and accountability to the energy transition and growth of clean energy.