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Blog Mar 14, 2022

The Renewables-Only Fantasy for Africa: A reply to Bassey & Lemos’ reply to Osinbajo

How can international donors better support Africa’s transition to a prosperous low-carbon energy future? And when should donors…

Future of Energy Tech

How can international donors better support Africa’s transition to a prosperous low-carbon energy future? And when should donors consider supporting highly-developmental fossil fuel projects? In response to these questions, Nigerian Vice President Yemi Osinbajo recently argued in Foreign Affairs that development finance should remain open to natural gas where projects would advance Africa’s own development. Osinbajo explained that in countries like Nigeria, gas can immediately reduce air pollution by replacing generators and dirty cooking fuels with cleaner options, provide balance to the national grid, and most of all enable his country’s transition to Net Zero.

Two environmental campaigners, Nnimmo Bassey and Anabela Lemos, replied in Foreign Affairs that Africa should not repeat the mistakes of rich countries and that financing for gas projects should be immediately halted. They argued that fossil fuels have failed to deliver development or universal energy access in Africa and that an immediate 100% renewables strategy is a better choice for the continent.

Those who follow our writing will be unsurprised that we find Osinbajo’s case far more compelling, and that a nuanced position on gas is necessary to balance climate and development goals. Most importantly to the policy questions on the table right now, is a clear distinction between upstream (exploration and production) versus downstream (distribution and consumption) segments in the gas value chain. These two are, unfortunately, often conflated, despite having very different investment needs and development impacts.

But let’s start with the Bassey & Lemos points with which we agree.

First, they argue, rightly, that the mitigation burden is on the wealthy high-emitting countries. Indeed. Europe, North America, and East Asia are the source of the overwhelming majority of climate emissions, both historically and today. One billion people in 48 countries of Sub-Saharan Africa (excluding South Africa) contribute barely 1% of emissions. No plausible development pathway for Africa would meaningfully change this reality; the continent’s future emissions are in no way a threat to global climate plans.

Bassey & Lemos also are correct in arguing that Africa’s future will be predominantly renewable. African countries, on average, already get more of their power from renewable sources than most of the rest of the world, including a greater share than either the US or EU. And most are planning significant build-outs of more renewable energy. Nigeria, for example, has a 2060 Net Zero plan that calls for nearly 200 GW of new solar capacity, supplemented by just 10 GW of new gas-fired capacity. (By comparison, the United States will add 27 GW of new gas capacity in the next three years on top of its existing 552 GW.)

And, of course, the resource curse has affected many African countries. Bassey & Lemos note that fossil fuel development on the continent has “deepened inequality, caused environmental damage, stoked corruption, and encouraged political repression.” All true. The influx of oil revenues has often poisoned politics while failing to deliver widespread developmental benefits and often contributing to serious environmental and social harm.

Yet Bassey & Lemos get much wrong; in some cases, their conclusions are exactly backward.

Most obviously, they conflate upstream production for export with downstream domestic uses. Private capital is readily available for Africa’s extractive industries because they can sell those commodities in richer markets in Asia or Europe. But that’s not at all what the current debate is about; in fact, major development partners are already out of financing upstream production. Osinbajo isn’t arguing for development finance for upstream oil and gas production, but instead for the downstream infrastructure that would allow Nigerians to directly benefit from their country’s own natural resources. Private commercial capital is not available for these projects – clean cooking fuel, industrial uses like fertilizer, and generating electricity – without some form of public support, because the buyers are either too poor or the offtakers aren’t creditworthy. And that’s exactly what development finance is designed for: to fight poverty by investing in countries where private capital is scarce. Bassey & Lemos, by arguing that Nigerians and Mozambicans haven’t benefited enough from past fossil fuel exports, should not be arguing for a ban, but rather for more investment in enabling domestic uses so that Mozambicans do benefit. The equity case is exactly the opposite of their analysis.

To make this point sharper, let’s imagine the World Bank and other funders followed the advice of Bassey & Lemos and halted all finance for all development projects that relied on fossil fuels. What’s the outcome? Does Shell stop pumping African oil or Total abandon its African gas assets? Of course not. What would stop would be new power plants and industrial parks and cooking alternatives to wood or charcoal in Africa. In short, implementing their advice would do nothing to slow the export of African resources to the rich world while killing potential direct benefits to local people such as more reliable power or fertilizer or cleaner cooking. This is literally the opposite of promoting equitable development.

Moreover, to break reliance on resource exports, countries must diversify by developing new sources of income in different industries. If African countries want to create jobs in, say, manufacturing or in the digital economy, what’s among the top barriers?

Lack of reliable and affordable electricity. In other words, downstream gas development could provide a foundation for diversification in gas-rich countries. Again, the failure to distinguish between upstream and downstream leads to an upside-down conclusion.

Bassey & Lemos also falsely claim that 100% renewables is a viable alternative today that obviates the need for gas in all countries. A few African power systems are already heavily renewable, such as Ethiopia and Kenya who are fortunate to have significant hydro and geothermal resources. But that’s not the case everywhere. Countries that don’t have enough of these options will likely need to pair wind and solar with gas as a balancer. Indeed, Osinbajo’s argument is precisely this: “Gas-fired power can be quickly ramped up or down to meet demand, thereby helping balance Nigeria’s energy mix and enabling greater use of variable sources, such as wind and solar.” (Indeed, their evidence that 100% renewables is possible today refers to modeling which actually includes growth of gas-fired power generation as a backup to variable renewables, which is eventually converted to green hydrogen; see Table 8.45.) So both Osinbajo and their cited study conclude that short-term investment in gas infrastructure is not only consistent with but necessary for Africa to reach a low carbon future.

Other issues that Bassey & Lemos get wrong are that they:

  • Misleadingly suggest take-or-pay is a nefarious feature of fossil-based power contracts. Citing Ghana, they criticize take-or-pay provisions in power purchase agreements for gas-fired power when take-or-pay is in fact standard for solar and wind PPAs too. (See e.g., here for a list of all known PPAs in Ghana with their fuel source and here for a short case study of why contract nondisclosure is a problem across all technologies.)
  • Vastly overstate the current competitiveness of batteries as a replacement for gas applications. Battery costs are of course falling and are increasingly viable for some specific uses. But batteries are nearly all upfront capital expenditure and are not yet able to entirely replace gas in high-income markets (e.g., Germany, US) where interest rates are very low. In high-interest environments (i.e., all of Africa), they are even further from being realistic alternatives at any scale.
  • Mistakenly assume renewables + batteries can provide the same energy services as gas. Even once the technological hurdles of an all-renewables grid are overcome and the cost of batteries declines enough to make them cost-competitive in frontier markets like Nigeria or Mozambique, gas will still be useful for industry, as a chemical feedstock, and for cleaner cooking. Until these critical but hard-to-electrify activities are widely running on solar + batteries in rich countries, we should not expect them to do so in Africa. Offgrid solar has many attractive features, but it enables a narrow range of energy services. Until solar home systems can reliably boil water, for example, LPG will likely be the go-to cooking replacement for wood and charcoal.

While pointing out the inequity of the current climate finance approach, Bassey & Lemos do not make a credible case for a total ban on fossil finance in Africa. They confuse different parts of the energy sector value chain, misread the state of energy technology, and entirely miss the actual debate over development finance that is happening today. The Big Climate and Energy Policy Question today is: how can donors who care about both poverty and climate change better support Africa’s transition to a prosperous low carbon economy? One small part of this discussion is when donors should support or oppose gas projects. But rigid policies to block all investments in downstream gas in all African countries on the basis of ideological wishful thinking is impractical, unethical, and likely to worsen global inequality.