Russia’s Repeat Failures
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The greatest share of the burden of addressing climate change lies with the major polluters—the wealthy countries of Europe, North America, and East Asia—that are disproportionately responsible for causing the crisis. Some governments, financial institutions, and companies in those countries have begun taking long-overdue action. They have committed to reducing greenhouse gas emissions and to boosting investments in renewable energies as part of a broader transition away from fossil fuels. Crucially, many of these actors have also pledged to divest from coal, oil, and gas projects around the world—even those in energy-hungry developing countries.
In August 2021, Nigerian Vice President Yemi Osinbajo bemoaned these divestments in Foreign Affairs. “After decades of profiting from oil and gas, a growing number of wealthy nations have banned or restricted public investment in fossil fuels, including natural gas,” he wrote. “A global transition away from carbon-based fuels must account for the economic differences between countries and allow for multiple pathways to net-zero emissions,” he argued, concluding that “the transition must not come at the expense of affordable and reliable energy for people, cities, and industry.” In Osinbajo’s view, countries like his still need to rely on fossil fuels to speed development and to bridge the long-term transition to a green economy.
But far from generating prosperity and stability in sub-Saharan Africa, investments in fossil fuels cause real harm. Decades of fossil fuel development have failed to deliver energy to much of the continent and have built economic models dependent on extraction that have deepened inequality, caused environmental damage, stoked corruption, and encouraged political repression. Pouring more money into fossil fuels will not only perpetuate this dynamic but also delay the necessary shift to renewables. The likes of solar and wind energy are not just environmentally and ethically superior to coal, oil, and gas; thanks to advances in battery and energy storage, they are becoming cheaper and more practical alternatives to fossil fuels. African countries should avoid the fossil-fuel-burning habits of other countries not just because it is the right thing to do but also because it is the sensible thing to do.
Between 2016 and 2019, G-20 countries directed nearly four times as much public financing to developing fossil fuels as they did to developing renewable energy in Africa. But much of that money will be wasted: 71 percent of projected oil and gas projects in Africa are at risk of becoming stranded assets because they involve very costly methods of production, they are in countries without solid track records of successfully exporting fossil fuels, or both. Economies in Africa that rely on the production and export of fossil fuels experience slower economic growth compared with those that don’t—as much as three times slower—and suffer from increasingly unsustainable levels of debt. According to a 2013 study by the African Development Bank, countries heavily dependent on the extraction of fossil fuels are more likely to struggle to democratize; thanks to the so-called resource curse, countries blessed with natural resources experience worse development outcomes as a result of corruption, increased militarization, and political repression.
Moreover, fossil fuel financing has failed to achieve its main goals: ensuring access to energy and generating inclusive development. Nigeria, for instance, has spent decades exploiting its oil and gas reserves and has become the richest economy in sub-Saharan Africa. But as of 2019, only 55 percent of Nigerians had access to electricity. In 2018, Nigeria overtook India as the country with the greatest number of people living in extreme poverty. And the Nigerian government has lost out on tens of billions of dollars in oil and gas revenues over the last decade thanks to corruption and to the cut-rate deals that officials have struck with multinational oil companies.
Mozambique is the site of Africa’s single largest foreign direct investment project, a $20 billion offshore natural gas field and an associated onshore liquefied natural gas facility. But that gas is intended for export, not to help expand energy access to the 70 percent of the country living without electricity. Ironically, Mozambique already generates more electricity than it consumes and exports excess power to its neighbors South Africa and Zimbabwe. Mozambique’s leaders—along with outside investors and donors, including the International Monetary Fund and the World Bank—are placing their bets for the country’s development on the promised future revenues generated by gas exports. Yet as with previously overhyped coal projects in Mozambique, these risky endeavors could saddle the economy with a mountain of potential stranded assets, owing to projected shifts in global gas demand, competition with other major and more advanced liquefied natural gas exporters, and the volatility of fossil fuel prices.
Mozambique is already waist deep in debt to the tune of 120 percent of GDP. A new independent financial analysis by the Berlin-based think tank OpenOil found that if oil prices remain at current average levels, revenues from liquefied natural gas over the life of the project will amount to little more than half—or $3.4 billion in today’s money—of what the Mozambican government projected in 2018. That sum is less than a quarter of the country’s current national debt. The investment could become worthless for Mozambique or even a liability as a result of unfavorable contractual terms with fossil fuel companies and investors and the preponderance of risk assumed by the country.
Elsewhere, Ghana is on the brink of fiscal distress thanks to both “take-or-pay” contracts that require the government to pay gas producers hundreds of millions of dollars for unused gas and dozens of power purchase agreements that require the government to pay electricity producers for a fixed amount of electricity supply, regardless of demand. In 2019, Ghana paid the equivalent of over seven percent of its GDP in fines for unused gas. The country’s finance minister has acknowledged that excess gas capacity, rising fixed-capacity payments for electricity, and growing debt within the power sector are threatening Ghana’s economy. The accumulation of debt in Ghana’s power system could reach $12.5 billion by 2023 and is at risk of becoming unsustainable, according to the country’s Finance Ministry. Kenya faces similar problems. In Côte d’Ivoire, where most power stations burn gas, hikes in electricity tariffs led to protests in 2016 in which police killed and injured many demonstrators.
Energy portfolios based on fossil fuels are inherently riskier than those based on renewables. The latter do not have highly variable costs that fluctuate on the basis of prevailing global market prices—governments know precisely what they are getting and how much they have to pay for it. With renewables, governments would not need to raise taxes on consumers or use precious additional tax revenues to recover expenses for higher fuel prices, allowing them to better manage costs and keep debts from spiraling. Although gas prices are inherently inflationary, clean energy prices are generally getting cheaper as the technology improves. Renewables can also be built modularly, meaning that investment risks are smaller and better spread out.
Development driven by fossil fuels tends to harm the environment and society. In the worst-case scenarios, it requires in effect the establishment of sacrificial zones and the designation of sacrificial people whose lives are forever changed by proximity to these projects. For decades, activists have witnessed and fought against the abuses of the fossil fuel industry in Africa, documenting the health, environmental, social, and political costs that Africans have incurred. These include the effects of routine oil spills in the Niger Delta and of toxic gas flaring that sinks people into poverty by destroying agricultural land and poisoning fishing waters. Government repression of subsequent dissent has led to the incarceration and even the execution of peaceful environmental defenders, such as the writer and activist Ken Saro-Wiwa in Nigeria.
In Mozambique, open-pit coal mining has severely harmed the health of people in local communities and led to land expropriation and human rights abuses. Communities near gas operations have protested over unfulfilled job promises and economic neglect. Liquefied natural gas development in Cabo Delgado Province has led to evictions and ruined fisheries and livelihoods, and civil unrest has spread in the midst of deep inequality and increased state repression, including the disappearance of journalists. This agitation has escalated into a militarized insurgency that has left tens of thousands of people dead, displaced nearly a million people, and destabilized the region.
Big renewable projects also raise concerns about land grabbing. The extraction of minerals required for renewable energy must be carefully and fairly managed to prevent human rights and labor abuses and environmental degradation. But renewables would not contribute to greenhouse gas emissions, toxic air pollution, or oil spills. The potential of renewables to be deployed in a decentralized manner could create millions of local jobs and allow people to have a greater say in how energy systems are created and administered.
Instead of pouring more money into fossil fuel production and perpetuating the crises many African countries face (and, of course, pumping more carbon into the atmosphere), foreign investors should focus on renewable sources of energy. Africa has the richest solar resources of any continent in the world but has less than one percent of the world’s total installed solar power capacity. Solar and wind energy are not costly compared with fossil fuels—in fact their prices are already competitive with those of oil, gas, and coal in Africa. According to new research and modeling by Sven Teske at the University of Technology Sydney, the development of renewable energy sources in Africa could help provide the whole continent with electricity in a decade; by 2050, Africa could phase out fossil fuels altogether and rely entirely on renewable energy. Such a transition to green energy would create millions more jobs for Africans than the fossil fuel industry can.
Many proponents of continued investment in fossil fuels, including Osinbajo, tout the virtues of natural gas and how its use will help bridge the energy transition and ensure development. These claims don’t stand up to scrutiny. Usually, gas is only marginally less polluting than coal, and depending on the location, it can be equally polluting. A study released in 2021 by the International Energy Agency found that governments cannot allow any new coal, oil, or gas projects if the world is to stay below the threshold of 1.5 degrees Celsius in global warming. The study also showed that solar and wind energy will become the cheapest sources of energy in the world in the next two years.
Investing in renewable energy in Africa is not just the right thing to do—it is the sensible thing to do.
The real bridge to a green economy is not gas but improved batteries and energy efficiency measures. Technological advances in energy storage have already begun to stabilize the electricity supply from renewables, addressing the problem of the intermittency of solar and wind energy. A 2020 study by the research firm BloombergNEF concluded that in the United States, renewables combined with battery storage are already an economically viable alternative to building new gas peaking plants, which are used to balance the power grid. Solar energy combined with improved battery storage will be economically competitive with the world’s most efficient gas technology in Jordan, Morocco, South Africa, and the United Arab Emirates by 2023.
The United States’ own energy research agency, the Energy Information Administration, has found that solar and wind power sources located near the point of use in rural Africa, where the lack of energy access is greatest, are more economically viable than building out the transmission systems for fossil-fuel-based power, including natural gas. According to the public polling organization Afrobarometer, only four in ten Africans enjoy a reliable power supply, owing to fuel shortages, mismanagement, and energy theft. Instead of trying to expand this often faulty infrastructure, governments should lean on the capacity of renewable energy to reach more people through mini- and off-grid energy deployment, making electricity generating systems that serve a limited number of consumers through grids that can operate in isolation from national electricity transmission networks or that are independent of utility systems altogether.
The governments of many wealthy countries, including that of the United States, and various African leaders argue that the extraction of a country’s gas resources is necessary for its development and is even a matter of historic climate justice. It is true that most African countries did little to nothing to contribute to the planet’s present climate predicament, and many face critical economic and developmental needs. But the fact that Africans have not burned up as much carbon as others provides no justification for attempting to reproduce harmful modes of energy production and their related economic systems. African leaders and their partners in the West misappropriate the concept of climate justice when they invoke this narrative. They claim the moral high ground while benefiting from the deeply unequal financial flows generated by fossil fuel projects.
By continuing to finance gas expansion in Africa, outside investors are in fact displacing renewables, delaying Africa’s energy transition, and making it harder for countries to decarbonize and escape a harmful extractive economic model. Investments in renewable energy would produce an economic model that is cheaper, more reliable, and more democratic. Africa need not be seen as a site of destitution and need. It is a continent with rich knowledge, practices, and potential for establishing ecologically sound socioeconomic systems—ones that don’t replicate the mistakes made by so many others in the past century.