Energy is the ‘number one problem' for Africa's economy, says IEA director
CNN —
Nearly 600 million people in sub-Saharan Africa live without access to electricity, creating huge barriers to development. Not only does it stifle industrial growth and agricultural efficiency, but it also has implications on health and education: students often have little lighting by which to study, vaccinations cannot be refrigerated, and a lack of access to clean cooking technologies has led to severe household air pollution – causing 700,000 premature deaths a year.
According to the International Energy Agency (IEA), energy investment in Africa has fallen in recent years, although recent programs such as Mission 300, launched by the World Bank and African Development Bank, aim to unlock investment and provide power to 300 million people in the next six years.
CNN's Eleni Giokos speaks to Dr. Fatih Birol, executive director of the IEA, about the state of energy in Africa and the challenges the continent needs to overcome.
This interview has been edited for length and clarity.
Eleni Giokos: When we talk about 600 million people on the continent having some kind of energy insecurity or no access to electricity, what does that mean in terms of investment required to bridge that gap?
Fatih Birol: Africa is a continent of contrasts when it comes to energy. Africa has a lot of energy sources: oil, gas, solar, wind, geothermal energy, hydropower, all of them. But at the same time, Africa is very poor when it comes to use of energy. Every second (person) in Africa (has) no access to electricity, and at the same time, four out of five families use open fire to prepare their meals. Lack of energy hinders Africa's development, (it is) maybe (the) number one problem when it comes to Africa's economy.
What do we need? In Africa, we need these huge energy sources to meet with investment, with money to make projects, to bring energy to the people and to the economy. So, this is the key issue today in Africa.
Let's look at the energy supply mix right now on the African continent. According to IEA statistics, coal accounts for 13%, oil 26%, gas 18%, biofuels 40%. Renewables are a small portion. Where is the money meant to come from to really tap into this abundant resource?
Today in Africa, the energy sector receives about $100 billion of investments. If we want to see an Africa which is providing energy – clean energy – to its citizens, we need to see at least three times higher, about $300 billion investment. This needs to come from the countries themselves, and Africa has such huge potential, that with right investment policies, it shouldn't be difficult to attract foreign investments. The problem is foreign investors think Africa is a risky investment climate. The governments' job is to minimize those risks, minimize the bureaucracy, increase transparency … rather than providing uncertainties for the investors. Investors should know that if (they) invest in African energy, they will get a decent return, and this is guaranteed. This is the way that governments need to prepare the investment framework for the investors.
When I look at the overall global carbon emissions from the continent related to energy emissions, Africa accounts for only 3% of what we see globally. The continent has an amazing opportunity, firstly, to industrialize, but doing it in a different way to the rest of the world. What strategy do you think that should be adopted?
Africa's sins in terms of climate change are almost negligible. Africa's share (of the world's energy-related carbon dioxide emissions) is less than 3%, but the worst effects of climate change are felt in Africa. When we look at the future of African energy, especially for electrification, I see that renewables will play a very important role: solar, wind, hydropower and others. But it is not only electrification you need for the industrialization of the (continent), you also need other energy sources. For example, I believe Africa should make use of natural gas in a responsible way – it has huge natural gas resources. Africa should use its solar, wind, hydropower, natural gas, maybe nuclear (power) in some countries, all its energy sources, to develop. It is Africa's time to develop now, and Africa needs a lot of energy – and Africa needs to get this energy in a clean, secure and affordable way.
The African Continental Free Trade Area, the ambition to create the largest trading block in the world, how is that going to change the game, in terms of African countries collaborating?
The idea is very good. If we can find (a way) to foster trade among African countries, it can increase the cost effectiveness of many projects and reduce the tax issues. It can provide a boost to the investment needs in Africa, if it is rightly implemented.
What countries are you hopeful about, where are you seeing major progress?
I wouldn't like to pick one country, but I see that (across) Africa, governments are now understanding more and more that without fixing the energy problem, they cannot make their citizens happy or wealthy. If there is no energy, there is no stability. If there is no energy, there is no economic development. And Africa needs to solve this problem. Some governments are making very good steps in sub-Saharan Africa, but some others are lagging, unfortunately.
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