Ongoing oil and gas investment still crucial for Africa, says Namibian minister

Namibia’s Minister of Mines and Energy Tom Alweendo says the overarching message from 200 delegates at the COP28 in Dubai was clear: a full-scale transition to renewable energy sources is imperative, while fossil fuels must be left in the ground.

This approach, however, poses a significant dilemma for African countries, according to the minister, as economic and social benefits derived from fossil fuels are still crucial for Africa – from reducing energy poverty to bolstering the continent’s economies.

“Moreover, we believe that these benefits can be harnessed in tandem with addressing climate change concerns,” he states in an article published by the African Energy Chamber (AEC) in preparation for the African Energy Week 2024 (AEW2024) scheduled for November 4-8 in Cape Town, South Africa.

COP28 culminated in a comprehensive agreement known as the “Global Stocktake”. This ambitious strategy set forth key objectives: tripling renewable energy capacity, doubling the rate of energy efficiency improvements by 2030, expediting the reduction of coal power without carbon capture, and intensifying efforts to shift away from fossil fuel reliance in energy systems.

As a result, Western nations and environmental groups are intensifying their efforts to stop new investments in African oil and gas ventures. According to The Economist, 27 banks have withdrawn from financing the East African Crude Oil Pipeline (EACOP) project, and numerous others have decided against directly funding new oil and gas initiatives.

However, there are glimmers of hope, particularly in Namibia, where the government has introduced reforms to reduce the risks for investors, says Alweendo. Almost a year ago, significant offshore oil and gas discoveries in Namibia rewarded the investments of oil majors like Shell (UK), TotalEnergies (France), and QatarEnergy.

Following this, Namibia has witnessed a surge in exploration activities resulting in the discovery of a substantial light oil reserve in the beginning of 2024 by Portugal’s Galp Energia in partnership with NAMCOR and Custos Investments. Upcoming drilling campaigns by Chevron (US) and Woodside Energy (Australia) are expected to continue this momentum.

“This is a testament to an irrefutable fact: despite the global push for near-instant transition to renewables, the immediate benefits for us (and many African nations) still predominantly lie in oil and gas,” Alweendo says.

Swift transition - unrealistic

An immediate shift to renewable energy is impractical and idealistic, according to the minister. It would only be viable if Africa, or indeed the world, were ready to rely entirely on wind, hydro, wave, and solar energy for powering homes, businesses, vehicles, and industries. “Unfortunately, we are nowhere close,” he says.

Africa has abundant potential for solar and wind energy, holding 60% of the planet’s capacity, but the continent’s actual production capabilities are starkly different.

“We might be termed the “Sun Continent”, but our solar energy generation capacity is a mere 1% of the global total. In Sub-Saharan Africa, biomass remains the predominant energy source for many,” Alweendo explains.

Namibia, nevertheless, remains committed to a renewable energy future, according to the minister. The country’s progress in establishing a green hydrogen economy is evident in projects like the 3-GW Tsau Khaeb and others in Kharas, Kunene, and Walvis Bay.

However, achieving parity with global renewable energy capabilities will take time. It will also take a whole lot of money that most, if not all countries of the so-called “Sun Continent”, do not have, Alweendo says.

Despite the calls from the World Bank, the UN and the International Energy Agency (IEA) for developed economies to invest in African renewable energy infrastructure, the financial support has been underwhelming so far.

“What this means is that, for all their renewables fervour and promises, the richer Western nations — who collectively contribute the highest to global emissions — are not putting their money where their mouths are,” the minister explains.

The IEA estimates that Africa would require over $200bn annually until 2030 to meet the Sustainable Africa Scenario’s energy and climate objectives. Yet, despite a rise in global clean energy investment, only about $25bn, have been invested in Africa’s renewable infrastructure development.

The continent’s energy needs will rise exponentially to accommodate Africa’s rapidly growing population projected to reach 25% of the global population by 2050. And the funding gap does not seem to be closing anytime soon, Alweendo warns.

“It is within this context that one must challenge the renewables or nothing stance of the Global Stocktake at COP28,” he adds. “If fossil fuels are out, what do we have to replace them, now and into the future?”

A larger problem

Alweendo sees the underinvestment in African renewables as just one aspect of a larger problem, given that there is a concerted effort by the West to stifle investment in African fossil fuel projects. Even the exploration of Africa’s lucrative natural gas reserves that can provide the cleanest fossil fuel and a transitional energy source faces intense opposition.

“This is not to undermine the dedication of climate activists; the reality of climate change impacts is undeniable,” he says. “However, I believe Africa can address climate change while simultaneously tackling energy poverty through the judicious use of our natural resources. With 600 million people lacking electricity access, a comprehensive approach is imperative to overcome the current energy deficit and mitigate against a larger one in the future.”

Therefore, he concludes, it is only logical for African nations to safeguard the socioeconomic advantages from ongoing oil and gas operations.

A way forward

According to the AEC, African countries’ pursuit of fossil fuel projects, especially natural gas, is in line with global practices. Even countries advanced in renewable energy generation do not rely solely on these sources. Natural gas is deemed more reliable, operating at full capacity 65% of the time, compared to solar and wind energy’s 36% and 25% capacity factors, respectively.

“Asking African nations to disregard natural gas is akin to suggesting we should accept half the power capacity, half the standard of living, and half the safety compared to Western nations. This is not a reasonable expectation,” says Alweendo.

There is a clear imperative for African leaders to take immediate action to foster an environment conducive to oil and gas investments, the minister believes. Addressing energy companies, Alweendo advises them not to overlook the vast opportunities in Africa.

“Your investments will not only yield returns but also contribute significantly to eradicating energy poverty, driving economic growth, and paving the way for the development of renewable energy sectors in African countries,” he urges.

Alweendo emphasises the fact that no nation has achieved industrialisation solely through solar or wind power. However, industrialised countries with financial reserves are in a better position to finance their energy transitions.

“For us as Africans, we must be in the position to drive our energy transition initiatives by using what we have now to achieve what we envision for our future,” he says. “To waiver from this objective is a risky and untenable proposition.”