Green transition

The Energy Transition or Development – Will Developing Countries Need to Choose?

By Laura Parry-Davies, Digital Communications Officer, OECD Development Centre

Countries with low access to energy and minimal contributions to greenhouse gas emissions are being asked to prioritise the low-carbon transition over economic growth.

Is this fair? Will the benefits of switching to net-zero outweigh the costs?

Experts from CATF’s Energy and Climate Innovation Program, Strathmore University, The World Bank and IEA gathered to discuss, as part of the OECD Development Centre’s 60th Anniversary Dialogues.

What the Europe crisis teaches us

The energy crisis Europe is currently experiencing is challenging the net-zero commitments of many countries and putting a spotlight on the practicality of climate-policies in crisis scenarios.

“We are seeing Europe scramble to meet its energy needs. We are seeing a region in the world that was advocating not to fund further investment in fossil fuels in the developing world now begin to scramble around these same places for the very same resources that were to be taken off the table,” says Lily Odarno, Director of CATF’s Energy and Climate Innovation Program, Africa.

The importance of having systems that are resilient – when economic and geopolitical shocks place energy access under stress – has never been more apparent, nor has the importance of prioritising energy security for developing countries in conversations around the transition to net zero.

Contextualized approaches to the energy transition

The challenge ahead of us is too complex for us to bet on only a few sets of technologies.

Even within continents, country-contexts, energy mixes, energy lobbies, and associated political economies differ. For example, while Nigeria is a leading producer of oil and gas, Kenya is a global leader in geothermal energy, Arnaud Rouget, Africa Program Manager, IEA explains.

This means that we must approach energy transition conversations with an openness to all technologies that could drive us to the desired end states. “We need more options and not less,” Odarno, emphasises.

In water-constrained countries such as Namibia and Mauritania, developing large-scale renewable capacities, such as wind farms and solar photovoltaic plants, will be important to inject more electricity into the national and regional power pools. These in turn can power systems to develop more desalination units.

Building capacities to pursue multiple solutions at the same time is also essential, Rouget explains. In countries where we prioritise working with variable resources, such as solar and wind, we need to be advancing technologies that enable us to store these resources to use them over time, while simultaneously setting aside resources to consider how other zero-carbon baseloads could help the system.

Building trust and understanding for transition projects

The clean energy transition, if done correctly, could result in industrial development and economic diversification for affected communities.

While capital costs of renewable energy are high, the operational and maintenance costs are lower, Helen Hoka Osiolo, Senior Climate Change Researcher and Lecturer at Strathmore University, points out. When you look at clean energy in terms of returns, you are looking at profits that far surpass the investments, she adds.

Yet, only 2% of global renewable energy investments have been made in Africa, despite its abundance of renewable energy resources.

“It is to be expected that countries who are rich in clean energy, or renewable energy resources, will support or advocate for a more radical push towards a clean energy future – in the short term. While we see fossil dependent economies advocating for a more phased approach, or asking to buy more time, so that they do not crash their economies in the process,” says Odarno.

To effectively finance the transition in fossil-dependant economies, governments need to invest time in understanding the interests of (and explaining the benefits of changing systems to) various stakeholders who could be barring the way.

The “just transition” is an essential part of this process, Franz Gerner, Lead Energy Specialist at the World Bank adds. Without national trust and consensus, transitioning to a low-carbon economy is incredibly difficult. In our communications with the public and private sector we need to be clear that the transition we are proposing will have a human resource and skills development focus.—-

The energy transition is going to be a process; it is not going to happen overnight

To achieve this transition, African countries need a long-term strategy to strengthen their infrastructure at the same time as strengthening the institutions and resources behind the development of energy, says Osiolo.

Even though there has been a huge move to build a decentralised market in Africa (mostly around solar technology), utility access, delivery and costs are going to be a core part of the energy transition, Odarno says. To address this, we need to rethink how we can improve performance; financial viability; and institutional and governance issues which are affecting current utility operation.

Home-grown solutions and youth participation

We need to move from this notion of Africa as a consumer of technologies that are developed in Europe, the US, and elsewhere to producers and innovators in its own right.

As 40% of Africa’s population are currently under 15, a renewed focus on training youth in research and building new tailored technologies for the continent will be an essential piece of the puzzle.

Done correctly, the energy transition can be an instrument for addressing unemployment, enhancing industrial development and economic diversification, Gerner insists.

Energy is essential for stability and growth

Currently, 770 million people worldwide live without access to electricity, with people in developing economies struggling the most.

Without energy, economic development, quality of life, and public health suffer. But continuing to meet these needs and to fuel economies through oil and gas is a fundamentally unsustainable solution for everyone. So, what are our next steps?

If this discussion brought forward one core element, it is this: It is not pragmatic to ask any country that is heavily dependent on [a particular] resource to immediately shift to something else, without knowing what will happen to the rest of the economy.

We need to come up with economic diversification that can help the transition – and our solutions need to acknowledge that what lies ahead of us is not only a climate challenge but also an energy security challenge; an energy access challenge, and a development challenge.

Disclaimer

This blog reflects the views of this DevTalks’ speakers, as articulated on 20 October 2022, drawing on prior research and experience in their areas of expertise.