Can a new African bank powertrain the continent while protecting the planet? | News and gas news

A group of African countries should launch a bank for financing petroleum and gas projects due to growing reluctance by western institutions for further investment in fossil fuels.

The long -planned “African Energy Bank” expected to take off soon was announced last June as a common initiative African Bank for Export-Import (Afreximbank) and an African Oil Manufacturer (Appo) manufacturer of 18 oil-exports.

The bank aims to raise growth by increasing African energy supply. Its founders believe that the rescue line is on the continent rich in natural resources, but where millions of people still have access to electricity.

However, climate activists have questioned the logic of doubling on fossil fuels.

In addition, the oil and gas projects built today are very likely to become unusable “stranded assets”, leading to expensive debt on the balance of countries in the future, since the world goes to alternatives with low carbon -shaped.

In order to ensure material needs for the power supply of Africans, and at the same time protecting the planet, experts say that balance is needed.

Caught between a rock and a hard place

Under 2015 Paris AgreementHundreds of countries have committed to keep global temperatures below 2 Celsius (3.6 degrees Fahrenheit) above the pre -industrial level. Since then, governments and companies – including Africa – have faced increased pressure to reduce their reliance on fossil fuels.

The World Bank ceased to finance oil and gas drawing in 2019. 2022. Shell suspended the activity of the sea research along the coast of South Africa after the High Court ordered him to stop his work because of the successful legal challenges of the environmental campaign.

At the time, Happy Khambale, a senior campaign for Greenpeace Africa, said“We have to do everything we can to undo the destructive colonial heritage of extractivism, until we live in a world where people and planet do not come before profit of toxic fuel fuel companies on fossil fuels.”

For his part, Omar Farouk Ibrahim, the General Secretary of the Appo, said that there was “the need to establish the right balance between the imperatives of alleviation of climate change and the need to avoid social reversals, which could be due to difficult economic and financial conditions in Africa.”

Indeed, the energy needs of Africa are immense.

The number of sub -Sahar Africans has increased in recent years without access to electricity. As the population growth surpassed the new energy supply in 2023, 600 million people (43 percent of the continent) were left in the dark, according to the International Energy Agency.

Although the assessments are different, the electricity supply should increase five times to support large industrial activities and help raise most Africans-one-thirds from which they live on Less than $ 1.90 a day – From poverty.

Africa per capita has the lowest level of modern energy consumption in the world. At the level of the entire economy, it is also lagging behind. Globally, production does 42.2 percent total energy consumption. In Africa is only 16.8 percent.

Appo boss Ibrahim says the African Energy Bank is the result of leaving Western countries ”[ing] hydrocarbons “so” continent leaders have no choice but to look for them to collect the necessary means of maintenance and growth [energy] industry”.

The African Energy Bank will be headquartered in Abuji, the capital of Nigeria.

On February 11, Nigeria State Minister for oil resources Heineken Lokpobiri told reporters that “the building is ready, and by the end of this quarter we only set the final touches [end of March]This bank will take off. “

The countries involved in the African Energy Bank include Nigeria, Angola and Libya, among others. Planned projects are expected to move from oil oil oil to new gas power plants.

Each country promised $ 83 million and raised a total amount of $ 1.5 billion. This will complement $ 14 billion from Afreximbank, a trade credit organization.

Over the next five years, Lokpobiri said the African Energy Bank hoped to provide property of $ 120 billion. Additional funding is likely to come from sovereign wealth funds, merchants of goods and international banks interested in the acquisition of capital.

African context is “different”

Many African leaders recognize the need for rapid industrial development and trimming western financial support limitations, whose rules are increasingly scored by traditional energy projects.

Arkebe Oquabay, former Ethiopia Prime Minister Abiy Ahmed, insists that “the context of Africa is completely different from elsewhere, because his economic resources are not fully developed. At the same time, he made a minimal contribution to climate change.”

Africa is responsible for only 4 percent Global carbon emissions, much less on the historic basis. It also disproportionately suffers the effects of extreme weather events.

“The moral imperative for reducing emissions is not present in Africa,” Oqubay said.

Said Al Jazeera yes, “[these] Are countries in the development phase in which you cannot suddenly move to the green transition … You cannot only say that funding is reduced and cannot be obliged to have oil and gas.

The African Energy Chamber, the advocacy group, also has argumentative This Africa has a “sovereign right” to develop its natural resources, which, according to the group, includes 125 billion barrels of oil and 620 trillion cubic meters of natural gas.

“To [renewable energy] Financing becomes easier to access, African countries have the right to expand their oil and gas capabilities … and the international community is not entitled to say that we cannot do so, “said Oquabay.

“But to be clear, fossil fuels are not the future,” he said.

‘Huge’ potential of renewable energy sources

The African lack of energy is a “development limit,” said Fadhel Kaboub, an associate professor of economics at Denison University in the United States. The African dimmed electrical sector limits the production of fertilizers, steel and cement – characteristics of economic development.

The inability of the industrialization continent has worsened the divergence of global growth.

From 2014 to 2024, a gross domestic product (GDP) per capita in Subsaharian Africa has dropped by more than 10 percent (from $ 1,936 to $ 1,700). During the same period, global GDP per capita increased by 15 percent.

“In order to climb on the rankings of development, the continent needs more energy,” Kaboubuub said. “But the best path forward is not to double on fossil fuels. And strengthening oil and gas exports as an end, in itself is what afrexim dictates.”

Instead, she believes that Africa should use her remaining infrastructure of fossil fuels to build her “huge” potential of renewable energy sources. Africa is endowed with solar, windy and geothermal resources, as well as critical minerals needed for green technologies.

According to the International Renewable Energy Source Agency, the potential of Africa to create renewable energy sources from Existing technologiesCurrent cost accounting is 1,000 times higher than projected demand for electricity in 2040.

“Of course, there are limitations for the realization of the capacity of the renewable energy of Africa. But the cost is not one of them, “Kaboub said, calling on to reports who state that most new winds and solar projects are cheaper than their colleagues on fossil fuel.

Instead, he claims that “the debt of pressure is not to change.”

Nearly 60 percent of the countries in Subsaharian Africa has trouble in a long, according to the World Bank. “For oil producers on the continent, economic activity is mainly consisting of export of fossil fuels to stay at the top of the debt repayment,” Kaboubuub said.

He suggested that, providing oil and gas for industrial processes of other countries, the African governments are involved in the “economic bandage”.

“Industrial growth requires an economy of scale [cost savings derived from high levels of production]”, Kaboub said.” Africa needs regional development plans where national resources are supplemented and built in all countries … No more oil and gas projects need. “

In his opinion, development banks do not represent the long -term economic vision of the continent. “And the Green Industrial Revolution, where renewable energy energy could be home production, could be that strategy,” he said.

“Or we can still focus on the activity of the export of raw materials and stay stuck in the trap of the resources.”