Could Russia's invasion of Ukraine jeopardise Africa's green energy transition?

The continent of Africa is comprised primarily of commodity based economies, and the i mpact of supply shortages of grain, wheat and fertiliser have led to low GDP forecasts as well as spiking inflation across many African countries. This in turn has raised questions as to how serviceable debt (both sovereign and private sector) will be across the continent if the impacts of the Russia-Ukraine conflict persist.

Why the above is important in respect of Africa’s green energy transition is that as African nations struggle to maintain debt sustainability, European nations (among others) are eager to ensure their own energy security, by sourcing alternatives to Russian gas. As an example of this, the European Union has recently softened its previous objections to liquefied natural gas ("LNG"), which it has now labelled a "transition fuel", and a draft European Union paper has identified the largely untapped LNG potential of Nigeria, Senegal and Angola as the best option for reducing the European Union’s dependency on Russian natural gas by two thirds this year.

The above points to a trade-off that may take place across African nations between economics and climate sustainability. Given the current global demand for LNG (as well as other fossil fuels) and the need for African nations to maintain debt sustainability, ramping up production in respect of LNG would seem like a rational economic step, at least in the short term. Alternatively, a transition to green energy may be perceived as an economic luxury that the continent of Africa simply cannot afford right now, and which needs to be deferred.

Notwithstanding the above, it's worth noting that the reason why the European Union has labelled LNG a "transition fuel" is because ultimately, it is the cleanest fossil fuel. There are also notable incidents of significant investment in green energy on the continent already, for example the Energy and Petroleum Regulatory Authority of Kenya reported in 2021 that 75 per cent. of Kenya’s electricity generation comes from renewable sources³. As a final statistic, though Africa is renowned for its fossil fuel reserves, it also has hugely untapped renewable energy sources, which are far less discussed. Only about 2.5 per cent of the Congo River’s hydroelectric potential has been developed so far, but if properly exploited, it’s thought that the Congo River could generate enough clean energy to power the whole continent⁴.

There isn’t a correct answer as to how decision makers in Africa should choose between debt sustainability and promoting a green energy transition. Arguably, the two options aren’t mutually exclusive in all circumstances. Even though strong international demand for LNG points to Africa ramping up production in this area, this doesn’t necessarily mean that alternative funding won’t be made available for green energy projects too, particularly if they can be shown to be economically viable. Much like the rest of the world (and somewhat regardless of the Russia-Ukraine conflict), a green energy technology breakthrough has the potential to materially disrupt how funds are allocated to energy projects throughout Africa, and could bridge the gap between debt sustainability and green energy transition.

¹ https://unctad.org/system/files/official-document/osginf2022d1_en.pdf

² https://www.afdb.org/en/news-and-events/press-releases/african-development-bank-board-approves-15-billion-facility-avert-food-crisis-51716

³ https://www.epra.go.ke/energy-petroleum-statistics-report-2021/

⁴ https://energycapitalpower.com/beyond-fossil-fuels-a-look-at-the-republic-of- the-congos-hydropower-potential/