ACS 2023: Rifts on the African energy transition send mixed signals to investors
At the Africa Climate Summit in Nairobi, several large oil-producing nations are challenging Kenya's ambitious agenda for investments in renewables
While the first day of the Africa Climate Summit in Nairobi was marked by unity and optimism, with a clear focus on luring green investors, day two is very different as divisions between African nations emerge.
First there were several reports doing the rounds at the event in the Kenyan capital which warned that the global carbon offsetting market is shrinking rapidly, with companies dropping their credit purchasing activities altogether.
An unwelcome message for host Kenya, which has made carbon offsetting a key pillar of its pro-investor conference this week.
In addition, debates are increasingly overshadowed by African countries deep division on their approach to fossil fuels.
Several large oil-producing nations are openly questioning Kenya's ambitious agenda for investing in renewable energy.
Nigeria, the continent's number oil-producing giant, as well as Senegal, Namibia and Angola are reluctant to open up their energy sector to renewables. And no climate summit in Nairobi is going to bring them around.
At the conference, the fossil fuel giants no longer make any attempt to disguise that their preferred approach to climate change is a very different one, particularly at what speed, thereby sending global investors a very different signal than host Kenya, as well as the other major power blocks at the event, namely the UN, the EU and the U.S.
The pro-business government of Kenyan President Ruto is championing a rapid energy transition and has made renewables one of they key themes at the summit.
While Ethiopia, Egypt, South Africa and Kenya are seen as true champions of clean energy, and have been expanding their renewable energy capacities in recent years, the team of powerful oil-rich nations are moving in the opposite direction as today they moved to openly refute the pro-renewables approach of their host.
Experts predict Nigeria's oil reserves will last for at least another decade, and Senegal recently discovered sizeable oil and gas fields. Both countries have made it clear fossil fuels, and fresh investments in such firms, are here to stay as they are paramount for their future economic growth and vital for their investor appeal.
"Fossil fuels are at the heart of Angola's economy, bringing in lots of money. Of course we won't abandon that soon," an Angolan official told Net Zero Investor on the side-lines of the summit, on the basis of anonymity, as he accompanied the country's vice-president during her summit visit.
"We want to send oil and gas companies a clear message, Angola is open for business," he said. "A reality check is needed here, Angola is the second largest oil producer in Africa [after Nigeria]."
Nigeria is taking a very similar position, arguing that it should be allowed to use its lucrative oil and gas reserves to finance a gradual transition to clean energy, a similar approach to countries like Saudi-Arabia and COP28 host United Arab Emirates.
The oil-producing countries keep pointing out that Africa is responsible for less than 5% of all emissions.
'Wrong' signal to investors
Climate campaigners, however, who held a march in Nairobi yesterday, warned that Nigeria, Senegal, Angola and Namibia are sending investors the wrong signal.
Such open invitations to oil and gas companies to could kill off any critical discussion on what it would take for the continent to undergo a “green industrialisation”, such as increased investments in renewables and building the continent’s renewable energy manufacturing capacity, stressed Wangari Muchiri, the Africa director at the Global Wind Energy Council.
Muchiri said COP28 should place a fossil fuel phaseout prominently on its agenda, if only to deter investors and send the global investment community a clear signal.
"With the dash for gas in Senegal and projects such as the East African crude oil pipeline, there is no sign of a slowdown."
Meanwhile, host Kenya seems to largely ignore the oil-producing countries' statements at the summit and is ploughing ahead towards a pro-renewables statement, expected to be made tomorrow.
A draft version of the final declaration, expected to be announced on Thursday, places investments in renewable energy investments centre stage, as well as biodiversity and nature assets.
However, it seems some pressure from Nigeria and Angola has paid off as a leaked version of the join declaration reads: “No country should ever have to choose between development aspirations and climate action."