Can Africa win from exploiting its oil, gas?

ONE cannot dispute the arguments made against fossil fuels from an environmental standpoint. Numerous calculations demonstrate that the production from oil and gas fields that have already received licenses, much alone any upcoming exploration, will release carbon emissions substantially above what is consistent with the 1.5-degree ceiling stipulated in the Paris Agreement.

From the standpoint of energy systems, it is gaining strength quickly.

What is the development justification for a fossil fuel `free-for-all’ if the environmental pressure to quit fossil fuels is so great and they are less and less technically necessary? From a development standpoint, the case is supported by two important channels.

Does fossil fuel investment tackle inequality?

The first is that investments in fossil fuels lead to widespread wealth creation on the continent, with profits from new projects going directly into African communities where they can improve quality of life.

This connection is flimsy. Just 33 percent of expected oil and gas output in Africa is held by African companies, according to data from Oil Change International. Companies in the global North, mainly in Europe, with 36 percent of the market share, but also in Asia and North America, hold the majority.

As the only owners of the fuels produced by African fossil fuel projects, it is highly improbable that a sizable portion of the sales proceeds will stay in Africa to support local development. Therefore, Africa must ensure that it benefits from its resources.

Even if a sizable amount of the gains from the extraction of fossil fuels go to Africa instead of the foreign investors who hold the resources, these are likely to be distributed very unequally.

A very small group of African countries account for the lion’s share of new oil and gas output. At least 36 percent of the total expected production is accounted for by Nigeria and Mozambique alone, when including Algeria and Angola, coverage is about 60 percent.

This shows that increased fossil fuel output is more of a short-term boost for a selected few, rather than a solution to the pan-African challenges of poverty and vulnerability. It might not even be that, given that the majority—including established fossil fuel producers like Nigeria,

Algeria, Angola, Libya, and Egypt—have not yet been able to use their resource richness to achieve real development results.

Do Fossil fuels increase access to energy for Africa?

According to supporters, if Africa extracted more gas and oil, it could be utilised to increase energy availability while displacing dirtier options for cooking and heating. This merits careful consideration. Sub-Saharan Africa was home to 660 million and 910 million of the 759 million people who did not have access to electricity or clean cooking in 2019, respectively, according to the World Bank.

However, it is unclear that increased domestic fossil fuel output will be able to address these issues.

We would anticipate that Africa would consume at least as much energy as it actually produced if supply alone were the problem—if demand for energy constantly outpaced the amount available from existing sources, leading to access gaps. Contrary to popular belief, Africa routinely produces more energy than it consumes.

The fact that Africa cannot even use all the energy it produces raises the possibility of other factors contributing to the extreme lack of access to energy. For instance, cost is probably a key consideration. The price and trading of fossil fuels drives a significant gap between what the average African can afford to pay for energy and the price that energy can fetch abroad, even if it was initially extracted in Africa.

Nine of the top ten most expensive nations for gasoline are located in Africa, according to www. globalpetrolprices. com, which offers a real-time database of fuel affordability. The least expensive country, Malawi, charges 1.48 times the average monthly salary to fill a 40-liter tank. Therefore, it should come as no surprise that Africans use a lot less fossil fuels than they have to. It is simply too expensive at inelastic global prices and is likely to stay that way.

Along with being simply unaffordable, the high cost of fossil fuels on global markets increases the likelihood that Africa`s oil and gas will be sold rather than kept for domestic use. Given recent moves by European nations to wean themselves from Russian gas, this is extremely pertinent.

In order to support Germany’s claim on Senegal and Niger’s future gas supply, Chancellor Olaf Scholtz travelled there in May.

In contrast, Italy signed significant new supply agreements with Angola, the DRC, Algeria, and Egypt in March. More will come, and as more fossil fuels are sold to wealthy Western customers, access for power-poor Africans will be reduced with each drop.

Another important issue is the infrastructure. Just 43 percentage of African households are connected to a national electrical grid, according to a new Afrobarometer poll. Increased fossil fuel output doesn’t do much to address this issue; the issue isn’t a lack of availability, but rather the inability to provide energy to those who need it most.

And the most likely winners are... In reality, the expansion’s development dividend is meagre. It is far from certain that it will bring about widespread riches on the African continent or resolve chronic access to energy deficits.

The foreign corporations and rich countries whose carbon- intensive development is to blame for the change in climate, which has been devastating on the continent are the most likely winners from African fossil fuels, not Africans themselves.

Africa would be wise to avoid footing the price for them. It is time Africa becomes the centre of its own energy revolution.

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