Study raises fears over high fossil fuel investment levels in Africa

23 July 2018 (Last Updated July 23rd, 2018 16:59)

New figures from clean energy advocacy group Oil Change International show a majority of public aid for energy projects in Africa has been channelled into fossil fuels, causing some to accuse governments of jeopardising clean energy development to ensure their own financial gain.

Study raises fears over high fossil fuel investment levels in Africa
The World Bank Group is named as one of the largest contributors to energy aid in Africa Credit: Victorgrigas

New figures from clean energy advocacy group Oil Change International show a majority of public aid for energy projects in Africa has been channelled into fossil fuels, causing some to accuse governments of jeopardising clean energy development to ensure their own financial gain.

The study found that 60% of public aid funds were spent on fossil fuels, while only 18% was put towards renewable sources. Though many of the governments behind the funding have curbed spending on fossil fuels in their own countries, they continue to support the sector in Africa, parts of which face severe threats from climate change.

Between 2014 and 2016, $59.5bn was given in aid to Africa’s energy sector, with almost half of this going to Egypt, Angola and South Africa.

Of the governments, banks and other groups behind the financial aid, China was found to have given the most to the energy sector, offering $5bn per year, of which 88% was found to have been spent on fossil fuels, while no renewable schemes appeared to have received any of the money. Almost three-quarters of the funds were given in support of oil and gas extraction, with 13% provided for coal-power generation.

The World Bank Group (WBG), Japan and Germany were next on the list of those who provided the largest sums, though the WBG has denied the estimates.  A spokesperson from the organisation said the group is “on track to provide the total projected investment needed in off-grid solar home systems for the developing world over the next four years”, having financed a quarter of mini-grid projects in developing countries.

In total, the report claims that less than 2% of aid given to the continent’s energy sector went towards renewables or small-scale decentralised energy projects.

Christian Aid international climate change leader for relief and development agency Mohamed Adow described the countries’ aid as ‘climate change-causing subsidies’, which negated any benefits gained from renewable developments made at home.

He adds: “Rich countries must stop pushing their dirty energy on Africa and use their wealth to provide energy that is clean, green and will serve Africa and the world for years to come.”

Senior advisor for Africa at Oil Change International Thuli Makama said governments need to “improve transparency around contracts, financing terms and energy planning, and engage in more meaningful dialogue with civil society to address this question”.

Some authorities argue that to prevent developing countries from investing in coal would be to prevent them from making financial gains in an industry the rest of the world has already seen huge benefits from. However, the level of investment displayed in the Oil Change International report implies a worrying threat to the climate targets set in the Paris Agreement, considering the fact that researchers have said to stay below the 2˚C global temperature limit most existing fossil fuels will need to remain in the ground.

Some countries have cracked down on fossil fuel investments in recent months due to rising environmental concerns. For instance, banks in Japan have made it more difficult to gain loans for coal power investments, while the country’s largest life insurer Nippon has halted investments in coal-fired power plants, the first move of its kind for a major Japanese institutional investor.