In this newsletter:
1) EU to unveil green classification of gas and nuclear projects just before Christmas
Bloomberg, 7 December 2021
The Daily Telegraph, 7 December 2021
3) Germany: Nord Stream 2 cannot begin operations until certified
OilPrice.com, 6 December 2021
OilPrice.com, 2 December 2021
Bloomberg, 6 December 2021
9) Why the climate panic about Africa is wrong
Foreign Policy, 6 December 2021
1) EU to unveil green classification of gas and nuclear projects just before Christmas
The European Union is likely to unveil on Dec. 22 its plan for how natural-gas and nuclear-energy projects would be classified under its green investment rules.
The proposal by the European Commission would come after a meeting of EU heads of government on Dec. 16, where the so-called taxonomy is expected to be discussed.
The EU’s executive arm is weighing whether the sustainable classification should apply to investments in gas plants that replace coal and emit no more than 270 grams of carbon dioxide equivalent per kilowatt-hour, two people with knowledge of the matter said last month. The projects would have to be finalized by 2030, the people told Bloomberg News.
The design of the EU green investment classification system is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition. The challenge is to ensure the decision on nuclear and gas gets political support, while avoiding the risk of greenwashing, or overstating the significance of emissions cuts.
A temporary green classification for some investment in gas projects is sought by a group of member states mostly in eastern Europe, led by Poland. The inclusion of some nuclear-energy projects in the taxonomy would help attract private finance in nations like France and the Czech Republic, which plan to rely on atomic power in their transition to net-zero emissions.
The Daily Telegraph, 7 December 2021
The sanctions under discussion are “pretty damn aggressive”, on par with the restrictions faced by Iran and North Korea, an official said
The United States is prepared to target Russia with “nuclear” economic sanctions that could see Moscow shut out of the global electronic payment system if it invades Ukraine.
Plans for potential “aggressive sanctions” were revealed on Monday night ahead of much-anticipated video talks between Vladimir Putin and Joe Biden on Tuesday afternoon.
The conference call between the Russian and the US leaders is widely seen as a last-ditch attempt by Washington to ease tensions over fears that Moscow is preparing to attack its neighbour.
The White House will be prepared to take the “nuclear option” and disconnect Russia from the SWIFT international payment system used by banks around the world if Moscow does invade, CNN reported on Monday, quoting senior administration sources.
One official reportedly described the package of sanctions under discussion as “pretty damn aggressive”, on par with the restrictions faced by Iran and North Korea.
An unnamed White House official called the proposed sanctions a “way forward that will allow us to send a clear message to Russia that there will be genuine and meaningful and enduring costs to choosing to go forward with a military escalation.”
Other unnamed officials said a new round of sanctions could target Russian energy producers, banks and potentially Russia’s top oligarchs.
The officials said the decision to impose the sanctions has not been made and is under discussion with Washington’s European allies for a potentially coordinated response.
In Kyiv, Dmytro Kuleba, Ukraine’s foreign minister, expressed confidence that Mr Putin “will hear clear signals from President Biden about what Ukraine’s allies will do in case Putin were to resort to a military operation against our country.”
Russian stocks did not show much of a movement on the news of potentially crippling economic sanctions as the markets still appear to view an invasion as unlikely.
Russia has been amassing tanks, heavy weaponry and about 100,000 troops near Ukraine for several weeks. Open-source data and intelligence reports point to large amounts of weaponry on the move across Russia.
President Putin made it clear last week that Moscow was losing patience with the West selling weapons to Ukraine and supporting its aspirations to join Nato.
The Russian leader said he wanted iron-clad guarantees that Ukraine would never be allowed to join the alliance and that Nato would not deploy its weaponry there.
Nato and the West have so far brushed off Mr Putin’s demands as Cold War rhetoric.
Konstantin Kosachev, chairman of the foreign affairs committee at the upper house of Russian parliament, expressed hope on Tuesday that the talks could “help alleviate tensions in bilateral relations” but said Washington first needs to drop its “aggressive” rhetoric about Russia.
3) Germany: Nord Stream 2 cannot begin operations until it is certified
OilPrice.com, 6 December 2021
The Russia-led Nord Stream 2 gas pipeline cannot start sending natural gas to Europe until it is certified by German authorities, which have suspended the certification process, according to Germany’s Ministry of Economic Affairs and Energy.
“The certification has not yet been completed. Until this happens, Nord Stream 2 cannot be put into operation,” Russia’s TASS news agency quoted a spokeswoman for the ministry as saying on Monday.
In the middle of November, Germany said it had suspended the process of certification of the Nord Stream 2 gas pipeline.
The Federal Network Agency of Germany, Bundesnetzagentur, suspended the procedure to certify Nord Stream 2 AG as an independent transmission operator until an operator of the pipeline in Germany is incorporated under German law.
The agency, which had until January 8, 2022, to express an opinion on the operating license, dealt a blow to the pipeline and dashed hopes that it could start sending gas to Germany in time to save Europe from a gas crunch if this winter is colder than usual, analysts say.
If energy infrastructure operators wanted to use Nord Stream 2 before it is certified, they would face penalties, reports had suggested earlier, according to TASS.
The pipeline construction is completed, but Nord Stream 2 is awaiting full regulatory clearance from Germany and a potential review by the European Union over its compliance with EU energy regulations.
The suspension of the certification could push the commissioning of Nord Stream 2 into March 2022, German government sources told Reuters last month.
Some analysts and EU officials attribute the inconsistent Russian gas supply to Europe in recent weeks to Moscow using gas as leverage to get Nord Stream 2 approved.
Russia’s inconsistency in booking extra capacity on pipelines to Europe and the volatile supply over pipelines in recent weeks could continue for months, as it is likely linked to the Nord Stream 2 approval, Poland’s Climate and Environment Minister, Anna Moskwa, told Bloomberg in an interview last week.
OilPrice.com, 2 December 2021
A coalition of 15 Republican State Treasurers, Auditors, and Comptrollers of states representing over $600 billion in public assets – have recently said their states could potentially reduce future business with banks that cut off financing for oil, gas, and coal, West Virginia State Treasurer Riley Moore says.
The coalition “will begin considering whether financial institutions are engaged in boycotts of America’s traditional energy industries when awarding state banking contracts,” Moore said, announcing that the state treasurers had sent an open letter to the banking industry.
In the letter, the state officials say, “We are writing to notify you that we will be taking collective action in response to the ongoing and growing economic boycott of traditional energy production industries by U.S. financial institutions.”
“We cannot allow companies that have a stated goal of harming key industries or the economies of our states to then turn around and try to profit from our states’ finances,” Moore said in a statement.
“Woke capitalists and globalist actors have been using the guise of climate change to press for anti-American reforms that reduce our country’s competitiveness against hostile nations like Russia and China,” Moore added.
“While we understand that you may be under tremendous undue pressure from the Biden Administration, we are simply asking financial institutions to award financing based on an unbiased, non-political basis,” the officials say in their letter to the banking industry.
The Republican officials overseeing state finances are pushing back against the growing ESG trend in the banking industry to shun funding for the fossil fuel industry.
Banks worldwide and in the United States have announced in recent years restrictions to their financing not only for coal projects but also for some forms of oil and gas extraction amid heightened investor pressure to shun fossil fuels.
In the United States, Goldman Sachs said in December 2019 that it would decline to finance new Arctic oil exploration and production and new thermal coal mine development or strip mining. Wells Fargo and JPMorgan have also said they will stop financing new oil and gas projects in the Arctic.
Bloomberg, 6 December 2021
Like any major economic event, getting to net-zero emissions will bring investment opportunities. But as is often the case, initial enthusiasm may soon give way to disappointment.
The goal of net-zero carbon by 2050 is almost certain to be drastically curtailed by its costs and lack of feasibility.
The International Renewable Energy Agency, an intergovernmental body, estimates that the world needs to invest $115 trillion in clean technologies such as solar and wind power and electric vehicles to limit global warming since 1900 to 1.5 degrees Celsius, the goal of the 2015 Paris climate agreement that was signed by 195 countries.
Much of the reduction would have to come in India and China, which would need to invest $21 trillion to overhaul transportation and construction while building nuclear, wind and solar facilities to reach zero net carbon emissions by 2060, according to the Wall Street Journal.
But 57% of China’s energy consumption in 2020 was supplied by coal, and its consumption of that commodity is forecast to rise 6% from 2020 to 2025. With coal-mining a big employer in China, coal power plants heavily indebted and electric power needed for economic growth, the nation is reluctant to phase out coal before the 2040s. Coal supplies half of India’s energy needs and its share of world coal consumption is expected to rise from 11% to 14% in 2030.
With tightening restrictions on coal mining in China, the politically-inspired ban on coal imports from Australia and worldwide economic recovery, the Newcastle thermal coal price, a global benchmark, has tripled since the end of 2019. Low coal inventories at power plants portend even higher prices this winter. This encourages the resulting switch from coal to fossil fuels, and U.S. gasoline prices are up 92% since the spring, causing consumers much pain when they fill up their vehicles.
Also, natural gas costs have leaped 273%, further distressing consumers since half of American houses are heated by gas. The Energy Information Administration forecasts 30% higher fuel bills this winter compared with last year and 50% more if the weather is 10% colder than normal.
A harbinger of U.S. consumer reaction to higher energy costs was the French nationwide “gilets jaunes,” or yellow shirts, protests in 2018 in response to a proposed fuel tax hike. President Emmanuel Macron was humiliated and forced to rescind the plan.
The total cost of fulfilling the Paris climate agreement alone would be $50 trillion in 2030, or $140 per American. Yet a recent Washington Post survey found that the majority would vote against even a $24 annual climate tax added to their energy bills. Still, the $140 per American per year investment, if sustained through 2100, would only reduce global temperatures by a minuscule 0.03 degrees Celsius. Everyone’s for emissions reductions unless they have to pay for it.
President Joe Biden’s goal of 100% net-zero carbon emissions by 2050 would cost $11,279 per American annually, according to the Congressional Budget Office. That would equal 11.9% of gross domestic product, more than the 11.6% costs of Social Security, Medicare and Medicaid combined. The annual cost of the plan would rise to $4.4 trillion in 2030.
At the Glasgow COP26 climate summit, poorer countries demanded that wealthy nations channel at least $1.3 trillion in climate financing to them annually, starting in 2030. But developed countries fell $20 billion short of their $100 billion aid target for 2020 and aren’t likely to meet it until 2023, climate negotiators wrote in a report in October, according to the Wall Street Journal.
Big polluters such as China, India and Russia have pledged emissions cuts, but not to the levels that Western nations have insisted are necessary to limit global warming. Saudi Arabia plans to reduce net carbon emissions to zero by 2050, although that doesn’t include carbon from the oil it exports. The kingdom produces about 10 million barrels of crude oil per day and has been installing solar panels in the sun-drenched desert to save hydrocarbon for sale abroad. Meanwhile, a recent survey of big companies by Boston Consulting Group found that only 11% had met their emissions-reduction goals over the past five years.
The surging costs of carbon reduction raises the important question of the bang-per-buck. Damage due to climate change as a percentage of global GDP has dropped from 0.25% in 1990 to 0.18% in 2020, according to the CFDA/CRED International Disaster Database. And the trend has been down in rich and poor countries alike.
Also, more disasters are made known today due to better reporting and higher minimum levels of damage that’s recorded. Climate-related deaths worldwide have plunged from almost 500,000 in 1920 to 14,000 in 2020 and 5,500 in 2021, and will probably reach 6,600 by year’s end. That’s a 99% lower death toll than a century ago, even though global population has quadrupled.
Economist William Nordhaus, who won the Nobel Prize in 2018 for his work on effective climate solutions, developed models calculating the cost of global warming but also the cost of climate-control policies and the reductions in economic growth they cause. Nordhaus’s models indicate that without any regulations to slow climate change, the average temperature in 2200 would be 4.1 degrees Celsius higher than in 1900 and cost $140 trillion in today’s dollars.
Stringent climate policies would reduce the temperature rise to 2.2 degrees Celsius but cost $177 trillion to reduce climate change-related damage from $140 trillion to $38 trillion. That would raise the total cost to $215 trillion. His optimal solution, with a temperature rise of 3.5 degrees Celsius, would cost $21 trillion and reduce the climate-related damage cost by $53 trillion for a total cost of $108 trillion.
Even though a cleaner atmosphere promotes better health, malnutrition death rates in 2050 would be barely lower without climate change. With better nutrition, they’ve dropped from seven per million per year in 1990 to 2.78 per million in 2020 and are forecast by the World Health Organization to drop to 0.64 per million in 2050 with continuing climate change. If huge costs keep the global temperature flat, the 2020 number is the same, 2.78, and 0.56 per million in 2050, a tiny 0.08 percentage point lower.
The United Nations estimates that even if no country does anything to slow global warming, the annual damage in 2100 would be the equivalent of a 2.6% cut in global GDP. Since the UN expects the average person to be 450% richer in 2100 than today, the average falls only to 434% if the temperature continues to rise unimpeded. Relative to better health and economic growth, the effects of climate change are minimal.
Like any major economic event, the pursuit of carbon-cutting opens investment opportunities. But as is often the case, initial enthusiasm will probably soon give way to disappointment as soaring costs are revealed and hopes for net-zero carbon emissions fade. The prudent investor will probably be better off waiting for the retreat from current exuberance over climate investments and then buying cheaper.
Property Reporter, 7 December 2021
65% of UK renters say rising fuel costs will make it difficult for them to pay their energy bills, with 62% indicating they may struggle to pay their rent this winter, according to research commissioned by Smart Energy GB.
Almost half of renters surveyed are worried about how they will pay their bills, with 57% saying these concerns are having a negative impact on their mental health.
According to the findings, renters think landlords could be doing more to help, with 46% saying their energy bills could be better managed if their landlord made their home more energy efficient. 28% of renters don’t feel their landlord supports them enough when it comes to managing their energy use, with 85% of renters who do not feel that their property is as energy efficient as it can be concerned that a current lack of energy-efficient measures will make their energy costs even higher.
In terms of things that renters feel their landlords could do to make their homes more energy-efficient, they would like their homes to be better insulated (73%), with other popular initiatives including having drafts filled in (54%), boilers upgraded (45%) and double glazing installed (44%).
Energy Live News, 7 December 2021
From September to November, the BM cost reached £967m, compared to £337m the same period last year
The crisis in the energy market has so far had many collateral damages – one of them, the cost of the Balancing Mechanism (BM) that soared by 234% during the three-month period, from September to November.
The BM is a tool used by the National Grid to balance electricity supply and demand in real-time. Where these two metrics are not balanced, participants submit bids to either increase or decrease their generation or likewise for consumption.
New research by the consultancy LCP suggests the BM cost has jumped to £967 million from the £337 million that it was in the same period last year.
The analysis suggests that the top ten most expensive days in the BM of all time have occurred in the past three months.
It also notes that the all-time peak was breached on 24th November, where the cost to balance the UK’s electricity network totalled £63.3 million, a leap of £18.6 million from the previous most expensive day recorded on 2nd November.
For November alone, the average daily cost of the BM was £16.4 million an increase of 192% from 2020 and 756% from 2019 when the average daily cost was £1.92 million, the report concludes.
Rajiv Gogna, Partner at LCP Energy Analytics, said:
“The energy crisis has torn apart the sector, driving multiple suppliers into non-existence and forcing millions of customers to change supplier, and there will undoubtedly be more energy suppliers struggling to cover costs from this autumn and winter for many months.
“We have seen the perfect storm of low renewable generation and an increase in global demand for gas which has put the UK’s limited capacity on the edge, forcing prices to repeatedly break new ground.
“Across a number of days, we also saw energy from the GB market being exported to Europe to overcome some of the generation issues faced there, compounding our own problems.”
Mr Gogna said that the increase in BM costs will result in suppliers facing higher Balancing Services Use of System charges.
A few days ago, National Grid ESO unveiled plans to review the balancing market.
Western Standard, 6 November 2021
By Mark Milke and Ven Venkatachalam
With the recent rise in the price of natural gas in Europe to five times where it was in early 2021, expect to see many more Europeans and those in United Kingdom plunged into what’s known as “energy poverty.”
From Greece to Great Britain and everywhere in between, the European electricity grid has increasingly been delinked from reliable affordable fossil fuels and hooked up to more expensive and intermittent wind and solar projects.
One result is Europeans pay twice for generated electricity: once for the existing sunk costs of existing fossil fuel (and nuclear in some countries) projects and again for renewable-based electricity projects. Another result is when wind and solar are not available, multiple nations in Europe and elsewhere are chasing the same available oil, natural gas and coal, pushing those fuel prices dramatically higher.
Canadians — and indeed everyone else around the world — should pay attention. That’s because what Europeans are enduring and will suffer through again this winter will intensify thanks to what governments worldwide are pushing at the 26th UN Climate Change Conference of the Parties (COP 26) at Glasgow, Scotland: An even faster assumed “phaseout” of fossil fuels.
But it’s just that past policy preference that has caused substantial energy poverty in Europe even before the price spike this autumn. (For those unfamiliar with the term, energy poverty is all about citizens too poor to pay their utility bills on time and/or keep their homes adequately warm).
Stephen Bouzarovski, a University of Manchester professor and chair of an energy poverty working group, estimated pre-pandemic, 80 million Europeans were already struggling to adequately heat their homes. Meanwhile, at least 12 million European households were in arrears on their utility bills.
The European Union attempted to provide an objective measurement of the problem, but its best data is six years old. The EU Energy Poverty Observatory’s most recent estimate from 2015 showed 16% of EU consumers faced a “high” share of energy costs. “High” was defined as the proportion of European households whose energy expenditures relative to income was more than twice the national median share (of energy expenditures relative to income).
To get a better sense of the challenge faced by European households and energy poverty, we used 2008 as a start year and then compared the rise in household median incomes (with the full set of data ending in 2019) with the rise in electricity prices (ending in 2020) in 30 European countries.
We found for lower-income European countries that have seen strong growth in incomes since 2008 (mainly ex-communist states such as Estonia, Bulgaria and Poland as examples), most such states could handle the rise in power prices because median incomes rose faster.
This was not the case in mature countries where median incomes were already relatively high in 2008, but barely grew in the ensuing years, this while power prices zoomed up. For example, electricity prices jumped by 61% in France between 2008 and 2020 with median household income rising by just 19% (using 2019 as our end date given the limited data). The United Kingdom and Ireland saw a 51% and 48% rise in electricity prices in that period while incomes rose by just 14% and 11% respectively.
Worst off was Spain, where median household income was below more prosperous European states in 2008 (at €13,963 that year) and has barely grown since (to just €15,015 in 2019). Median household income thus rose by just 8% in the years available for comparison but electricity prices soared by 68%.
The response of some European governments to this has been to subsidize utility bills. But as with Ontario which does the same to mask the expense of past government policy which drove the province’s electricity prices dramatically higher, all that does is shift the burden of high power costs from the “consumer pocket” to the “taxpayer pocket.” Of course, it’s the same household that bears the cost, or their children and grandchildren if present-day utility bills are subsidized through government borrowing.
The source of high-cost electricity can be found in European Union and United Kingdom policy. Governments there have attempted to “transition” from fossil fuels despite their superior energy density (their “power punch” as Vaclav Smil, retired environment professor at the University of Manitoba characterizes it) vis-à-vis renewables.
The result can be seen in the declining share of fossil fuels in EU electricity production from about 50% in 2000 to 38% as of 2019, with nuclear-generated electricity also discouraged and declining from 32% in 2000 to just over 26% in 2019.
Meanwhile, renewables as a share of EU electricity production more than doubled, from just over 16% in 2000 to over 34% in 2019. That would be fine, except solar and wind are not inexpensive. They are also not as reliable as fossil fuels, something Brits just noticed again when wind power dropped and coal was again used to prop up that country’s electricity grid.
It’s been said the definition of insanity is “doing the same thing over and over again and expecting different results.” It appears policymakers are gathering in Glasgow to speed up killing fossil fuels, precisely what already led to massive energy poverty in Europe.
Mark Milke and Ven Venkatchalam are with the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. They are authors of Energy Poverty in European Households: An Advance Lesson for Canadians.
9) Why the climate panic about Africa is wrong
Foreign Policy, 6 December 2021
By Todd Moss and Vijaya Ramachandran
The very definition of environmental racism is when a policy has a disproportionate impact on communities of color. What else to call a rule that almost exclusively affects Africans?
As climate pledges pile up, a worrying theme is emerging that bold efforts by rich nations to decarbonize the global economy will be ruined by hordes of new consumers in the developing world buying cars, installing air conditioning, and taking planes. China’s and India’s rapid development and steep emissions trajectories have been central to these fears, but Western governments and climate activists have found little traction there.
Instead, the focus of attention has now shifted to Africa, where energy use is still very low—and where rich countries see an opportunity to apply pressure by leveraging development aid and cutting off finance. This is already leading to harmful policies that will hurt millions of poor Africans by slowing down their continent’s economic development while doing little, if anything, to help fight climate change.
Fears of a fossil fuel boom in low-income but fast-growing regions such as Africa are cited as the rationale for imposing new bans on financing for such investments. At this year’s U.N. Climate Change Conference, or COP26, the United States, Britain, and other countries pledged to end international financing of fossil fuel projects. The key word here is “international.”
While barring public finance for oil and gas projects in other countries, Britain continues to subsidize its own fossil industry, while the United States—already the world’s biggest oil producer—plans to increase its own domestic production. But even if we ignore Western hypocrisy and take their promises of rapid carbon reduction at face value, is there any rational reason to worry about African nations blowing up the world’s carbon budget? A closer look suggests no.
Scaremongering about Africa points to a disturbing undertone in rich-world debates. On climate change, as on so many other issues, many in the West seem to see Africans as a mass of passive victims lacking agency and requiring charity—the quintessential “white man’s burden”—or a looming threat to civilization. To save the planet, this thinking goes, Africans can’t enjoy a high-energy future that people in rich countries take for granted. The climate just can’t afford Africans to be prosperous.
Blaming Africa takes several classic forms. The first is to rattle off big scary numbers without background or context. Bill McKibben—one of the world’s most prominent climate activists—recently declared that the world can’t fight climate change if it doesn’t stop Uganda from building an oil pipeline, citing the project’s planned transport of 210,000 barrels per day, which sounds like a lot. McKibben never mentions that Uganda is one of the world’s poorest countries, that its people suffer from severe energy shortages, that it emitted a mere 0.01 percent of global carbon dioxide last year, and that the pipeline’s capacity will be equivalent to only 1.8 percent of crude oil output in the United States, where McKibben is based.
The second form of activist fearmongering about Africa is to brandish frightful but improbable scenarios. In a recent report from the Wilson Center with the headline “The Battle for Earth’s Climate Will Be Fought in Africa,” the author rightly wrote that Africa’s energy needs must be considered in future energy planning. But then he speculates wildly: If, in 2060, every African were to emit at the same level as Indians or Egyptians today, it would wipe out many of the gains from reductions elsewhere. But is such a scenario even plausible? Almost certainly, no.
Africa is starting from such a low-energy base that even rapid increases in oil and gas use could not possibly have much global impact. We calculate that if the 1 billion people living in sub-Saharan Africa tripled electricity consumption using natural gas—the most widely available fossil fuel in Africa—the additional emissions would equal just 0.62 percent of global carbon dioxide today. And of course, no country is remotely planning an all-fossil-fuel future. As in most emissions projections, the scenario makes worst-case assumptions and ignores future changes in technology.
A third factor has been alarm over planned and potential projects to extract fossil fuels and generate electricity in Africa. A widely cited recent study in Nature Energy predicts more than 30 gigawatts of new power capacity from coal and 85 gigawatts from natural gas in Africa by 2030. But the authors’ suggestion of a gargantuan, continentwide buildout of coal and gas does not stand up to a simple smell test. Rather than 30 GW of new coal, our analysis of every potential coal project on the continent suggests only one 0.3 GW project will likely reach completion.
If Africa’s pipeline of coal projects was already all but dead, China’s recent pledge to halt support for overseas coal projects is the final nail in the coffin. Similarly, the gas predictions are wildly high. For instance, the study authors’ forecast for new gas generation in West Africa by 2030 is five times the region’s total gas potential as identified by the U.S. government’s Power Africa team.
A final source of unjustified fear is when experts cherry-pick a single example to create the false appearance of a coal-heavy future: South Africa. The country skews all views on African emissions because it accounts for nearly half of Africa’s total power capacity and nearly all the continent’s coal use.
A model from the U.S. Energy Information Administration, for example, predicts steep increases in African coal and gas use. The problem: The study assumes the continent is an integrated power market (it’s not) and thus greatly overstates fossil fuel growth based on the far-fetched theory that South Africa will be Africa’s main electricity provider via coal-fired power exports. In reality, South Africa’s coal is already on its way to being phased out, and any power exports will likely come from renewables. South Africa’s past is not the continent’s future.
Naturally, all these apocalyptic narratives promoted by experts and activists are irresistible to the media. The Nature Energy study generated dramatic headlines, including “Africa Could Be Locked Into Fossil Fuel Future” (Forbes), “Renewables Need ‘Shock’ to Push Ahead of Fossil Fuels in Africa” (Bloomberg), and “Climate change: Africa’s green energy transition ‘unlikely’ this decade” (BBC).
More importantly, rich countries’ concerns about a carbon-intensive future for Africa have encouraged drastic policy decisions. Britain, Canada, France, Italy, the United States, and others signed a pledge at COP26 to end public support for overseas fossil fuel projects, including natural gas. The U.S. Development Finance Corp. (DFC), a new $60 billion agency created to support infrastructure in low-income countries, will soon halt all investment in natural gas projects.
The World Bank, a leading financier of infrastructure in low- and middle-income countries, has stopped all investment in coal, oil, and gas exploration and production, leaving only narrow space for some downstream uses of existing gas supplies. European shareholders are already pressing the World Bank to end even this limited exception.
The principal justification for banning finance for all fossil fuels—including gas for cooking, heating, fertilizer, and electricity—is the potential for future emissions and the desire to encourage a “climate-friendly” future. The DFC justifies its exit from gas on the grounds of avoiding future emissions. The agency’s alternative is to invest only in renewables, a position already taken by the European Investment Bank and nearly every institution financing African infrastructure.
This all calls for taking a deep breath. Africa’s energy consumption must rise steeply in the coming decades given the trends of population growth, rapid urbanization, and rising incomes. The International Energy Agency estimates that African electricity generation will double or triple by 2040. This is good news for Africans because it will help some of the world’s poorest nations boost living standards. Energy is fundamental to modern living and the bedrock of all modern economies. Indeed, Africans are poor in large part because they are energy–poor. To get richer and create jobs, Africans will inevitably need to consume a lot more energy, especially in the form of electricity.
But it is just not true that Africa’s energy development will sabotage the world’s climate rescue plan. Instead, African countries are already on a low-carbon energy pathway, with relatively clean gas playing a backup role. Not a single African nation is planning a long-term future dominated by fossil fuels. Kenya, Zambia, and Ethiopia already generate more than 50 percent of their power from renewables (versus just 20 percent for the United States). Even the countries with their own abundant natural gas resources, such as Ghana, Senegal, and Mozambique, plan to rapidly scale up renewables alongside domestic gas. [...]
With every decision to cut off financing and condition development aid, Africans increasingly view climate policy as green colonialism. American, French, British, and Italian firms don’t need development aid and are investing in African gas for export to Europe or Asia. But if Senegal and Mozambique want to build pipelines and power plants to use their gas at home in order to raise living standards, Western governments refuse to help. This is rightly seen in many African capitals as just the latest round of extractive exploitation.
Worse, this policy is climate redlining. Bans on financing for gas only apply to poor countries that rely on development finance for infrastructure. Rich countries face no such constraints. The very definition of environmental racism is when a policy has a disproportionate impact on communities of color. What else to call a rule that almost exclusively affects Africans?
The reality is that the global carbon problem is still very much caused by the rich countries plus China. Africa’s economic and energy ambitions are not going to ruin the West’s climate plans. Cutting off financing for gas to the world’s poorest nations is unfair and inhumane. Justifying such policies based on irrational and factually incorrect fears of Africa’s carbon future is wrong. Western climate policy must stop blaming the victims.
see also: GWPF project on Energy Justice The developed world is foisting expensive and unreliable renewables on the poorest people, who simply cannot afford it. Full project