A just energy transition that mitigates the risks and captures the benefits of renewable energy in developing countries can be achieved through a broad policy framework developed using energy justice as a key set of metrics, say development academics University of Hamburg political science professor Franziska Müller and University of Kassel research fellow Manuel Neumann.
The 'Assessing African Energy Transitions: Renewable Energy Policies, Energy Justice, and SDG 7' research paper explores the limitations of existing energy transition policy frameworks and how these can be augmented to ensure the developmental effectiveness of renewable energy projects and the broader transition to low-carbon and sustainable energy sources.
“The United Nations Sustainable Development Goal 7 (SDG 7) [which aims to support access to affordable, reliable, sustainable and modern energy] indicators are output-oriented and do not sufficiently ensure a successful transition is achieved, leading to mismatches between objectives and outcomes.
“However, this can be overcome with better planning, energy governance to manage the transition risks and ensuring that the challenges facing late-comers [which include some developing countries] are addressed," says Müller.
“The comprehensive study of 34 African countries' policies investigated whether energy justice criteria are met. These countries are at a critical juncture and, with a few tweaks to policy frameworks, can drive a just energy transition more successfully going forward," notes Neumann.
Müller and Neumann selected three energy justice criteria, namely procedural energy justice to address the specific needs of groups and other vulnerabilities, participation and benefits, and recognition, to show how energy justice criteria can support the just transition.
They focused on energy policies in Rwanda, South Africa and Zambia to illustrate various aspects of energy transition policy gaps and how these impact on energy justice and, thereby, a just energy transition.
"South Africa has to decommission about 35 GW of coal-fired power plants by 2050 and this will impact on the coal-bearing regions of Mpumalanga and Limpopo. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in South Africa has various procedural dimensions that support participation, including public consultations, local content and empowerment regulations.
"The REIPPPP aims to attract private investment into renewable energy generation and is not based merely on best prices, but also socioeconomic and local community revenue sharing aspects captured within a scorecard, which ticks various sustainable development boxes," Neumann points out.
However, there are gaps in this approach, notably that REIPPPP policies can be better aligned with National Development Plan objectives.
"Similarly, transnational corporations outperformed domestic banks in terms of debt provision, which led to returns from projects leaving the country. Further, the renewable energy sector may be too small to have a bearing on electricity pricing for consumers.
"However, a more critical concern is that local industry and content regulations can be easily overruled, as was the case in the Risk Mitigation Independent Power Producers Procurement Programme (RMIPPPP) [which aimed to rapidly secure 2 000 MW of power] that waived local content requirements, which benefitted a foreign gas powership company."
In the same RMIPPPP round, local content requirements for solar energy projects were also scrapped, with some bidders highlighting the lack of local manufacturing capacity available in the country.
Therefore, bidding schemes can be more closely harmonised with industrial policy to ensure benefits of the energy transition are captured, Neumann says.
Meanwhile, pointing to the rural electrification policy of Zambia, Neumann says, while funds that have been made available by development finance institutions and innovative financial instruments, such as flexible microloans and repayment schemes, help to support the objective, the critical question of whether energy justice is achieved remains.
"Energy access and basic electricity access are expanded, but some people cannot afford to participate in this project. There are some missing links to industrial policies evident in this rural electrification framework and interviews indicate low engagement with civil society and limited consultation with State representatives, meaning there is room for improvement."
Neumann notes that knowledge transfer as part of the project was limited, although there is encouraging evidence of women gaining know-how through village representation.
"The key message, to successfully reach SDG 7 and paving the way for SDGs post-2030 in a mutually supportive way, is that a comprehensive energy policy is key and combining tools, such as feed-in tariffs and green industrial policies, into a broad and effective policy mix is necessary," says Müller.
"Mainstreaming the justice dimensions and how they contribute to energy access and benefit disadvantaged groups will benefit policy planning, ensure benefits from the energy transition and participation are captured, as well as help ensure that civil society stakeholders are involved."
There is a need to expand renewable value chains within countries, which also links to the promotion of green industrial policies. Local content requirements are useful and stimulate the accrual of benefits, but are insufficient on their own and require a larger green industrial policy mindset embedded in the larger productive value chain to deliver the intended benefits, she adds.
The researchers identified a gap between policy formulation and implementation that can be reduced by engaging with development partners and regional organisations. Regional organisations can help to share learnings of best and good practices.
Policy frameworks and development planning can be improved by including energy justice criteria, as well as supporting the derisking of renewable energy investments by ensuring the process is depoliticised. Curated derisking measures must address development nuances and socioeconomic components must be embedded into the energy transition process, says Müller.
Meanwhile, development finance institution the African Development Bank (AfDB) Eastern Africa regional principal officer Dr Olufunso Somorin says that national differences and contexts must be considered to develop an effective policy mix to achieve a just transition, and noted that, while national energy policies are crucial to achieve a just transition, a regional approach may enable a more effective just transition, especially given the existing regional power pools and organisations.
"The opportunities presented by renewable energy transition are huge, with up to 90% to 95% of the AfDB's yearly funding allocated to renewable energy projects.
"However, the derisking measures must consider who benefits from these measures to ensure that catalytic capital that is invested and incentives provided benefit local ownership, including local banks' ownership of the assets, and does not only lead to returns for investments from outside the country, such as by incentivising investment in local content productive capacity."
Global research organisation World Resources Institute Africa research, data and innovation director Dr Rebekah Shirley highlights the importance of governance of energy transitions, noting that transitions based on renewable energy sources face a range of challenges, including maturity, costs at scale and fossil fuel implications.
Regions dependent on hydrocarbons may not be responsible for the majority of global emissions contributing to climate change and may only be in the early stages of developing local energy markets. The challenges may be compounded by a severe lack of financing for alternative energy sources, adaptation, resilience and equity, she states.
"While technology is a central part of the transition, advances must be coupled with deep thinking and reflection about the system and governance to ensure a just transition and the removal of larger obstacles, if we are to achieve the mission of sustainability in the long term," she says.
The speakers participated in a virtual workshop hosted by public policy think tank the South African Institute of International Affairs (SAIIA) held on June 14.