Funding Africa’s transition to net zero by 2050 is one of the most pressing issues that Africa and the world must address, PwC states in a new report that estimates the cost of such a transition to be about $2.8-trillion.
The ‘Africa Energy Review 2021’ calculates that $33-billion would be required yearly between 2020 and 2030 to place Africa on a path to a net-zero energy mix by 2050. Yearly costs would then rise substantially to $111-billion between 2030 and 2040 and to $142-billion between 2040 and 2050.
Africa emitted only 1.62-million kilotons of carbon dioxide in 2020 against a global estimate of around 33-million kilotons and the continent accounts for only 3% of cumulative global emissions and less than 5% of the world’s yearly emissions.
“Such investment levels are increasingly unaffordable for many African economies and increased reliance on international finance will be needed if progress is to be made towards sustainable access to affordable energy for all Africans,” PwC energy strategy and infrastructure head James Mackay said during a virtual release of the report’s findings.
The report was released only days after South Africa signed a political declaration at COP26 with the governments of France, Germany, the UK and the US, as well as the European Union for an initial $8.5-billion funding package to support South Africa’s just transition to a low-carbon economy over the coming three to five years.
Mackay said financial and technical assistance from developed countries would be critical for Africa’s transition to unfold at the scale and pace required, as well as to address chronic energy poverty across the continent. This despite the fact that 35 of Africa’s 54 countries have undertaken some form of commitment towards net-zero emissions.
Likewise, market reforms would be needed to attract private capital into the African energy sector, which would be dominated in future by wind, solar, hydropower, geothermal, battery storage and green hydrogen.
Total renewables capacity across Africa currently stood at 58 GW, with hydropower contributing 63% of that.
“By 2050, energy production from solar and wind is expected to increase by as much as 110 times and 40 times respectively,” Mackay said.
Africa’s coal and oil energy production, meanwhile, was expected to drop by around 96% and 71% respectively over the same period.
Natural gas, the report said, would continue to play a role in the continent’s energy mix beyond 2050, but a lack of finance and challenging geopolitics would constrain Africa’s potential to participate in any growth in demand over the medium term.
“Africa’s gas reserves are therefore largely likely to remain untapped.”
Mackay cautioned against Africa resisting the transition, describing the global shift towards net zero as inevitable. However, he warned that there was an increasing risk of further energy crises with negative economic impacts on many African countries.
“Africa will need international support to sustainably transition towards net zero,” he averred.