Africa: Green Growth Pioneers?

By Joe Powell

If incentives for cost-effective clean energy are not put in place, Africa may follow the same dirty industrialisation route of China and India.

Environmentalists and poverty campaigners have not always found themselves on the same side of development debates. A basket of contentious subjects that divide the two might include genetically modified crops, nuclear power, DDT spraying and industrial-scale agricultural production methods. However, on one thing the two sides should agree: the costs of climate change and environmental degradation are mounting in Africa – it was recently estimated that Uganda loses an equivalent of 15% of GDP annually to their effects.

It is unfortunate, therefore, that the global institutional response to climate change has so fundamentally short-changed the African continent. A good example of this is the ‘Clean Development Mechanism’, one of the flagship ideas of the United Nations-led climate process. It is a programme which provides cash grants to projects that can prove they are reducing greenhouse gas emissions compared to ‘business as usual’. This means rapidly growing China, with its vast array of dirty coal-fired power plants, can attract money for energy production which proves itself to be cleaner than ‘normal’.

However, less than 2% of these Clean Development Mechanism grants have been awarded to sub-Saharan African projects. The reason? In the part of the world which has the lowest access to power, greenhouse gas emissions are too low and growing too slowly. It is simply too difficult to prove your project is cleaner than normal, as Africa is starting from such a low baseline. It is a startling perverse incentive. If the African Union tomorrow persuaded each of its members to publish plans to build ten of the dirtiest, largest coal plants on the planet, then the cash would start flowing.

Negotiations over global forest protection suffer from a similar problem. The Amazon and Indonesian rainforests attract huge attention (and funding) due to the speed at which they are being cut down. Rightly environmentalists want to stop this. Yet the second largest rainforest – The Congo Basin – is relatively ignored in the process, as the infrastructure is simply not in place to enable the types of mass clearance seen elsewhere. The rule of perverse incentives applies again – if the countries that make up the Basin were to begin chopping the forest down faster, they would attract more funding to stop and benefit economically in the short-term.

The climate change debate also fails to address the most fundamental energy challenge in sub-Saharan Africa: how to bring electrification to the rural poor as quickly as possible, and provide a more reliable supply to job creating industries in the cities. Energy poverty is a drag on educational attainment, entrepreneurship and prevents utilising technology that can add value to primary products. Vital drugs cannot be refrigerated. On the macro-scale the investment climate suffers if companies cannot rely on the grid to deliver the power they need to operate profitably.

For African countries, therefore, there can be no choice between rapid expansion of energy access and complying to climate change best practice. The challenge is to make the two compatible. Until then cost and speed will be the two deciding factors in a region where 590 million people live without electricity. If the global institutions involved in climate change do not ensure the incentives are in place to make it cost-effective to provide clean energy, then it is likely Africa will follow the same dirty industrialisation route that China and India are taking. Policy choices have to be made now.

The wrong choices, however, have been made recently by some campaigners who appear to hold the principle of clean energy above the right of poor people to light their homes. It is that thinking which led to the unfortunate optics of environmentalists lobbying against World Bank investment in a coal-fired energy plant in South Africa, a country that has suffered repeated energy blackouts and in which one in six people still live without electricity.

While China has been building coal plants at the rate of almost three a week (South Africa has not built a new power plant for a decade), this kind of action feels like a frustrated attempt to take advantage of Africa’s need for external capital to combat energy shortages. Campaigning would be better directed at ensuring the plans South Africa has recently laid out for the world’s largest solar power project receive the public and private funding needed to go ahead.

There are, of course, these sorts of opportunities in the climate change debate. It is not inconceivable that Africa could pioneer a truly sustainable form of green economic growth, leap-frogging the traditional industrialisation path of the past. But this will not happen by accident, it must be by design.

Currently climate negotiators think mainly of Africa in terms of how to provide resources for adapting to the changing conditions. Given the reliance on small-holder agriculture, and the risks of increased drought and failed crops, this is understandable, but short-sighted. If compatibility with economic growth and new jobs is not considered then prepare for the similar hand-wringing over Chinese dirty development to be had over Africa in 30 years time.

Fortunately, the African Development Bank have realised this and are leading a drive on energy access and low carbon growth, including in Uganda where they contributed nearly $150million to the Bujagali hydroelectric power project. They have proposed a new Africa Green Fund to mobilise a fair share of pledged climate finance from the traditional polluters. They have also began to define what green growth will look like for the continent, focusing on the economic assets of natural resources, the huge potential for renewable energy and the multiple plus points of green industries, including health benefits from moving away from fuel-intensive smoky cooking methods. The Bank’s leadership should be supported for their initiative in this area.

South Africa hosts the UN climate talks in 2011, an opportunity for African negotiators to change how the international climate establishment has defined its approach to the continent. Re-focusing now on green growth, not just on coping with the effects of climate change, could see Africa lead the way on truly sustainable development.