Hawilti released an important new study on Gas for Africa in partnership with the International Gas Union (IGU), assessing the potential for domestic gas resources to energise Africa in line with the global energy transition. The African Energy Commission (AU-AFREC) and the Africa Finance Corporation endorse the report and its findings.
The study starts by analysing current energy poverty trends in Africa, a continent with the lowest electricity per capita consumption in the world and the lowest CO2 per capita emissions. It argues for a pragmatic use of natural gas reserves to support a broad industrial and economic development of Africa in a way that is sustainable and enables a just energy transition.
Mickael Vogel, Director & Head of Research, Hawilti“Energy poverty in Africa often boils down to the number of people without access to electricity – 600 million, or without access to clean cooking – 970 million. Unfortunately, this assessment misses the point and can lead to responses and solutions that are ill-adapted to Africa’s development needs. As it argues for a better use of gas, the report calls for more ambitious targets around energy access so that we can both bridge Africa’s energy deficit but also support economic growth and industrialisation.”
The ”Gas for Africa” report highlights several ways in which gas can have a positive impact on Africa’s socio-economic development including by switching away from coal and diesel, developing energy-intensive industries and gas-based industrialisation, displacing fuelwood and biomass in households, generating baseload electricity to integrate intermittent energies, and building gas systems that can be decarbonisable in the future with hydrogen, renewable gas, and CCUS.
However, a pragmatic utilisation of Africa’s 18 Tcm of proven gas reserves – or 9% of the world’s reserves – calls for a reorientation towards domestic monetisation. Most of the gas produced in sub-Saharan Africa remains exported, with local consumption still limited because of limited infrastructure availability. Additional barriers include limited access to capital, security risks, and policy uncertaint.y
To overcome these key barriers to development, a total of eight guiding principles are given as recommendations to help stakeholders and policy makers navigate the complexity of the gas industry:
- Futureproofing by design: Alignment of future gas development plans with the just energy transition; guarantees of environmental sustainability and compatibility with the goals of the Paris Agreement.
- Financial innovation: Look inward and promote domestic financing mechanisms that can tap into vast pools of institutional money, especially for domestic projects.
- Good business climate: Safe and stable investment climate will be pivotal to ensuring that the continent is globally competitive
- Regionalisation: Sub-regional and regional gas and energy networks can support economies of scale and infrastructure investments.
- Cluster and ecosystem investing: Industrialisation plans can focus on creating manufacturing clusters located next to gas fields to benefit from a cheap source of electricity and energy.
- Gradual scaling: Small-scale projects have proven as a winning strategy to pre-develop gas markets and unlock suppressed demand.
- Building and reforming electricity markets: Reforms are needed to restructure electricity markets and increase liquidity, while improving operational efficiencies.
- Price emissions: Externalising the cost of emissions is an effective way to invest in emission reductions projects and incentivise switching from coal and oil to natural gas.
The full report is available for download here.