Africa sits in the perfect position to take advantage of its climate, young population, and minerals in order to shift to renewable energy, but unsurprisingly, the continent doesn’t have the money needed to do so.
Due to its vast deserts, the continent has the highest potential for long-term solar generation, according to the World Bank. Climate finance remains the main barrier between Africa and its transition from coal and gas power stations to more sustainable green energy production driven by solar and wind energy.
Renewable energy facilities have become cheaper to build, according to research by BloombergNEF. With more than half the population in sub-Saharan Africa still living without electricity, using solar seems like the obvious thing to do. Without the funding to build these, the continent remains filled with unused potential.
In 2021, investment in renewable energy in Africa fell to an eleven-year all-time low. Africa took a bigger knock in investment towards renewable energy compared to other continents.
“Renewable energy power-generating assets attracted $434 billion worldwide in 2021, but just 0.6% of that ($2.6 billion) went to African nations,” notes BloombergNEF.
Read More: South Africa could produce a lot more renewable energy: here’s what it needs
So what’s stopping the financing towards climate and renewables?
Bloomberg points to Africa’s unstable political and economic environment as the reason behind the lack of funding on the continent.
In 2009, developed countries committed to investing $100 billion a year in developing countries to boost their transition to cleaner energy, but to date, these countries have not met their pledge.
Last year, countries made more commitments. This time around, countries agreed to create a fund during the UN’s COP27 talks in Egypt. Meanwhile, the private sector is calling for the banking industry to play a greater role in financing clean energy in developing nations.
This year, the climate conference in Dubai is expected to focus on financing climate energy — especially in developing nations.
Read More: South Africa has three new solar projects totalling 225MW of energy on the way
To meet its population’s energy needs, Africa needs $2.3 trillion, according to Africa Finance Corp. In addition, it also needs $1 trillion to protect infrastructure against climate disasters. South Africa’s current energy crisis is also part of this assessment.
According to Global Climate Initiative, climate-related projects attracted a financial boost of around $632 billion in 2019 and 2020. Of this chunk, Africa only received $19 billion which included only $2 billion from the private sector.
Africa’s startup side isn’t doing any better. From the $415 billion investment aimed at startups globally, Africa only received 1%, according to research by Briter Bridges.
“Of that, 15%, or around $800 million went into clean tech or climate tech,” notes Bloomberg.
As financing continues to block Africa from achieving its clean energy potential, governments across the continent have been gradually making amendments to policies in an effort to attract investments and partnerships.
By 2035, Africa could potentially produce $1.1 trillion worth of green hydrogen annually, according to the European Investment Bank. In order to produce green energy-powered electricity of a similar magnitude, the continent needs money.
Source:Bloomberg
