The Sky’s Limit Africa: The Case for a Just Energy Transition from Fossil Fuel Production in Africa
The Sky’s Limit Africa assesses fossil fuel industry plans to sink USD $230 billion into the development of new extraction projects in Africa in the next decade — and USD $1.4 trillion by 2050. It finds these projects are not compatible with a safe climate future and that they are at risk of becoming stranded assets that leave behind unfunded clean-up, shortfalls of government revenue, and overnight job losses.
In partnership with Oilwatch Africa, Africa Coal Network, 350Africa.org, Health of Mother Earth Foundation, WoMin African Alliance, and Center for International Environmental Law.
October 2021
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The Sky’s Limit Africa assesses fossil fuel industry plans to sink USD $230 billion into the development of new extraction projects in Africa in the next decade — and USD $1.4 trillion by 2050. It finds these projects are not compatible with a safe climate future and that they are at risk of becoming stranded assets that leave behind unfunded clean-up, shortfalls of government revenue, and overnight job losses.
The report also contains country-level analysis for the top 16 projected oil, gas, and coal producers in Africa for 2020-2050: Nigeria, Mozambique, Algeria, Angola, Libya, Egypt, Tanzania, Mauritania, South Africa, Republic of Congo, Senegal, Ghana, Uganda, Ethiopia, Equatorial Guinea, and Gabon.
EXECUTIVE SUMMARY
NAVIGATION:
FOSSIL FUEL EXTRACTION DOES NOT EQUAL DEVELOPMENT, JOBS, OR ENERGY ACCESS
FOSSIL FUEL INDUSTRY PLANS ARE VOLATILE AND CARRY SYSTEMIC ECONOMIC AND CLIMATE RISKS FOR AFRICA
RECOMMENDATIONS
In May 2021, the International Energy Agency (IEA) released its first global scenario compatible with limiting global warming to 1.5 degrees Celsius (°C) and found that new oil and gas fields and coal mines are incompatible with this urgent climate goal. The IEA’s report bolstered existing research from Oil Change International and many others showing a managed phase-out of global fossil fuel production is urgently needed to avoid the worst impacts of climate change.
The climate impacts, human costs, and economic risks of new oil, gas, and coal projects mean that no new fossil fuel extraction projects should be approved – in Africa or anywhere. This report makes the case for a gradual, equitable, and managed phase- out of fossil fuel production in Africa alongside a just transition to renewable energy and green economies. Phasing out fossil fuel production does not mean halting the use and production of fossil fuels in Africa overnight. Rather, it means starting widespread planning now to ensure there is time and resources for clean-up and for a just transition for the workers and communities that depend upon production.
The costs of this phase-out should not and cannot be borne equally: Wealthy countries in the Global North most responsible for historic and current emissions must move first and fastest to phase out their fossil fuel production and pay their fair share for the global energy transition.
Poor contract terms, industry-friendly subsidy and royalty frameworks, debt traps, corruption, and the outsized ownership of fossil resources by multinational corporations have all meant fossil fuel production in Africa has not historically served as a vehicle for just development, energy access, or resource sovereignty. As the industry faces increasing systemic financial risks, the possibility that it ever could promote just development has faded. Governments choosing to pursue new oil, gas, and coal extraction now risk locking themselves out of a transition to renewable energy and other green sectors.
FOSSIL FUEL EXTRACTION DOES NOT EQUAL DEVELOPMENT, JOBS, OR ENERGY ACCESS
We start by reviewing the impacts of fossil fuel production in Africa to date and assessing how increasing threats to the sector are likely to influence these outcomes.
Leaving people behind while rewarding international corporations: Sixty percent of projected production over the next three decades will be owned by multinational corporations. Figure ES-1 shows that new projects will make this worse: when only the production from new projects is considered, 66% is owned by international corporations, with Total, Eni, ExxonMobil, and BP in the lead.
Figure ES-1: Who profits? Ownership of projected production volume from new, not-yet-approved oil and gas projects in Africa 2020-2050 by company headquarter location.
Source: Oil Change International analysis based on data from Rystad UCube. [1]
Endangering the health, jobs, and environments of frontline communities. Communities near extraction have faced displacement, job losses as farmland, fisheries, or tourism prospects are damaged, serious health conditions, environmental degradation, human rights abuses, and increased violent conflict and militarization.
Compounding Africa’s heightened climate vulnerability. Africa has only contributed 2% of cumulative global emissions from 1890 to the present. Yet relative to other continents, it is projected to be hardest and fastest hit by climate change and to have the fewest resources to manage its consequences.
Locking in risky raw material exports while locking out renewable energy and other green sectors. Africa holds 39% of the world’s total renewable energy potential. [3] Continuing fossil fuel development as the industry faces unprecedented global headwinds is undermining Africa’s prospects for unlocking these unparalleled solar and wind energy resources.
FOSSIL FUEL INDUSTRY PLANS ARE VOLATILE AND CARRY SYSTEMIC ECONOMIC AND CLIMATE RISKS FOR AFRICA
Next, we map overall projected fossil fuel production as well as production from new projects in Africa between 2020 and 2050, using a model from the industry consultancy Rystad Energy. We highlight that:
If the fossil fuel industry extracts the oil, gas, and coal projected for production in Africa in the next three decades, this will emit 62 billion tons of CO2. This is equivalent to 13% of the remaining carbon budget associated with a 50% chance of staying within a 1.5°C level of warming.
Figure ES-2: Projected emissions from oil, gas, and coal production in all African countries, by reserve category, 2020–2050, billion tons of CO2
Source: Oil Change International analysis based on data from Rystad UCube. [4]
31% of production is in 7 “new entrant” countries with little or no existing oil and gas extraction. Seven of the countries expected to be top 16 oil and gas producers in Africa from now through 2050 are newcomers to the sector (Mozambique, Tanzania, Mauritania, South Africa, Senegal, Uganda, and Ethiopia). Planned projects in these countries come with added costs of building new infrastructure and regulatory systems for extraction.
36% of Africa’s future fossil fuel emissions are not yet locked in. From 2020 to 2050, 46% of gas production, 36% of oil production, and 23% of coal production are projected to come from new projects that are neither in production nor under development currently. This means there are little or no costs to cancel them.
Industry is risking USD $230 billion in the next decade on new oil and gas projects that could become stranded assets, and USD $1.4 trillion by 2050. These are the amounts that the fossil fuel industry anticipates investing in exploration and development of new, not-yet-approved oil and gas projects in the next 10 and 30 years. If decarbonization and rapid uptake of renewable energy continue, much of this investment could become “stranded,” creating the need – but not the funds – for cleaning up environmental damages, overnight job losses, and shortfalls of government revenues.
The industry is being propped up by public finance from rich, polluting governments that is poised to fade. Between 2016 and 2019, Oil Change International data shows G20 countries provided USD $47 billion in public finance for fossil fuels in Africa, 3.7 times the amount provided to renewables. However, these trends are starting to shift. As the EU, UK, and US among other major economies move to phase out this international public finance, the economic prospects of oil, gas, and coal in Africa are poised to fall further behind other sectors — including already cost-competitive renewable energy alternatives.
Figure ES-3: Top 16 African countries for oil and gas production from new, not-yet-approved projects (2020–2050)
Source: Oil Change International analysis based on data from Rystad UCube. [5]
Senegal’s Petro-Tim scandal, an example of resource rents ending up in private pockets and offshore accounts rather than public coffers and local projects (Section 4.1, p. 41).
Ghana’s take-or-pay clauses in oil and gas contracts that have caused debt to pile up and crowded out renewable energy (Section 4.2, p. 41).
The resistance to human rights abuses including the deadly repression of civil society as well as local environmental and health impacts in Nigeria (Section 4.3, p. 41).
Total’s plans for the largest LNG development in Africa in Mozambique. These gas projects are combining with growing wealth disparity, climate impacts, and local environmental damages to fuel violent conflict (Section 4.4, p. 42).
The movement for a just transition from coal in South Africa (Section 4.5, p.43).
The struggle against the economically and environmentally risky Uganda-Tanzania East African Crude Oil Pipeline (EACOP) (Section 4.6, p. 44).
RECOMMENDATIONS
The year 2020 provided a snapshot of what an unmanaged decline could look like in the oil and gas sector globally. This process has hit the most vulnerable countries and communities hardest, including many of those heavily dependent on oil and gas exports in Africa. As environmental justice and other social movements in Africa have long contended, moving past fossil fuels provides an opportunity to build an energy system and wider economy that is local, equitable, and democratic instead.
Transitioning in a fair way will require local decision-making and consultation to allow communities to determine how the energy transition should look in their regions. However, we put forward some broad principles for what transitioning our communities to a renewable, fair, and regenerative economy must include: a phase out of fossil fuels, strong social movements and trade unions, just transition plans for and led by fossil fuel workers and impacted communities, economic diversification with people and planet in mind, renewable energy for all, fostering local ownership and democratic control of resources, food sovereignty, rejecting false solutions and green extractivism, fostering deeper regional cooperation, and ensuring polluters pay for the damages they have caused.
Building off the Communiqué of the 2020 Africa Energy Leaders’ Summit and a framework for a globally equitable phase out of fossil fuels from Muttitt and Kartha (2020), [6] we make the following core recommendations to African governments:
Where fossil fuel production is already an established industry:
Develop plans for a gradual and managed phase-out of existing fossil fuel extraction projects by 2050 at the latest, alongside a just transition for workers and communities.
Prioritize the phase-out of projects where human rights are most at risk, and where marginalized communities bear the most adverse impacts of fossil fuel production.
Implement industrial and social policies towards economic diversification through participatory planning, with an emphasis on low-carbon sectors that also build more resilient and equitable communities.
In all countries, including where fossil fuel production is planned but not already established:
Rapidly scale up the installation of renewable energy – especially distributed renewable energy in off-grid areas – to achieve universal energy access.
Stop licensing and approvals for new fossil fuel projects.
Pursue rapid development of Africa’s unparalleled solar and wind energy resources to achieve universal energy access before 2030.
Throughout this report, we emphasize that wealthy country governments must do their fair share as well. We provide recommendations that would ensure they (a) move first and fastest in phasing out fossil fuel production, (b) cease fossil fuel finance and other actions hindering the just transition of countries in Africa, and (c) pay to support just transitions from fossil fuels throughout Africa and across the Global South in line with their historic and ongoing responsibility for the climate crisis.
References:
1 Rystad Energy UCube, April 2021.
2 Based on ranges reported in: UNIDO & Global Green Growth Institute, “Global green growth: Clean energy industry investments and expanding job opportunities,” Volume I: Overall findings, 2015, p. 24, https://gggi.org/report/ global-green-growth-clean-energy- industrial-investments-and-expanding- job-opportunities/; Heidi Garrett-Peltier, “Green versus brown: Comparing the employment impacts of energy efficiency, renewable energy, and fossil fuels using an input-output model,” Economic Modelling, 61 (2017), pp. 439-447, https://doi. org/10.1016/j.econmod.2016.11.012; Sangji Lee, “The case for a green economy,” April 5, 2021, https://www.undp.org/blogs/case-green-economy; Andrew Jarvis, Adarsh Varma and Justin Ram, “Assessing green jobs potential in developing countries: A practitioner’s guide,” 2011, p. 73, www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_153458.pdf.
3 Kingsmill Bond et al., The Sky’s the Limit: Solar and wind energy potential is 100 times as much as global energy demand, Carbon Tracker, 2021, https://carbontracker.org/reports/the-skys-the-limit-solar-wind/.
4 See note 154 for a detailed background.
5 Rystad Energy UCube, April 2021.
6 “Communique of the 2020 Africa Energy Leaders’ Summit,” Oil Change International, January 2020, http:// priceofoil.org/2020/02/06/communique-of-the-2020-africa-energy-leaders- summit/, Greg Muttitt and Sivan Kartha, “Equity, climate justice and fossil fuel extraction: principles for a managed phase out,” Climate Policy, 20:8 (2020): pp. 1024-1042, http://www.tandfonline.com/10.1080/14693062.2020.1763900.