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African Development Bank Discusses its Energy Strategy for Africa at COP 17
More than 600 million Africans in sub-Saharan Africa cannot access electricity in their homes from a grid. In order to improve this situation as quickly as possible, the African Development Bank (AfDB) has been working during 2011 on a new energy strategy for Africa with an emphasis on low carbon methods.
Appropriately, the AfDB discussed progress on the strategy and forward plans on it with experts at the climate change conference, or COP 17, in Durban.
In sub-Saharan Africa, at least 625 million people do not have access to modern energy services. Access to these services is essential for economic growth and human development. Added to this, is the impact of the changing climate, which will affect the options and choices available to bring modern energy access to Africa, particularly for rural areas.
Taking this into consideration, the AfDB is working on a new energy sector policy and strategy, said Héla Cheikhrouhou, Director of the Energy, Environment and Climate Change Department at the AfDB.
“The overall vision,” said Cheikhrouhou “is how to achieve and how to help achieve accelerated access to modern forms of energy while helping the continent achieve lower carbon growth.”
The draft energy strategy rests on two pillars: ensuring access to modern energy and fostering clean energy investments.
“We are particularly clear that specifically in sub-Saharan Africa and the low-income countries, access to energy will continue to be the top priority in the near term. Creating that access in the cleanest possible form is an opportunity for the continent,” said Cheikhrouhou
The AfDB has identified three key areas for action. First, as resources are limited compared to the scale of the need, said Cheikhrouhou, “it is important to maximise the leverage of our interventions.”
The second is enabling public-private partnerships and, according to Cheikhrouhou, “we have to find a way to mobilise a substantial amount of private financing whether from local or international sources.”
A third key action area is the fostering of regional integration, as regional trade of electricity is seen as an important area of intervention. The AfDB will place particular emphasis on tailoring its assistance to countries and regions’ specific needs.
The AfDB will also strive for better cooperation among development finance institutions and creating incentives for the joint, optimal use of expertise and resources. As an example, to foster this type of collaboration an Africa Finance Partnership comprised of various development finance institutions was developed, among other initiatives.
“The whole purpose is to be more effective in our support for African countries, to embark on a low-carbon growth path which will enable them to fulfil the purpose of abundant energy resources, particularly renewable, and access to modern energy.”
According to Eric Usher of the United Nations Environmental Programme’s Division of Technology, private sector engagement is starting to make a difference. He adds that, at least from a private sector view, the AfDB’s energy strategy has to address three basic issues: manageable on-the-ground deals, access to finance at a reasonable cost of capital and revenue certainty.
Another key challenge is to make use of the massive opportunity that the renewables market currently offers.
Globally, there has been a transformation in renewable energy in the last 10 years, he said. “The industry has grown from about USD 35 billion in all new renewables (not including large hydro) in 2004 to USD 211 billion in 2010. That’s very significant growth.”
Notably, a shift is also taking place towards the development of small-scale renewable projects and, said Usher, we need to figure out how to not only deal with a couple of large projects but thousands of small projects.
Sakkie Leimecke, Lead Principal: Energy at Nedbank, agreed that improving the power situation in Africa will require substantial funding and expertise, which are scarce resources. As such, partnering with financial institutions and pools and expertise is essential for success.
Leimecke added that it is important to remember that it is not only the generation of power which is important, but that serious challenges will arise without transmission and distribution.
Also, investor confidence to encourage more projects is needed, and government intervention is critical. “Unless government spearheads the process towards renewables, nothing will happen.”
This is especially relevant with initiatives like Nationally Appropriate Mitigation Actions (NAMAs). CDM and the Green Climate Fund are seen as further incentives to encourage the development of sustainable energy, even though the first has not had the results to date originally anticipated.
With governmental support, the AfDB can allow for protocol and discussions to take place. “No one single entity can solve Africa’s problems,” said Leimecke, “but it’s very clear that the AfDB has put up its hand to play a leading role in changing Africa’s power situation.”
In general, South Africa is catching up particularly fast in the area of renewables, especially since 28 such projects were announced at COP 17. This situation gives a sense of optimism and it is hoped that more successes will follow in the rest of Africa.
The AfDB needs to change in line with the on-going energy revolutions, said Usher. However, the draft strategy as a basis shows that “we are heading in the right direction,” he said.