Energy

By Sabiu Abdullahi

Tony Attah, the Chief Executive Officer and Managing Director of Renaissance Africa Energy Company, has said about 100,000 Nigerians die every year because they do not have access to cleaner energy sources.

Attah spoke on Thursday at the Africa CEO Forum held in Kigali, Rwanda. He said the situation extends across the continent, where more than 400,000 deaths are linked to poor access to cleaner energy.

He stressed the importance of natural gas to Africa’s electricity sector and described cleaner energy as critical to improving living conditions across the continent.

“When you look in Nigeria, 100,000 people die every year from lack of access to cleaner energy. Just look at that poor woman who is trying to put food on the table, and she has to cook through the smoke, using poor quality fuels, walking in and out of that every day,” he said.

“Think about it. One child on the left, one on her right, one on her back. They go in day in (and) day out. That is where your 100,000 people come from. The overall number for Africa is more than 400,000.”

Attah said Africa should not accept such statistics despite its huge gas reserves.

“That’s not the narrative that you should feel proud of as an African, that’s not the narrative that you should feel proud of as somebody in the industry that says we have 620 tcf of gas that can provide life,” he said.

“Essentially, gas is life, and that’s how Africa has to see gas. And if we as producers see it that way, we now need to get that same logic to the minds of the leadership, because integration is what has to happen in Nigeria.”

The energy executive also urged African countries to invest in their own natural resources instead of relying heavily on foreign financiers.

According to him, Nigeria’s electricity supply remains inadequate for its population of more than 200 million people.

“If you look at Nigeria, we have over 200 million people. The total spinning reserves of electricity is under 20 gigawatt. And what is available for the population is about five. So 5,000 megawatt for 200 million people,” he said.

“Of course, there are millions of generators all over the place. But no economy can take off on the back of diesel generators. In the same vein, no economy should expect to take off on the balance sheet of others.”

Attah argued that Africa must reclaim financial resources tied up abroad if the continent hopes to fund its own development.

“So those $4-$5 trillion that Amaodu referenced, that is sitting elsewhere but belongs to Africa, has to come back, and that is how Africa will start to take centre stage in financing itself,” he said.

“You can’t keep expecting people to want to finance you and then you want to lead them or you want to stand up to them — you must be subservient if someone is financing you. As they say, who pays the piper dictates the tune.”

He further called for a shift from exporting raw gas to using the resource to create economic value within Africa.

Also speaking at the forum, Chairman of McKinsey Africa, Acha Leke, said Africa possesses about 10 per cent of the world’s proven gas reserves and could sustain production at current levels for another 70 years.

Despite this, he noted that only three per cent of gas produced on the continent is traded within Africa.

Leke said 34 per cent of African gas is exported outside the continent, while most of the gas consumed within Africa is concentrated in Algeria, Nigeria, Egypt and Libya.

According to him, the continent’s gas infrastructure was designed mainly for exports rather than for regional distribution and trade.

By Haitham Al Ghais 

The energy transition as a concept is itself in need of a transition. 

We must move beyond the blinkered view that this is about substituting energy sources, that hydrocarbons should be consigned to the past and that recent real concerns expressed by energy consumers around the world on current transition strategies are temporary blips.

In recent years, there has been much discussion among policymakers of the International Energy Agency’s prescriptive “Net Zero by 2050” scenario. Many ambitious proposals for net-zero policies have leveraged this scenario, but there is evidence that some of these policies are now being pulled back and reconsidered.

There is a refocusing on the daily energy realities lived by billions of people. Yes, we all want energy with lower emissions—that is a given. But we also want to ensure reliable and affordable energy, enable economic growth, and enhance energy accessibility.

Ongoing Re-Evaluations

There are a number of reasons for these ongoing re-evaluations.

Firstly, technologies like solar, wind and electric vehicles (EVs) are not replacing hydrocarbons at any real scale. While these alternatives will play a role moving forward, the share of hydrocarbons in today’s global energy mix is over 80%, similar to the level 30 years ago. Wind and solar combined make up under 4% of the world’s energy, and global EV penetration is between 2%-3%. This is despite the fact that $9.5 trillion has been invested in “transitioning” over the past two decades.

The course of history has shown that energy transitions take centuries to evolve and have been about energy additions, not energy subtractions. Previous transitions were technology-driven, with policy following suit. This current transition has, to date, been policy-driven, with the hope that technology will catch up.

Cost and Competitiveness Challenges

Secondly, the costs and competitiveness of many of these alternatives remain a challenge. Renewable costs have been reduced, but when considering intermittency issues, the levelized cost of “total” electricity from solar is more than seven times higher, and from wind 15 times higher when compared with conventional power plants. Additionally, reports of the profitability struggles of many renewable developers are a testament to their economic challenges.

For EVs, the volume-weighted average retail price of EVs in the United States and Europe is higher than gasoline and diesel models, and EVs are heavily subsidized. Such subsidization cannot go on forever. Many automakers are also scaling back or delaying their EV plans, and some have declared bankruptcy. Clearly, the hype around EVs is wearing off, as consumers are showing a preference for continuing to have a choice of vehicles and as the huge challenges around electricity grids, battery manufacturing capacity and critical minerals increase.

For critical minerals in particular, imbalances between processing capacity and reserve concentration present significant challenges, such as supply chain bottlenecks, price gyrations, and geopolitical tensions. Moreover, mining is an energy-intensive activity that runs today on hydrocarbons. In fact, studies show that final energy consumption in mining activities could increase more than fivefold by midcentury.

Developing Country Needs

Thirdly, billions of people are playing energy catchup. Oil consumption in developing countries currently ranges from less than one to just below two barrels per person per year, compared with nine in the EU and 22 in the US. These countries will require more energy, not less, in the future. They cannot wait on costly alternatives when reliable, secure and affordable hydrocarbon options are already available at scale, ones that continue to provide prosperity to the developed world.

Fourthly, renewables and EVs do not own clean energy technologies or efficiency improvements solely. The oil industry is also advancing efficiencies and investing in technologies to reduce emissions, such as carbon capture, utilization, and storage, direct air capture, carbon dioxide removal, and clean hydrogen, alongside investing in renewables.

Rethinking Perceived Wisdom

It may make for some awkward conversations, but the perceived wisdom on the energy transition needs a serious rethink.

We need to move away from categorizing energy sources as good or bad.

We need to reflect the realities on the ground and park the misguided narrative of there being no need for new oil and natural gas fields. With oil and gas demand continuing to rise to historically high levels, it is not a prudent or stable way forward for global energy security.

We need to invest in all energies and technologies and recognize the needs of people around the world, delivering on both our energy security and climate objectives. All the dots require connecting, not just a few. Our energy and climate ambitions necessitate realistic policies that ensure that emissions are reduced while populations have access to affordable energy products and services they require to live a comfortable life.

Haitham Al Ghais is the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC).