Can the world prevent catastrophic climate change while building energy systems? Commentary by Olusegun Obasanjo for CHOGM 2015 Reference Book

Can the world prevent catastrophic climate change while building the energy systems needed to sustain growth, create jobs and lift millions of people out of poverty? That question goes to the heart of the defining development challenges of the 21st century. This year’s Africa Progress Report, Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities, calls for determined leadership to answer it affirmatively. Africa (along with several other regions across the Commonwealth) is already experiencing earlier and more damaging impacts of climate change than many other parts of the world.

For some time, we have lacked the political leadership and practical policies needed to break the link between energy and emissions. The December 2015 talks in Paris on a new global climate treaty have prompted some notable forward steps from several of the world’s most influential countries. We now need to see more of such leadership across the board to truly set us on a new course.

A coherent set of demands

Greater cohesion among African countries is essential to success – in terms of the positions they take to Paris, as well as in how they negotiate. A coherent set of common African demands will be critical if the world is to raise the level of ambition needed for the Paris talks to end with a viable global climate agreement.

Additionally, engaged political leadership at the highest levels between African and likeminded countries is crucial. We therefore encourage the initiatives and efforts under way to ensure such leadership – before, during and beyond the Paris talks. In that regard, ambitious leadership from Commonwealth Heads of State and Government will be instrumental in ensuring we reach a deal in Paris that the lays the foundations for the transition to a low-carbon future.

Africa’s leaders must push for ‘development first’ – while emphasising that it is possible for Africa to expand its economies and improve the well-being of its citizens by choosing a low-carbon path. Some countries in the region are already at the front of the global trend of climate resilient, low-carbon development, including Ethiopia, Ghana, Kenya, Nigeria and South Africa.

They are boosting economic growth, expanding opportunities and reducing poverty, particularly through agriculture. African nations do not have to lock into developing high-carbon old technologies; we can expand our power generation and achieve universal access to energy by leapfrogging into new technologies that are transforming energy systems across the world.

A strong African voice promoting the opportunities for a ‘triple win’ in energy, climate action and poverty reduction can up the tempo for a scaling-up of low-carbon energy investment, not just on the continent, but globally. The recent G7 pledge to increase investments in the African renewables sector is the latest powerful acknowledgement from some of the world’s major emitters of the important role Africa can play.

Access to electricity

Africa stands to gain from developing low-carbon energy, and the world stands to gain from Africa avoiding the high-carbon pathway followed by today’s rich world and emerging markets.

Unlocking this opportunity will not be easy. It will require decisive action on the part of Africa’s leaders, not least in reforming inefficient, inequitable and often corrupt utilities that have failed to develop flexible energy systems to provide firms with a reliable power supply and people with access to electricity.

Africa’s energy challenge is substantial. Over 600 million people still do not have access to modern energy. It is shocking that sub-Saharan Africa’s electricity consumption is less than that of Spain, and on current trends it will take until 2080 to for every African to have access to electricity.

Modern energy also means clean cooking facilities that do not pollute household air. An estimated 600,000 Africans die each year as a result of household air pollution, half of them children under the age of five. On current trends, universal access to non-polluting cooking will not happen until the middle of the 22nd century.

The waste of scarce resources in Africa’s energy systems remains stark and disturbing. Current highly centralised energy systems often benefit the rich and bypass the poor, and are underpowered, inefficient and unequal.

Energy-sector bottlenecks and power shortages cost the region 2-4 per cent of GDP annually, undermining sustainable economic growth, jobs and investment. They also reinforce poverty, especially for women and people in rural areas. It is indefensible that Africa’s poorest people are paying among the world’s highest prices for energy: a woman living in a village in northern Nigeria spends around 60 to 80 times per unit more for her energy than a resident of New York City or London.

Changing this is a huge investment opportunity. Millions of energy-poor, disconnected Africans, who earn less than US$2.50 a day, already constitute a US$10 billion yearly energy market.

Redirecting finance

What would it take to expand power generation and finance energy for all? We estimate that investment of US$55 billion per year is needed until 2030 to meet demand and achieve universal access to electricity.

One of the greatest barriers to the transformation of the power sector is the low level of tax collection and the failure of governments to build credible tax systems. Domestic taxes can cover almost half the financing gap in sub-Saharan Africa. Redirecting the US$21 billion spent on subsidies to wasteful utilities and kerosene towards productive energy investment, social protection and targeted connectivity for the poor would show that governments are ready to do things differently.

Additional revenues can be mobilised by stemming the haemorrhage of finance lost through illicit financial transfers, narrowing opportunities for tax evasion and borrowing cautiously on bond markets. In 2012, Africa lost US$69 billion from illicit financial flows. G8 and G20 countries must act on past commitments to strengthen tax-disclosure requirements, prevent the creation of shell companies and counteract money laundering. Implementation of the G20/OECD’s planned actions on base erosion and profit shifting should be accelerated; and the international community should support African efforts to strengthen tax and customs.

Aid must play a supportive, catalytic role. Global and African investment institutions already see the growth and revenue prospects of African infrastructure in a world where demand is slowing in developed countries.

Reforming energy utilities is also key. Long-term national interest must override short-term political gain, vested interests, corruption and political patronage. Energy-sector governance and financial transparency will help bring light in the darkness. Energy entrepreneurs can join the reformed utilities in investing revenues and energy funds in sustainable power that saves the planet and pays steady dividends.

Act now and act together

Better and more accessible energy can also power up Africa’s agriculture. Governments should take advantage of adaptation opportunities that integrate social protection with climate-smart strategies to raise agricultural productivity and to develop rural infrastructure, including crop storage, agro-processing and transport, cutting poverty while strengthening international efforts to combat climate change.

Governments in the major emitting countries should place a stringent price on emissions of greenhouse gases by taxing them, instead of continuing effectively to subsidise them, for example by spending billions on subsidies for fossil-fuel exploration. In our latest report, we call for a comprehensive phase-out of all fossil fuel subsidies by 2025, with appropriate support for low-income countries. Eliminating subsidies for fossil-fuel exploration and production – especially coal – should be a priority.

The political power of multinational energy companies and other vested interest groups is still far too strong. Developed countries should withdraw by 2018 all tax concessions, royalty relief and fiscal transfers, and all state aid to fossil-fuel industries by 2020. The G20 countries should set a timetable for acting on their commitment to phase out fossil-fuel subsidies, with early action on coal.

Unlocking Africa’s energy potential and putting in place the foundations for a climate-resilient, low-carbon future will require ambitious, efficient and properly financed multilateral cooperation. Yet the current global climate finance architecture fails each of these credibility tests.

The window of opportunity for avoiding climate catastrophe is closing fast. The only promises that matter at the Paris climate summit are those that are kept. Africa’s leaders must rise to the challenge. They are the voice of their citizens in the climate talks – and that voice must be heard. Business leaders, religious leaders of all faiths, social movements and the leaders of the world’s cities must continue to pressure political leaders to reach an ambitious Paris climate agreement, backed by carbon pricing and taxation.

Representing a combined population of 2.1 billion people, almost a third of humanity, the leaders of the Commonwealth group of nations can individually and collectively play an instrumental role in implementing, to paraphrase the late Mahatma Gandhi, ‘the change we wish to see’.

Together we can create an overwhelming force for change to avert climate catastrophe and win the war against poverty. We must us act now and act together.

This commentary was published in the Commonwealth Heads of Government Meeting (CHOGM) 2015 Reference Book. The Commonwealth Heads of Government Meeting is being held between the 27 and 29 of November 2015 in Malta.