Energy transitions bring mixed implications for African resources

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Southern Times Writer

Harare - Energy transactions have been changing over the past years and these dynamics have an influence on African resources.

According to the African Energy Outlook 2019 report recently published by the International Energy Agency, changing global energy dynamics mean that resource-holders cannot assume that their oil resources will translate into reliable future revenues. Africa has abundant natural resources and the associated revenues could be an important motor for development.

However, the outlook includes higher US shale oil production, which is providing very strong competition for lighter African crudes.

“Accelerated energy transitions could result in lower global demand and prices and cut sharply into future revenues. Our analysis underscores the need for strategic thinking on future investments, transparent resource revenue management and efforts to reform and diversify economies,” stated the report.

 “Africa is also home to many of the mineral resources that are critical in driving global energy transitions. The Democratic Republic of the Congo accounts for two-thirds of global cobalt production and South Africa produces 70 percent of the world’s platinum.

“Rising demand for the minerals that can support global energy transitions offers an opportunity for minerals-rich countries in Africa, but failure to keep up with demand could not only hamper Africa’s economic outcomes but also hold back the pace of global energy transitions. Responsible stewardship of these resources is vital. Robust regulatory and oversight mechanisms would be needed to ensure that revenues produce visible positive results for local communities and that negative impacts on the environment are minimised.”

 

According to the International Energy Agency, Africa has the opportunity to pursue a much less carbon-intensive model of development than seen in many other parts of the world.

“The challenges and opportunities differ widely across a diverse continent. But renewables, together with natural gas in many areas, are poised to lead Africa’s energy consumption growth as the continent moves away from the traditional use of biomass that currently accounts for almost half of final energy consumption. With the appropriate policies to support a strong expansion of clean technologies and sufficient emphasis on energy efficiency improvements, Africa could be the first continent to achieve a significant level of economic and industrial growth with cleaner energy sources playing a prominent role than other economies in the past,” said the report.

According to the African Development Bank, most African countries are facing inadequate access to affordable and reliable modern energy services, for low income segments of their population. At the same time, the continent’s energy sector needs to evolve rapidly to be able to respond to local and global environmental concerns, especially climate change, and to significantly reduce reliance on fossil fuels, which are often imported.

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