Africa’’s Emerging Markets are growing their renewable energy sectors



The acceleration in growth of the renewable energy sector is a widening trend extending towards an increasing number of countries, particularly in the developing world.  According to a United Nations Environment Programme report, released this month, 2012 was the second highest year ever for renewable energy investments globally, totalling $1.3 trillion since 2006.

There was a continuing upward trend in developing countries in 2012, with investments in the South topping $112 billion vs $132 billon in developed countries – a dramatic change from 2007, when developed economies invested 2.5 times more in renewables (excluding large hydro) than developing countries, a gap that has closed to just 18%.

The 2012 global investment total for renewable energy (including small hydro-electric projects) was $244 billion. In previous years, global investments totalled $279 billion (2011), $227 billion (2010) and $168 billion (2009).

Of the 138 countries globally with renewables targets or policies in place, two thirds are in the developing world.

“The overarching energy challenge is how to balance the need to meet the increasing demand for affordable and secure energy with the need to tackle climate change…”

Africa as a continent is endowed with rich natural energy resources – both fossil fuels and renewable energy sources – and its energy sectors are opening up to greater investment and creating more jobs and opportunities. If properly harnessed, these resources could help to sustainably meet the continent’s energy demand, while responding to the climate change challenge.

Africa has lowest carbon emissions of all the continents, but it suffers most from the ill effects of climate change. According to the most recent African Development Bank’s (AfDB) Energy Sector Policy Document, “while there is an urgent need to increase access to energy in support of economic and social development in Africa, it is vital to harness renewable sources and make production patterns cleaner for steering the continent’s energy sector towards a sustainable path.”

Africa needs affordable energy quickly, and the temptation would be to focus exclusively on the fossil fuels for energy production. But the Bank recommends using a mixed portfolio of energy resources to make sure that the Continent develops along sustainable lines.

“The overarching energy challenge is how to balance the need to meet the increasing demand for affordable and secure energy with the need to tackle climate change,” says the Bank. “As the unique multilateral financing institution dedicated exclusively to Africa, the AfDB is in a position to take the lead in providing coordination, brokerage and syndication services to Regional Member Countries, bilateral and multilateral institutions, and private development partners, to support strategies for energy access and low-carbon development.”

The AfDB plays an advocacy role on the Continent to support Regional Member Countries in their efforts to access clean technologies. In order to encourage foreign investors to transfer technology and develop industrial capacity on the Continent, the Bank helps Regional Members Countries to build the required technical capacities and set up a local policy and regulatory frameworks conducive to better Intellectual Property Rights (IPR) protection and technology transfer. It plays a pivotal role in securing Africa’s energy future.

“The continent’s energy sector needs to evolve rapidly to be able to respond to local and global environmental concerns…”

Given the urgent need to increase access to energy for all, fossil fuels will continue to play an important role in power generation in Africa. The AfDB supports power generation from these sources while promoting, as much as possible, the best affordable clean and efficient technologies available so as to increase efficiency and reduce GHG emissions in coal-, gas- and oil-based energy projects.

“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. Therefore…the African Development Bank (AfDB) is committed to supporting the gradual adoption of a low-carbon and sustainable growth path by Regional Member Countries,” the Bank says.

“To this end, African countries will need, among other measures, to tap innovative energy funding approaches, pooling various forms of financing including public, private, external and domestic resources,” it says.

As the development of cleaner energy may entail extra costs for both consumers and producers, a blend of concessionary and commercial financing can play a key role in supporting the transition to a cleaner and green economy. Appropriate policies and targeted subsidies can also help encourage investments in this area. To this effect, the African Development Bank helps its Regional Member Countries mobilise concessionary resources and will support knowledge generation to guide the design of policies that enhance the profitability of low-carbon projects, including subsidisation, tax incentives and carbon pricing policies, where appropriate.  All of these efforts are contributing to Africa developing a successful and thriving renewable energy sector.

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