WEF: Response to energy crisis risks derailing net-zero transition

The World Economic Forum says the global reaction to the energy crisis has been counter-productive in the context of the race to net zero, and new immediate actions are needed to stick to the energy transition. 

Ahead of its annual meeting taking place in Davos in Switzerland from the 16th to the 20th of January, WEF released a white paper that criticises countries’ short-term fixes to the global energy crisis, including the increased consumption of coal and the expansion of energy subsidies.

“We are in the grip of an unprecedented energy crisis but short-term fixes will lead to a bleak future. To achieve energy security and sustainability the only solution is to accelerate the low carbon transition,” the report authors write.

“The current energy crisis is driving inflation, slowing economic growth and creating social turmoil. We cannot afford to compound this crisis by allowing our responses to derail the energy transition. Yet short-term backward steps, such as increasing production of electricity from coal or broad-based consumption subsidies, risk doing just that.

Ten energy transition solutions 

Instead of short-term fixes, the report proposes 10 actions to align immediate responses with long-term goals of a just energy transition. The proposed solutions are organised around four themes: supply reinforcements, demand management, fiscal measures and investments, and coordination and long-term strategy.

Building on its Energy Transition Index 2022 published last May, the Forum argues that countries worldwide should prioritise renewable energy investments, plug methane leaks, maximise electrification, drive consumption efficiencies, and leverage the excess profits made by energy companies in 2022 – estimated at $4 trillion.

Several of these solutions have a special resonance in the context of some African countries. As more and more African countries are set to become major exporters of natural gas – Senegal and Mozambique are currently developing their industries – addressing methane leakage and non-essential flaring from gas production and infrastructure could be highly beneficial.

“If potential gas exporters to the EU implemented measures to reduce gas flaring and methane leaks, it could save the equivalent of one-third of total Russian gas exports to the EU in 2021,” says the report.

“The climate benefits of natural gas are no better than coal if more than 3.4% of it escapes before combustion, with some fields having fugitive emission rates of 6% or more,” warns WEF.

The exploitation of natural gas, which has sparked fierce debate on the continent, needs “clear guidance from policy-makers on the outlook for gas demand alongside acceleration of low-carbon sources,” says the report.

Responding to the report, NJ Ayuk, executive chairman of the African Energy Chamber, which lobbies for the energy industry, argued that Africa has a sustainable plan for the exploitation of its natural gas reserves. 

“Africa’s plan for just transition is a pragmatic approach that encourages a sustainable, logical path that includes using our resources, natural gas in particular, to help us meet current needs and to generate revenue that can help pay for our transition to renewables rather than wait for foreign aid that will never come,” says 

Strengthening energy security

The report also says that a lack of diversification in energy supplies is a barrier to the energy transition. Sub-Saharan Africa is currently on the Forum’s red list for the diversification of its domestic energy mix and energy import partners. 26 countries in SSA are heavily reliant on just three countries for a majority of their fuel imports.

“The lack of diversity in imports results in the countries’ energy system having less cushion to deal with disruptions in supply from a given partner, which eventually could precipitate into a national concern,” says the report.

Last year, WEF said in its Energy Transition Index 2022 that addressing this energy vulnerability could help Africa to achieve net-zero targets.

“The region has great potential to leapfrog by avoiding expensive, inefficient, and more polluting energy infrastructure. Countries should consider all avenues to improve access, including off-grid electrification given the falling costs of solar panels. Improving the enabling environment for the energy transition, including policies for energy efficiency and electrification of transport, can accelerate progress in the region.”

Despite WEF’s vie that Sub-Saharan Africa’s position in the global race to net zero has kept a positive trajectory in 2022, the region suffers from the lowest access to electricity rate globally at 56%.

The International Energy Agency (IEA) reported that 2022 was the first year in decades in which the number of people without access to electricity has increased, with the largest increases occurring in two African countries: the Democratic Republic of the Congo and Madagascar.

“What is concerning is that the Davos plan does not mention energy poverty. 600 million Africans have not access to electricity, 900 million have no access to clean cooking technologies most of them women,” says NJ Ayuk.

“For African nations universal access to affordable, reliable electricity is one of the UN’s sustainable development goals – meaning it’s a basic human right – the huge and growing number of Africans without electricity is morally wrong, and it cannot be ignored by the Davos crowd,” he says.

How do African countries perform on energy transition? 

Out of the 14 SSA countries reviewed by the Forum for its 2022 Transition Index, Ghana, Namibia, and Kenya were leading in 2021 with a score of 59.1, 58.2, and 58.1. In comparison, Sweden had the highest score with 78.6.

The top three African economies received a different assessment for their energy transition (see graph below).

*Transition readiness is the readiness of a country to transition its current energy system towards one that enables the development of a sustainable low-emission economy.System performance is the combination of a country’s energy security and access, environmental sustainability, and economic development and growth.

While Ghana is tagged as a “country with potential challenges” (yellow) – meaning that it has an above-average energy system performance, its transition readiness is below the mean. Kenya and Namibia are identified as “leapfrog countries” (blue) which indicates a position to “leapfrog” their development due to a high transition readiness and below mean system performance.

Namibia, in particular, scores high in transition readiness at 58.6 – which is higher than China or South Korea – due to the recent signing of  communique with Germany to establish a green hydrogen technology partnership.

All other assessed African countries on the list are marked as “emerging.”