How will laws, policies and international regulations shape energy transition in Africa as the transformation of the global energy sector from fossil fuels to zero-carbon gathers steam? Oil and gas law experts met in Abuja for two days at a conference organised by the Lawyers in Energy Network to discuss the future of the African energy market amid a shift towards renewable energy. Deputy News Editor JOSEPH JIBUEZE reports.
Africa’s energy transition prospects look bright, but the regulatory framework must be retooled to serve the continent’s energy needs, experts have said.
With global focus shifting from fossil fuels, such as petroleum and natural gas, to zero-carbon energy in a bid to attain sustainable development and climate resilience, it is believed a blessed Africa can thrive in the transition.
According to Mr. Huub Stokman, CEO of OVH Energy Marketing, Africa is projected to have the fastest urban growth rate in the world, and by 2050, 56 per cent of its population will be urban.
The last two decades, he added, have seen the number of people living in cities increase by 90 per cent, a trend expected to continue over the next two decades
“Growing urban populations mean rapid growth in energy demand for industrial production, cooling and mobility,” he said.
And with 770 million Africans having no access to energy – the highest number in the world ‑ Skokman believes the continent’s energy opportunities remain huge.
He was one of the experts who spoke at a two-day conference in Abuja. It was organised by a non-governmental organisation, the Lawyers in Energy Network.
Its theme was: African future markets in energy transition: laws, policies and international regulations.
Highlighting Africa’s renewable energy potential, Skotman said the continent’s vast natural resources meant that low-cost energy technologies have plenty of potentials.
Africa, he said, has the richest solar resources in the world but has less than one per cent of the global installed capacity.
He pointed out that Africa is home to many of the minerals essential to the energy industry. For instance, he said DR Congo accounts for about 75 per cent of global cobalt production.
“The continent is also home to platinum (cars and fuel cells), chromium (wind turbines) and manganese (batteries) which are key minerals powering the global energy transitions,” he said.
Calling for a clear plan for moving away from fossil fuels, he noted that although carbon dioxide emissions in Africa represented about four per cent of total global emissions, the continent was on the climate change frontline.
“African ecosystems have been disrupted and the future impact is expected to be substantial.
“All African countries signed up to the Paris Agreement (an international treaty on climate change, adopted in 2015).
“A clear plan to switch from fossil fuels to greener energy sources is critical to contributing to the global effort to mitigate greenhouse emissions and ultimately protect the continent,” he said.
Skotman believes that Africa’s energy potential, especially renewable energy, is enormous, yet only a fraction of it is being employed.
“The institutional, regulatory, legal, tariff structure and frameworks for renewable energy are largely nonexistent or weakly implemented,” he noted.
Omorogbe: plan for renewable energy
A professor of energy law and former Edo State Attorney-General, Yinka Omorogbe (SAN), blamed Nigeria’s energy poverty on a lack of planning.
She emphasised the need for planning, especially for renewable energy.
Omorogbe said: “Energy poverty is as a result of either poor energy planning, or energy planning that does not put the common man as the main beneficiary of the plan or policy.
“That is why the grids of Africa are in the capitals and not the rural areas. Countries with 100 per cent access planned for it. It did not just happen.
“Planning in this time and season must incorporate renewable energy. There is no alternative.”
Omorogbe, who is the President of the Nigerian Association of Energy Economics, called for business models that grow modern energy access while the country aims for carbon neutrality or even reduced national emissions.
She was of the view that an energy transition does not mean the end of the petroleum industry.
“It means finding alternatives that align with protecting the planet,” she said.
Omorogbe added: “Now is the time to come up with an innovative business solution to stimulate energy access. Different circumstances and terrains will require different models.
“The right legal and regulatory environment is key and this must be driven by a policy that includes all – no one left behind.”
Head, Directorate of Legal Services at the Nigerian Content Development and Monitoring Board, Naboth Onyesoh, said energy transition was real as “there is no dispute about the science of climate change”.
Noting that African contribution to global warming is too negligible, he said the countries “must not be stampeded to abandon oil and gas”.
“The big polluters should carry the can,” he said, emphasising that energy availability and local content were crucial to Africa’s security and economic survival.
On the way forward, he said: “Regulatory framework must be applied to enable businesses.
“Regulations must be certain, transparent, uniform and predictable. A clear source of funding backed by law is required.
“Africa must collaborate on finance and infrastructure to optimise its energy resource.”
‘Harness untapped energy’
A law teacher, Dr Pereowei Subai, noted that if Africa is to transit immediately, it will mean less dependence on fossil fuels to fund its major economies.
However, he said there is a need for investment in innovative technologies for carbon capture, storage and use in an environmentally-friendly manner.
“There is a need for Africa to harness its potential for renewable energy, align its renewable targets to energy and climate plans, integrate its regional market structures, develop innovative power sector transformation plans and develop policy frameworks for just and inclusive transitions,” Subai said.
He called for investment in transmission and distribution infrastructure and urged governments to make their policy and regulatory frameworks more conducive to private sector investment.
The place of AfCFTA
A Senior Advocate of Nigeria (SAN), Adedolapo Akinrele, said the continent can capitalise on the African Continental Free Trade Area (AfCFTA) agreement to improve its energy transition.
He noted that an undoubted beneficiary of AfCFTA will be the energy sector, including traditional oil and gas operators in the upstream, midstream and downstream sectors.
“Oil and gas and mineral resources account for more than 75 per cent of the continent’s exports and with the high growth potential in oil and gas, it will have a role to play in the short and mid-term,” he said.
According to Akinrele, by consolidating small, poor, and fragmented African countries into one strong market, the agreement can change the dynamics in terms of access to funding, human capital, and technology for the green energy sector.
Whether AfCFTA will strengthen the continent’s energy transition, he said, will depend on the ability to utilise the existing regional economic communities, monetary unions and free trade areas as building blocks for it.
Guaranteeing the security of investments, transparent adjudication of disputes without delays and secure and truly frictionless infrastructure on land and sea for the delivery of renewables will determine AfCFTA’s role, he added.
Head of Research and Development/Projects at Starzs Investments Company Limited, Sofieye Uzor, said as the world races to meet the Sustainable Development Goals (SDGs) 2030, Africa can use regional trade integration to strengthen the energy sector and existing power pools and improve utilisation of the region’s abundant renewable energy resources to meet the vast demand.
He thinks AfCFTA’s role in stimulating the integration of Africa’s energy systems could create a single liberalised regional energy market.
“An integrated energy market can act as a catalyst to strengthen financial systems to support energy development projects, fund new technologies to reduce production costs, increase capacity, and maximise energy generation, which in turn can improve access to diverse energy products.
“Once investment increases, more capital becomes available for governments to allocate more,” Uzor said.
Wanted: legal, regulatory overhaul
An energy law expert and partner at George Etomi & Partners, Ivie Ehanmo, identified what must be done to close the energy access and transition gap.
They include deploying all available resources strategically, such as natural gas; legal and regulatory overhaul for investment promotion, shifting domestic public finance away from fossil fuel subsidies towards clean energy access, ambitious policies and programmes and institutional capacity building.
Others, she said, are skills development, reskilling and employment creation in the context of a ‘just transition’, research and gender mainstreaming, grid connection, expansion and integration programmes and decentralised solutions (renewable energy) with tailored consumer finance business models.
Ehanmo added that a solid policy framework needs to be established by policymakers that can influence the cost-competitiveness of renewable energy.
Removing subsidies for fossil fuels, she said, will allow for tariff increases closer to the true cost of power with the aim being to achieve grid parity in the long run.
“There is, therefore, a need for well-designed long-term legislation and enabling framework for the deployment of renewable energy technologies to guarantee investment security,” Ehanmo said.
Challenges ahead
Managing Partner at Detail Commercial Solicitors, Dolapo Kukoyi, decried poor regulatory framework and institutional arrangements for alternative energy (including renewables) in Africa.
He was of the view that the situation has stifled the ease of doing business and investments in alternative energy generation in Africa and must be improved.
Resolving disputes
A professor of law, Gbolahan Elias (SAN), said effective dispute resolution will be critical in the energy transition process.
He said: “The question is not whether the world needs to move on to green energy (this is beyond question). The question is more centred around when? How? Uniform or in phases?
“Africa desperately argues that it cannot transition at the same pace as the developed world.
“There is no doubt that a lot of investment and financing will be required to make the transition.
“However, investors and DFIs (development finance institutions) seek assurances that disputes arising from their investment can be resolved quickly and returns guaranteed.
“For the energy sector to thrive, disputes must be settled as quickly as possible and in the best interest of all parties involved.
“This makes ADR (alternative dispute resolution) imperative.”
‘Change won’t happen overnight’
Justice O. Derefaka, Technical Adviser to Nigeria’s Minister of State for Petroleum Resources, believes the world’s need for oil and gas for heat, food and shelter “will not change overnight”.
African governments and leaders, he said, should continue to invest in oil and gas while working to help speed up progress to a lower-carbon future.
“Multiple pathways to the energy transition should and must exist to ensure that no country is left behind in the process of achieving net-zero by 2050/2060.
“Fueling economic growth and powering our lives, hydrocarbons will continue to provide the foundation of world energy supply for at least the rest of this century.
“As a continent, we need to recognise the need to develop hydrocarbon resources in environmentally and socially responsible ways.
“The ability to manage CO2 is, therefore, a priority for the future development and growth of Africa’s oil and gas industry. We should aim to have a reputation for responsible CO2 management.
“As Africans, our commitment to developing a robust alternative energy business should complement our efforts to meet evolving societal needs.
“The climate change challenge cannot be met by a singular nation or by the energy industry alone.
“A public-private partnership and a strong policy framework are needed,” Derefaka said.