During the sidelines of this year’s edition of the African Refiners & Distributors Association (ARDA) conference, the organization’s Executive Secretary, Anibor Kragha spoke with the African Energy Chamber (AEC) about the need to balance the energy transition and energy security in Africa.
During your presentation earlier this week, you highlighted the need for Africa to balance the energy transition with energy security concerns. What role does the downstream sector play in achieving this?
The Russia-Ukraine war has caused shocks to our supply chain because we had not previously maximized investments in refining, storage and distribution.
As we progress with the energy transition, we will keep energy security front and center. The energy transition and energy security are complementary, but for Africa, energy security is the short-term focus, while the energy transition is longer term.
The Africa Carbon Markets Initiative, which is supposed to bring the voluntary carbon market about $600 billion in revenue by 2030, will increase the role of the downstream sector in the energy transition and in emission reductions. ARDA and the Ivory Coast’s Société Ivoirienne de Raffinage [operator of SIR oil refinery] have identified projects to reduce the refinery’s overall emissions by 26%. Now, imagine if we take that template and scale it across the continent.
How can African governments retool policies in a way that prioritizes decarbonization and clean fuels, while still accounting for rising oil and gas production?
It’s not just governments that need to play a role. We need to have a sustainable financing mechanism that supports projects across the continent’s entire oil and gas value chain. We, as ARDA, are helping our members raise financing by supporting them to develop bankable projects and participate in financing options that make sense. The African Union is helping ARDA members upgrade refineries to cleaner fuels and make strategic investments in storage and pipelines, while our work with OPEC is aimed at ensuring a coordinated effort across the upstream, downstream and midstream.
We also want to partner with industry to develop an African Downstream Transition Plan, which will enable us to determine the areas in need of investment on a decade-by-decade basis. Government policies need to create enabling environments that will enable foreign and private sector investors to invest and energy companies to thrive. We need to see tax breaks, government incentives and national strategies on liquefied petroleum gas (LPG) to accelerate clean cooking.
Where does the private sector come in?
Energy demand in Africa will continue to grow through 2050. The role of the private sector is to say how we can provide a roadmap for those investments and how we can get the right type of financial institutions involved in the discussion. Africa has more than 56 development finance institutions, which need to unite in supporting the continent’s oil and gas growth agenda.
Which resources have the most potential to advance Africa’s energy transition? What role will carbon credits play in this scenario?
What we need is a robust energy mix for different types of energy to thrive as required for Africa. There is going to be a huge space for gas and diesel, a place for solar and other renewables in meeting the demand. Fossil fuels will remain significant, which is why we need to make them cleaner now. Carbon credits will enhance Africa’s role in advancing global climate action, while meeting its energy needs. We will push for the creation of an African carbon credit trading platform to accelerate the creation of quality credits that are sought globally.
Large-scale mid- and downstream projects like the East African Crude Oil Pipeline (EACOP) have been met with criticism from climate activists. How do you respond to the international community regarding the development of these infrastructure projects?
For Africa to achieve security, we need to have infrastructure that will allow us to monetize energy resources and address reliability, access and affordability challenges. Africa has only contributed less than three percent of global emissions, and even if we monetize all of our natural gas reserves through the deployment of projects such as EACOP and the Trans-Saharan Gas Pipeline, our carbon footprint will not go above 3.5% of global emissions. We will continue to address our energy security challenges to be able to mitigate disruptions to our economies.
What discussions do you hope will take place at the 2023 edition of African Energy Week (AEW) in Cape Town this October?
AEW allows downstream players to collaborate with stakeholders across the continent’s entire oil and gas ecosystem. I would like to see continued collaboration that will enable Africa to maximize its oil and gas reserves, refinery and distribution capacity. Financing is one of the continent’s biggest challenges, and gatherings such as AEW are crucial in innovating African financing to boost oil and gas projects.