The Energy Transition, which refers to the switching away or transformation of the global energy sector from fossil-fuel dominated energy supply mix to zero-carbon emission sources, has fundamental implications for emerging petroleum economies. For example, oil’s share of the global energy mix is forecast to drop from the current 90 per cent to about 50 per cent if the two degrees centigrade global warming target is to be attained by 2050, according to some estimates.
The Ghana National Petroleum Corporation, GNPC, Petroleum Commerce Chair, University of Cape Coast, UCC, Oil and Gas Studies, Ghana, Omowumi Iledare, a professor of Petroleum Economics, so also Professor Emeritus in Petroleum Economics, LSU Center for Energy Studies, USA, stated the above during his remarks at the Inaugural Academic Symposium organised recently by the GNPC Centre of Excellence in Petroleum Commerce at the UCC Institute for Oil and Gas Studies , Ghana.
The theme of the Symposium is “Global Transition to Renewable Energy: Africa Must Walk the Energy Transition Path Tactically”.
“While the desire, determination and diligence to switch is not conjectural, the key challenges of the how to transit and the rate of transition without disrupting global economies and the unintended consequences, remain debatable.
Energy transition pace will present challenges as well as opportunities (mixed implications) in Africa”, he said.
“More so, in Africa’s emerging petroleum economies, where petroleum resources are in abundance and the dependability of such economies on petroleum for economic growth and development is significantly, glaring. On the other hand, natural gas, christened as the primary transition fuel, remains in abundance in Africa South of Sahara, ASS”, he added.
He pointed out that since 2010, there has been a wave of significant oil and gas discoveries in several African countries, including Ghana, which promises to address critical energy security and energy equity in the region. “Revenues from these natural resource exports are needed to close the estimated US$130 to US$170 billion a year continent-wide infrastructure gap, among others”.
“However, how would nations in Africa fund national economic development if they were to give up on exploration and exploitation of the petroleum resources due to climate concerns? He asked.
“Interestingly, these emerging petroleum economies in Africa are marginal contributors to global CO2 emissions with carbon emissions cumulative share estimated at less than 3% by 2040, according to IEA 2019”, he noted.
“Thus, the speed at which the global economies “walk” the ongoing energy transition “talk” is overly critical and it has mixed implications for petroleum-dependent economies in Africa South of Sahara in particular”, maintained Iledare.
Speaking further, he said, “This is more so because these economies with its endowed petroleum resources and paradoxically, significantly low energy access and high energy costs, would experience reduction in productivity and international trade competitiveness. Meanwhile, oil and gas production and export remain the economic linchpin, with several countries latching on the oil and gas industry as a fundamental component of their industrial strategy”.
“Ironically, however, Africa emits the least global Co2 emissions and yet stands to bear the biggest negative externalities of climate change. Thus, this generates a new, questions on what emerging economies with a lot of petroleum resources in Africa, must do to secure the needed investment to expand energy access and security and how to further utilize the petrodollars to mitigate the future negative externalities of climate change. The fundamental drivers influencing the shift from fossil-based to zero-carbon global energy market into to two, endogenous and exogeneous determinants”, stated the Petroleum Economics.
According, to Dr. Theophilus Acheampong of University of Aberdeen who is also an Adjunct Faculty at the GNPC Center of Excellence in Petroleum Commerce at UCC Institute for Oil and Gas Studies in Ghana, “the exogenous drivers include but not limited to access to external finance, United Nations Sustainable Development Goals, UN SDGs, compliance increasingly prominence, technological advances in energy supply and changing investor three priorities. The endogenous drivers, on the other hand, include significant fossil fuel resources and renewable potential, revenue and employment challenges, energy access and energy security”.
“There is thus, a clear dichotomy between the external forces, vis-à-vis, the internal forces in petroleum dependent economies. This begs the question, of what strategic options, to take keeping in view the imperative of International Energy Agency, IEA, that defunding petroleum assets is the only road to attaining zero carbon emissions in 2050. The following strategic options seem quite imperative”, he stressed.