• Friday, May 24, 2024
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Seven ways EU’s plan to cut emissions will impact Africa

Developing countries to drive growth in energy demand for 30 years

The European Commission on July 14, adopted a set of intermediate proposals to cut greenhouse gas emissions by 55 percent from 1990 levels by 2030 as part of a broader European Green Deal (EGD) and will impact its 65billion euros trade with Africa.

According to a report by the Africa Policy Research Institute (APRI), in collaboration with the Africa Programme at the Carnegie Endowment for International Peace, this development will impact African countries in seven main areas: agriculture, biodiversity, energy, critical raw materials (CRMs), circular economy, new technologies, and finance.

Most prominently, a decline in European demand for fossil fuels alongside rising demand for cobalt, nickel, and other critical minerals for the energy transition will greatly affect global markets and, by implication, the economies of oil-dependent and mineral-rich African countries.

The EGD offers the promise of overhauling EU-Africa relations from the donor-recipient orientation of the past toward a mutually beneficial partnership – if the right steps are taken to ensure genuine partnership building and representation of African priorities.

“In order to take full advantage of the opportunities presented by the EGD, and mitigate potential risks, African countries must clearly articulate and assert their own climate transition agendas; and, key issues that demand attention include increased transparency surrounding climate finance disbursements, creating a better understanding of the impact of the Carbon Border Adjustment Mechanism on exports from Africa, and updated mapping of Critical Raw Material reserves,” the report said.

The EGD is a set of long-term policy initiatives that define the European Union’s (EU) climate strategy to reach net zero emissions by 2050 and aim to make Europe the first mover in international climate policy. Toward this goal, the EGD provides a road map for a socioecological transition to a low-carbon future and the building blocks for a green economic growth strategy.

Seven Implications of the EGD for Africa

The EGD will demand new agricultural standards as the EU plans to become a leader in setting sustainable global food standards. To access the EU market, African countries must comply with these standards and this could constitute additional non-tariff barriers for African agriculture exports to the EU.

The EU intends to phase out oil by 2050 as part of a shift to clean energy and this could lead to a decrease in oil demand and declining prices for African suppliers, particularly after 2030. The energy transition is already leading to a decline in upstream investments with oil majors like Shell planning divestment.

The report said that Europe’s plans to use decarbonized gas as a transition fuel would present some short-term opportunities for African gas producers. With an increasing European demand for green hydrogen, partnerships are being established with African countries through the European Clean Hydrogen Alliance to secure 40 gigawatts of hydrogen imports from non-EU countries by 2030.

The phaseout of oil will lead to the rising demand for critical raw materials required for clean energy and technologies. The EU sources some of these raw materials like barite, bauxite, and cobalt from Africa, creating opportunities for Africa to replace Asian supply chains.

Read also: At Africa-France summit, youths not govts tipped to lead continent’s growth

“There are, however, risks of reinforcing technology dependencies for Africa, accelerating environmental devastation, compounding climate disruptions, and importing Europe’s carbon emissions,” the report said.

The EU biodiversity strategy to protect wildlife and ecosystems, could provide local populations with economic opportunities in green sectors, and strengthen the links between biodiversity protection and Indigenous communities.

The report said that to successfully design and implement NaturAfrica, Europe must take into account the human rights abuses and land dispossession that often accompany conservation initiatives.

The EGD’s circular economy action plan which aims to reduce material throughput by reusing and recycling materials could present new economic opportunities, as relocalizing part of the circular economy value chain to African producers could strengthen manufacturing, allowing African businesses to engage in higher-value activities.

The EGD aims to scale commercial applications of breakthrough green technology innovations and create corresponding markets to secure an advantage over competitors in the United States and China. The report said African countries will struggle to adopt these emerging green technologies, some of which are still very costly.

But it said that competition between producers, especially the EU and China, could lead to early price decreases and could enable African countries to proactively negotiate skills, knowledge, and technology transfer as well as the localization of jobs around these new technologies.

Around 35 percent of Horizon Europe, a 95.5-billion-euro ($113.5 billion) research and innovation funding program from 2021 to 2027, is dedicated to climate research and this could be collaboration opportunities between stakeholders in industry and research communities in Europe and Africa.

To achieve its 2030 emissions targets, the European Commission estimates that annual investments of 260 billion euros ($309.4 billion) will be needed. In total, the EU aims to mobilize at least 1 trillion euros in sustainable investments over a decade through international carbon markets, the revision of the European emissions trading system, and a carbon border adjustment mechanism (CBAM). As the CBAM could impose costs on exporters from low-income countries, including those in Africa, such unintended consequences should be mitigated in consultation with those to be affected, the report said.

While the EGD does not outline a spending plan, it is worth noting that the amount of climate funds from the European Commission and the EU’s lending arm, the European Investment Bank (EIB), to developing countries has not increased from an average of around 5.7 billion euros ($6.7 billion) since 2018. It has also mostly non-concessional loans and the focus has been on wealthier countries.

Policy recommendations

The EGD is mainly an internal policy instrument, yet its potential global spillovers will reach African countries in view of the strong economic and historical ties between the continents. Such effects will be felt in the market for agriculture, fossil fuels, and other natural resources. The impacts will also occur through the channels of Europe’s financial muscle, technologies, and standards.

The report said the transition envisioned in the EGD offers the promise of overhauling EU-Africa relations from the donor-recipient orientation of the past toward a mutually beneficial partnership in the twenty-first century if the right steps are taken now.

Some of the recommended steps include forging genuine partnerships in sourcing critical raw materials and energy supplies from Africa by building industrial capacity, localizing value chains, and sharing technologies.

Clean energy hardware industries, such as battery and solar photovoltaic manufacturing plants, can be set up in mineral-rich countries, like the DRC, as the EU shifts from Chinese supply chains, the report said.

It also recommends aligning areas of the EGD that directly affect Africa with the continent’s own stated development priorities. These African priorities are outlined in continent-wide, sub-regional, or domestic policy documents. Overall, Europe should not use its financial muscle and technological standards to impose its foreign policy and geopolitical interests at the expense of Africa’s own development aspirations, it said.

It also called on African governments to match the EU’s stated principles around sustainability with actual volumes of climate financing to Africa.

“This climate financing should be separated from official development assistance and provided either as grants or at concessional rates to avoid saddling poor countries with unsustainable debt. The financing should also be rebalanced from its current heavy focus on climate mitigation toward climate adaptation and resilience,” the report said.

To tap into the opportunities presented by the EGD and mitigate potential risks, African countries must clearly articulate and assert their own climate transition agendas. They should outline their own climate change priorities, considering their resource endowments, historical legacies, development strategies, and geopolitical interests, while also presenting clear demands of the EU around specific aspects of the EGD, it stated.

Some elements of these transition agendas can include updating geological surveys of their endowments of fossil fuels, CRMs, and renewable resources to help attract foreign direct investment (FDI) and strengthening market-creating instruments by updating local content laws, policies, and regulations to reflect the low-carbon transition and to cover the specificities of CRMs.

It also involves working closely with local private sectors to leverage new financial instruments emerging in the context of the EGD toward job creation, skills upgrading, technology adoption, and investments in research and development to power local innovation.

It also involves developing their own overarching climate action strategy by finalizing the African Union’s climate action plan; updating sector-specific strategies in areas such as mining, biodiversity, the circular economy, and agriculture; and developing common positions on managing the energy transition, especially the various aspects of the oncoming fossil-fuel obsolescence in Europe.

But it is not just policymakers, the report provides a role for research communities. There are knowledge gaps where further study is needed: on generating better data and conducting in-depth forecasting, conceptualizing a just transition for Africa attuned to the continent’s realities, examining how to avoid replicating the technology dominance and dependency of the oil and gas era, and advocating for clarity on the allocation of EU climate financing across industries, sectors, and countries.