Africa is rising, and that rise demands more power. But of 1.3 billion people globally who have no access to electricity,⁽²⁾ 550 million are people of Sub-Saharan countries; two out of three people in the region aren’t plugged in.⁽³⁾ From a supply standpoint, this energy poverty presents investors and policy-makers with wide latitudes for grid development throughout the continent. The question of how leaders transform the regional landscape through electric power will have far-ranging consequences (for everything). Electric power is economic, political, and social - except it’s even more fundamental: it’s pervasively existential.

Figure 1: Access to electricity in sub-Saharan Africa ⁽⁴⁾

Sub-Saharan Africa’s rise has been characterised by high growth rates, far outpacing infrastructural capacities. Global development has meant that the world has increasingly needed more of Africa’s bounty to meet demand. So in Africa’s rise, the region’s energy poverty in particular has been greeted as both an obstacle and as an opportunity for investment, and as an opportunity to light a new development path.

So in late July 2013, while on its tour of Africa and less than a week after United States (US) President Barack Obama’s ‘Climate Action Plan’ speech at Georgetown, the administration announced preliminary details of ‘Power Africa’, an initiative targeting Nigeria, Kenya, Ethiopia, Liberia, Tanzania, and Chad; and two others, Uganda and Mozambique, who are entering into oil and gas (O&G) development partnerships with the US Government.⁽⁵⁾

In illuminating his administration’s vision for their legacy on the continent, President Obama wants Power Africa to represent at least three interrelated things about America’s development initiatives abroad. Power Africa is about sustainable development, building local effectiveness and distinguishing America’s way of doing business (from China’s). This CAI discussion paper evaluates the Power Africa initiative.

Projecting American interests through sustainable development

‘Sustainability’ is something of a catch-all, albeit a rightfully fashionable, term. Power Africa wants to be a sustainable policy initiative. That means a few things.

First, and most obviously, Power Africa is about sustainable development in the sense that its partners, among Africa’s strongest growth markets, have dramatically outpaced their power infrastructures. Power Africa hosts cannot sustain development without attending to their power generation capacity shortfalls. United States Agency for International Development (USAID) Coordinator for Power Africa, Andrew Hershowitz, emphasised the initiative’s need for sustainability when he said that the brainchild for the initiative was a high-level trip to the continent early in 2012, during which US officials met with firms in countries with high rates of growth, but which were saddled with power grid deficiencies that required them to run “polluting and expensive diesel generators.”⁽⁶⁾

Second, Power Africa is also about sustaining the US and global economies. Incentives matter for that process. The US is increasingly emboldened in undertaking self-consciously pro-business policy, relying on the logic of mutual benefit, rather than relying on workaday humanitarianism. As aid effectiveness has come under fire, budgetary austerity, reigning supreme in outflow economies like the US, has informed a shrewder approach to development. Not only are US companies operating in contexts of energy poverty throughout Africa and being thwarted in their operations, but the US’s ability to sell Africans Apple iPods (as went Obama’s anecdote),⁽⁷⁾ means that the region needs electricity and the sort of development fostered by sustainable, reliable, and affordable access to it.

As a case in point, General Electric, among the world’s largest companies and a major private sector investor in the Private Africa initiative,⁽⁸⁾ manufactures power generation hardware as well as light bulbs and household appliances. Powering Africa will directly affect GE’s bottom line on both ends of electricity supply and demand, and in turn, the US economy.

But the third and most fundamental aspect of sustainability is ecological. Regional population growth, together with infrastructure build-outs and rising educational outcomes, can act as a magnet for attracting value-added export industries. Human capital is protected at fundamental levels by avoiding the environmental and public health traps inherent in the supposed ‘cheapest’ power proffered by coal-fired generation, as coal-fired power generation, in fact, comes at great cost. After all, the accountancy of coal’s complete schedule of costs, externalities like public health and environmental damages included, makes it 3 times costlier than its sale price by utility providers.⁽⁹⁾ Extrapolating the over half a trillion dollars per year in costs to the US ⁽¹⁰⁾ to the entire world, the tab approaches 10% of the annual world gross domestic product (GDP).

Emphasising the need for all countries to devise cleaner solutions to accommodate increasing energy demands, Obama somewhat controversially remarked that “... if you think about all the youth that everybody has mentioned here in Africa, if everybody is raising living standards to the point where everybody has got a car and everybody has got air conditioning, and everybody has got a big house, well, the planet will boil over - unless we find new ways of producing energy.”⁽¹¹⁾ Clean(er) energy provision will mean that target countries can grow at lower cost without handicapping themselves, their regions, or their planet with pollution that’ll undermine their progress. While Power Africa has good intentions in this regard, it has to prove its environmentalism.

The president’s critics were ready to rake Power Africa over the coals, disjointedly either doubting its environmentalism altogether, or lamenting its inferred aggressiveness. Specifically, in his Georgetown speech Obama called for “an end to public financing for new coal plants overseas unless they deploy carbon-capture technologies, or there’s no other viable way for the poorest countries to generate electricity.”⁽¹²⁾ This is a de facto mirror regulation aimed at bringing international policy on par with US domestic standards. The World Bank followed suit in mid-July 2013 with a similar policy to fund coal plants only under “rare circumstances” and with tight guidelines, at the West’s urging, having been rebuffed in previous votes led by Brazil and China.⁽¹³⁾ Now observers are waiting to learn the scale of the impact of the loophole intentionally torn by the allowance of coal funding for the poorest countries with no other viable alternatives.

And while climate change sceptics Tom Harris and Tim Ball’s assertion that “significant advances have already occurred” in controlling soot, and other “real pollutants ⁽¹⁴⁾ has some scientific currency, in practice, a vast majority of coal-fired power stations anywhere, especially the developing world, do not deploy these technologies, let alone carbon capture. For instance, South Africa, which burns coal for over 90% of its power, has no current desulphurisation capacity. Sulphur dioxide emissions from coal power generation kills thousands of people annually,⁽¹⁵⁾ if quietly. And, in any event, even the World Coal Association, the global industry association representing interests like Anglo American and Rio Tinto, warns that that “CCS [carbon-capture and sequestration] is not a replacement for taking actions which increase energy efficiency or maximising the use of renewables or other less carbon-intensive forms of energy.”⁽¹⁶⁾

On the other end of the spectrum, detractors rushed to point out the seeming absence of a comparable level of environmentalism in Power Africa as in Obama’s Climate Action Plan. For example, some pointed to the number of times ‘carbon pollution’ was cited in Obama’s Georgetown speech: a whopping 30 times,⁽¹⁷⁾ but that the phrase appeared neither in the Power Africa memo nor in the announcement speech that accompanied it. However, a closer reading reveals that there were, in fact, many allusions to the term.

The Obama administration’s stance on fossil fuels is more complicated when it comes to natural gas, which he has welcomed as a “bridge” to renewable energy sources.⁽¹⁸⁾ Commensurate with the American O&G boom, the Obama administration has shied away from dealing with oil and natural gas as heavy-handedly as coal. Indeed, in the midst of its own domestic O&G bonanza, the US is projecting these interests abroad in its foreign policy.

Power Africa’s seventh and eighth partner countries, Uganda and Mozambique, aren’t in the pipeline for electrification build-out assistance, but for O&G industry management assistance instead.⁽¹⁹⁾ Uganda’s year-on-year foreign direct investment (FDI) inflows between 2011 and 2012 showed a 92% increase from US$ 894 million to US$ 1.72 billion, led by extractive industry investment.⁽²⁰⁾ In 2010, the government had announced an O&G discovery of 2.5 billion barrels of commercially-recoverable deposits since striking oil in 2006, and increased their reserves estimates by a billion barrels in 2012. ⁽²¹⁾Mozambique, meanwhile, is home to the single largest natural gas field discovery in the last decade. US company, Anadarko Petroleum Corporation, among the giants of publically-traded O&G operators, maintains a 26.5% stake in Mozambique’s bounteous deepwater Rovuma field,⁽²²⁾ a hotbed of Asian state hydrocarbon interests on a gas feeding frenzy, at least partially motivated by a desire to inoculate their environmental records, blackened with coal.⁽²³⁾

However, a major new study in the journal Geophysical Research Letters has poked some large, but contingent, holes in natural gas as a ‘bridge’ fuel from fossil fuels to renewable source. The gas industry is already besieged over its method of releasing the tight gas through hydraulic fracturing, or fracking. Beyond fracking, natural gas operators’ environmental impact may be worsened in the production and exploration (P&E) phase because aerial samples from US gas wells showed fugitive methane leakage rates at 6-12%, alarmingly surpassing the approximate 2% threshold beyond which gas becomes comparable with coal in its impact on climate change.⁽²⁴⁾ Furthermore, a July 2013 report from the Center for American Progress says that US natural gas use as a bridge from coal to renewables has to peak at or before 2030 for climate stabilisation to occur.⁽²⁵⁾ Joseph Romm, a Senior Fellow at the centre has added that “if natural gas is a bridge fuel, it has got to be a very short bridge.”⁽²⁶⁾

O&G expansion also comes with security risks. Shell’s website says that 76% of the current oil leak from Shell Petroleum Development Company facilities in Nigeria can be attributed to “sabotage, oil theft, and illegal refining.”⁽²⁷⁾ It also details how “heavily armed and well organised groups have kidnapped staff, invaded oil and gas facilities, shut down operations and vandalised pipelines” taking “millions of dollars of potential revenue out of the hands of the government each month.”⁽²⁸⁾ It’s not clear how the Power Africa framework addresses security issues that affect the energy industries and local environments, not only in Nigeria, but in other locales which may also suffer security challenges.

And as the door to coal-powered electricity generation swings closed, even if incompletely, the World Bank has relaxed its stance on funding for hydropower projects which it had previously restricted along environmental and social lines.⁽²⁹⁾ While the US’s Power Africa initiative may bolster Ethiopia’s hydropower plan, the environmental and social impacts of damming Nile tributaries is not without its consequences, despite negligible carbon emissions. The World Bank’s revamped hydroelectricity policy, a compromise with its new policy to restrict carbon emissions and coal use, will upset traditional floodplain farming techniques. Additionally, Egypt has voiced concerns about how the dam will affect the river’s flow.

Meanwhile, Kenya tops the Power Africa list for its commitment to renewable, decentralised power generation, and is on its way to becoming a system run completely on hydro, solar, wind, and geothermal energy by 2025 if it can sustain interest.⁽³⁰⁾ Even though less than a third of its population has access to electricity, its commitment to develop its extensive renewable energy resources has had investors scrambling.⁽³¹⁾ Yet unknown, though, is the level of investor skittishness engendered by the al-Shabaab attacks on Westgate Plaza in Nairobi in September 2013. However, security threats such as those posed by al-Shabaab in the region are likely to have significant effects on investor confidence and further expansion of Kenya’s green energy projects. As Kenya is affected in its energy build-outs, neighbouring Somalia is suffering the sister crises of deforestation, desertification, drought, floods and famine, reinforcing not just misery, but also the al-Shabaab ranks.

Sub-Saharan countries thus cannot abide the ravages of runaway climate change. Sustainability isn’t a tidy or singular issue, but deserves the inputs that increase the effectiveness of the initiative as a whole. Providing clean energy will pay more positive dividends than its designers have likely even imagined. Doing it wrong, likewise, puts a lot more at stake than what is immediately evident.

Building transactional proficiency in real-time

Even amid criticisms that Obama’s Africa trip would come with a US$ 60-100 million price tag to American taxpayers,⁽³²⁾ the primary money matter in the days following the trip seemed to be that Power Africa would only infuse a paltry US$ 7 billion of official and quasi-official money into a hole US$ 300 billion or more deep, the price tag the International Energy Agency calculated for universal access throughout Africa.⁽³³⁾

At the time of the announcement, Obama had conjured up another US$ 9 billion from the private sector, but a pervasive feeling was that America’s first black president’s continental legacy would be left wanting. After all, how could this initiative double access to power as it advertised, with just a 5% down payment? But by mid-July, that number had crossed the US$ 14 billion threshold in private investment commitments, the initiative gaining steam and its partners garnering good PR exposure.⁽³⁴⁾ In addition, it’s becoming harder to resist Sub-Saharan Africa’s growth rates, the Power Africa partner countries themselves averaging 7.9% in the World Bank’s latest GDP growth data.⁽³⁵⁾ Indeed, Andrew Mayock, Deputy Vice President of Compact Operations at the Millennium Challenge Corporation said that investments could rise to “US$ 90 billion on infrastructure and US$ 30 billion in energy infrastructure” per year in the future.⁽³⁶⁾

The US’s support extends beyond financial input, however. The World Bank and International Finance Corporation’s Doing Business 2013 (DB2013) report lists Sub-Saharan countries as 6 out of the top 10 hardest places in the world for businesses to get electricity, but also as the leading region for the number of business-friendly electrical reforms since 2011.⁽³⁷⁾ To reconcile the expanse between investors’ appetites for the opportunity suggested by African energy poverty with the barriers to doing business, the US government is deploying a veritable barrage of resources to usher projects through the successive transactions of energy build-outs and power delivery; export subsidies and risk management products chief among them.

Power Africa will be the first US Presidential initiative that will be administered from outside the US.⁽³⁸⁾ And to boot, a full dozen US federal agencies will bring to bear the weight of the American bureaucracy, with interagency coordination to shore-up institutional deficiencies in real-time, in the context of and simultaneous to energy sector development across the host countries.⁽³⁹⁾

Additionally, the initiative will fund the employment of domestic personnel in partnering governments, for example, through the support or establishment of “delivery units” in Tanzania, Nigeria, and Ghana’s government ministries.⁽⁴⁰⁾ This move will implicitly bypass the real and perceived barriers to domestic and international businesses operations throughout the continent, such as graft, or the perceptions of it, which seem to be substantiated by the lengths of time successive processes take to be granted approval, and which are reflected in poor scores across Doing Business and other metrics. Needless to say, the US will have to mind its manners to avoid the sorts of labels it is sometimes tempted to stick on China’s behaviour on the continent.

Powering Africa the American way

China’s investments in Africa have outpaced the US’s since 2009. Power Africa, in bolstering a strategic industry, is designed to help close that gap as well as to distinguish American from Chinese global leadership. Sustainability is the front on which the US hopes to assume a high-ground.

A March 2013 Brookings Institution report entitled Top Five Reasons Why Africa Should Be a Priority for the United States, China appears 55 times in the 16-page document, and energy is identified, of course, a strategic area in which the US needs to engage further.⁽⁴¹⁾ It argues that “China enjoys unique financial and political advantages in promoting Africa’s growth but neglects the governance, fairness and sustainability of such development. Therefore, the short-term benefit China provides to Africa is intrinsically flawed and has long-term negative consequences.”⁽⁴²⁾ The report goes on to call China-in-Africa policies “mercantilist” and “myopic.”⁽⁴³⁾

In scale, China’s infrastructure construction projects, including electrification work in Africa totalled a staggering US$ 40.83 billion in 2012 according to a key State Council document.⁽⁴⁴⁾ The same report says that China has “carried out 100 clean energy projects in African countries since November 2009.⁽⁴⁵⁾ Still, in September 2013, it was announced that the ironically-named China Africa Sunlight company will invest US$ 2.1 billion for a coal mining project which includes a 2,100 megawatt (MW) coal-fired power plant in Zimbabwe.⁽⁴⁶⁾ That sort of news isn’t lost on the US who wants to be seen as the better, if smaller, development partner, neither enabling the regime survival of those it calls dictators, nor supplying dirty energy.

On the latter issue, a US lawsuit brought and won by Friends of the Earth and Greenpeace in 2002 against the US Export-Import Bank (Ex-Im) and the Overseas Private Investment Corporation (OPIC) now requires the government to consider the environmental impacts of overseas financing.⁽⁴⁷⁾ The NGOs alleged that those agencies had produced the equivalent of 7% of the world’s CO2 emissions at the 2003 level through US$ 32-billion in projects between 1990 and 2003.⁽⁴⁸⁾ So Power Africa’s executors will provide cleaner energy as a matter of US law as well as for the good of the US economy as it seeks to substantiate a greener orientation. China has not yet constrained itself along these lines, and its commitment to political non-interference will mean that it develops more kinds of power in places where the US has restricted action.

So where the US may be relying on sustainability to win the day with Power Africa, China’s cash and expedience present a competing model. Even though both the US and China are playing a longer game, not only for Africa’s markets but for global influence, Africa is nevertheless set to benefit as the depth of the region’s energy poverty presents both actors with opportunities to light paths to development throughout the continent that drive their respective economies forward.

Concluding remarks

The electrification of the sub-Sahara has to be an enterprise that recognises that climate change and environmental damage are not ominous portents for the region somewhere in the offing, but a reality already affecting people, places, and development.

Alongside its direct and indirect benefits to investment attractiveness, poverty reduction and the improvement of living standards, security, institutional effectiveness, and more, Power Africa’s promise to invest in the region’s ability to leapfrog the dirtiest energy provision promotes a more sustainable development path for its partner countries. At the same time, it allows the US to develop and sell better products globally as it seeks to build a green(er) economy. It will also hopefully usher forth permanent and necessary revisions to the US’s historical approach and attitude toward development policy, giving due deference to African countries’ sovereign dignity while catalysing opportunities for people now in the dark.

To maximise its outcomes for sustainable development, Power Africa has to ensure that sustainability isn’t just the watchword of its private partners’ corporate social responsibility programmes. It has to become a permanent ethos, especially given the magnitude of the region’s obstacles to development and the spectre of the ravages of climate change and environmental decline in general. Power Africa has promised to be transformative. It can do that best by maximising the role of renewable energy in on-grid, off-grid, and micro-grid build-outs and by setting new standards of environmental stewardship in oil and gas management. Energy poverty in the sub-Sahara presents those opportunities, and a chance to become a substantial and constructive partner in Africa’s rise. Energy and environment policy and Africa’s rise will both figure heavily in the overarching history of this century. Surely, cooperation and competition between the US and China will also. But in electrifying Africa, anything less than luminary vision and brilliant execution leaves to everyone a dimmer future.

Written by Christopher Walker ⁽¹⁾

NOTES:

(1) Christopher Walker is a Key Consultant with CAI and a geopolitical researcher with a dual interest in Asia and Africa. Contact Christopher through Consultancy Africa Intelligence’s Africa Watch unit ( Africa.watch@consultancyafrica.com). Edited by Nicky Berg.
(2) ‘Redrawing the energy climate map’, International Energy Agency, 10 June 2013, http://www.iea.org.
(3) ‘Fact sheet: Power Africa’, The White House, 30 June 2013, http://www.whitehouse.gov.
(4) Graphic compiled by CAI with data from the Frederick S. Pardee Center for International Futures, 4 October 2012.
(5) ‘Fact sheet: Power Africa’, The White House, 30 June 2013, http://www.whitehouse.gov.
(6) ‘The President’s Africa trip and the Power Africa initiative’, The Center for Strategic and International Studies, 12 July 2013, http://csis.org.
(7) Pflanz, M., ‘Obama pledges to help double electricity in sub-Saharan Africa’, The Christian Science Monitor, 30 June 2013, http://www.csmonitor.com.
(8) ‘Fact sheet: Power Africa’, The White House, 30 June 2013, http://www.whitehouse.gov.
(9) Epstein, P., et al., 2011. Full cost accounting for the life cycle of coal. Annals of the New York Academy of Sciences, 1291, pp. 73-98.
(10) Ibid.
(11) Bishop, T., ‘Erick Erickson falsely claims that Obama told Africans they “must remain poor… or world would boil over”’, Media Matters for America, 2 July 2013, http://mediamatters.org.
(12) ‘Remarks by the president on climate change’, The White House, 25 June 2013, http://www.whitehouse.gov.
(13) Yakhananov, A. and Volcovici, V., ‘World Bank to limit financing of coal-fired plants’, Reuters, 16 July 2013, http://www.reuters.com.
(14) Ibid.
(15) Cooper, M., et al., ‘The health effects of coal electricity generation in India’, Resources for the Future, June 2012, http://www.hks.harvard.edu.
(16) ‘Carbon capture & storage technologies’, World Coal Association, 2013, http://www.worldcoal.org.
(17) Bryce, R., ‘Green dreams in America, Coal in Africa’, National Review Online, 8 July 2013, http://www.nationalreview.com.
(18) Wile, R., ‘President Obama gave a big smooch to fracking in his new climate proposal’, Business Insider, 25 June 2013, http://www.businessinsider.com.
(19) ‘Fact sheet: Power Africa’, The White House, 30 June 2013, http://www.whitehouse.gov.
(20) ‘World Investment Report 2013’, UN Conference on Trade and Development, 2013, http://unctad.org.
(21) ‘Uganda: Oil, gas discoveries boost FDIs to Dar, Kampala’, Tanzania Daily News, 16 July 2013, http://allafrica.com.
(22) Chatterjee, S. and Erman, M., ‘India’s ONGC to buy US$2.64-billion stake in Anadarko Mozambique gas block’, Reuters, 26 August 2013, http://www.reuters.com.
(23) Walker, C., ‘Scrambling for Southern Africa’s natural gas: Boon or bubble?’ Consultancy Africa Intelligence, 2 July 2013, http://www.consultancyafrica.com.
(24) Methane is the most potent greenhouse gas at over 20 times the 100-year impact on climate change, but has only a 12-year lifespan in the atmosphere compared to CO2 which can survive hundreds of thousands of years in the air. Karion, A. et al., 2013. Methane emissions estimate from airborne measurements over a western United States natural gas field. Geophysical Research Letters, 40(16), pp. 4393-4397.
(25) Banks, D. and Taraska, G., ‘US natural gas use must peak by 2030’, Center for American Progress, 24 July 2013, http://www.americanprogress.org.
(26) Romm, J., ‘Study of best fracked wells finds low methane emissions, but skips super-emitters’, ClimateProgress, 19 September 2013, http://thinkprogress.org.
(27) Shell company website, http://www.shell.com.
(28) Shell company website, http://www.shell.com.
(29) Ibid.
(30) Sanjayan, M., ‘To Power Africa, look to Kenya’, The Huffington Post, 29 July 2013, http://www.huffingtonpost.com.
(31) Rubadiri, V., ‘Kenya’s renewable energy sector attracts foreign interest’, Capital FM, 3 October 2012, http://www.capitalfm.co.ke.
(32) Leonnig, C. and Nakamura, D., ‘Document: Major resources needed for Obama Africa trip’, The Washington Post, 13 June 2013, http://articles.washingtonpost.com.
(33) Basu, T., ‘Obama Africa energy project seen as small first step’, Medill News Service via USA Today, 9 August 2013, http://www.usatoday.com.
(34) ‘The President’s Africa trip and the Power Africa initiative’, The Center for Strategic and International Studies, 12 July 2013, http://csis.org.
(35) ‘The World Bank Databank’, The World Bank, 2013, http://data.worldbank.org.
(36) Basu, T., ‘Obama Africa energy project seen as small first step’, Medill News Service via USA Today, 9 August 2013, http://www.usatoday.com.
(37) ‘Doing Business 2013’, The World Bank and IFC, 2013, http://www.doingbusiness.org.
(38) Ibid.
(39) ‘The President’s Africa trip and the Power Africa initiative’, The Center for Strategic and International Studies, 12 July 2013, http://csis.org.
(40) ‘Fact sheet: Power Africa’, The White House, 30 June 2013, http://www.whitehouse.gov.
(41) Banks, J., et al., ‘Top five reasons why Africa should be a priority for the United States’, Africa Growth Initiative at Brookings, March 2013, http://www.brookings.edu.
(42) Ibid.
(43) Ibid.
(44) ‘China-Africa economic and trade cooperation (2013)’, Information Office of the State Council, August 2013, http://news.xinhuanet.com.
(45) Ibid. It is important to note, however, that this kind of data has been called into question. See ‘Sub-Saharan Africa: Trends in US and Chinese economic engagement’, US Government Accountability Office, February 2013, http://www.gao.gov.
(46) Marawanyika, G., ‘China Africa sunlight to invest US$ 2.1 billion in Zimbabwe power’, Bloomberg, 3 September 2013, http://www.bloomberg.com.
(47) Herbertson, K., ‘Counting the carbon in overseas investments’, World Resources Institute, 13 February 2009, http://www.wri.org.
(48) Ibid.