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Pump or dump? With oil in decline, Africa ponders its energy future

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As COVID-19 bashes economies and demand for oil plummets, is this a moment to think green – or pump faster?

By Laurie Goering

As the COVID-19 pandemic bashes economies and demand for oil, many African nations dependent on exporting fossil fuels are “hemorrhaging” cash, African energy experts warned this week.

The crisis – which comes as more investors shun carbon-heavy businesses – is a taste of what may happen if Africa’s rich oil and gas reserves become “stranded assets” that cannot be pumped as the world shifts to clean energy to meet climate goals.

Fatima Denton, director of the United Nations University Institute for Natural Resources in Africa, said such a situation had always been “talked about as a hypothetical scenario”.

“But it’s fair to say it’s what’s happening now,” she said.

Hard-hit nations could respond to the threat in two ways, African experts said: either by switching up a gear on renewable power in a bid to meet development and climate change goals, or by pumping fossil fuels faster while they still can.

“It’s time to optimise our resources,” Senyo Hosi, CEO of the Ghana Chamber of Bulk Oil Distributors, told an online event this week. “If we don’t utilise (fossil fuels) in time, we’ll make fools of ourselves and miss a major opportunity.”

Cutting back on fossil fuel use to curb global warming is the job of rich countries that produce the vast majority of global emissions – not African nations which are responsible for only a tiny share, noted James Murombedzi, coordinator of the African Climate Policy Centre.

But Denton said the continent had the potential to leapfrog dirty technology in getting electric power to the 565 million Africans who still live without it today.

“Africa could become the custodian of a new sustainable development world order” if it can make that energy transition in a clean way, she added.

Doing so could also be an opportunity to root out corruption in oil and gas nations that has meant Africa’s fossil fuel resources “have never benefited the great majority of our people”, she said.

Story:Thomson Reuters Foundation

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