China has a unique opportunity to drive an energy revolution in Africa, but first it must reverse nearly two decades of neglect regarding green energy investments on the continent, according to a study by Boston University.
Beijing has become the continent’s largest bilateral trading partner since the beginning of the century and has financed large-scale infrastructure projects worth billions of dollars.
Three years ago, Chinese President Xi Jinping stated that the country would not build new coal-fired power projects abroad, pledging to tackle climate change by supporting the development of green, low-carbon energies.
Although Africa’s green energy potential is one of the highest in the world, Chinese loans and investments have so far provided relatively little support for the continent’s energy transition, according to a report by Boston University’s Global Development Policy Centre and the African Economic Research Consortium.
Loans for renewable energies, such as solar and wind power, granted by China’s two main development finance institutions made up only 2 per cent of their 52 billion dollars of loans in the energy sector between 2000 and 2022, while more than 50 per cent were allocated to fossil fuels.
Given the current economic challenges and future opportunities in the energy field, China can contribute to Africa’s energy access and transition through trade, financing and FDI (foreign direct investment), says the report.
Chinese development finance institutions have focused on investment in the extraction and export of commodities to China and on electrification projects.
Chinese loans have targeted many of the same sectors that produce the oil and minerals that are shipped to China.
At least eight hydropower projects financed by the China Export-Import Bank (CHEXIM), which account for 26 per cent of all hydropower loans, are aimed at supporting the extraction of various metals.
Although this route has led to export revenues for African economies, African countries are still not receiving the full benefits of renewable energy technologies, the report states.
By 2022, fossil fuels would account for around 75 per cent of total electricity production in Africa and around 90 per cent of energy consumption, according to the report.
O.Económico
