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SPEECH/10/430

Andris Piebalgs

European Commissioner for Development

Renewable Energy in Africa – From Vast Potential to a Reliable Energy Source

Africa-EU Energy Partnership's Ministerial High Level Meeting

Vienna 14 September 2010

Honourable Chair, African and European ministers and Excellencies, Distinguished Participants,

The mission to Africa in 2008

Two years ago, when I was Commissioner for Energy, I visited a number of African States together with my colleague Commissioner Louis Michel. That was the first mission of the European Commission under the Africa-EU Energy Partnership. As we met with Commissioner Ibrahim, the discussion centred on a number of issues, which are equally valid today, not least the strong link between energy access, poverty reduction and economic growth.

Commissioner Ibrahim rightly pointed to the need for the partnership to involve all African stakeholders, to develop a master plan for energy and to focus on renewable energy sources.

Two years after this first mission, we have made strong progress in terms of an enhanced cooperation between Africa and Europe under the Africa-EU Energy Partnership. We now have a comprehensive road map for the partnership, with a set of targets.

And as one of the key events today, we will launch a cooperation programme on renewable energy.

However, during my visit to Africa, I saw myself the huge challenges the continent faces in the energy field. Over the coming decades the developing world and Africa in particular face enormous energy-related challenges. The manner in which these are addressed will not only have huge consequences for the well-being of citizens in Africa, but for the whole world. And these challenges are at the same time similar and yet different to the challenges that the European Union is facing.

The facts today

I have often said that energy is the lifeblood of a modern society. We need a reliable source of electricity to fuel development. However, today 1.6 billion people worldwide have no access to electricity, most of them in sub-Saharan Africa and Southern Asia and that, with business as usual, the number of people without access to electricity in 2030 could still be at 1.4 billion, with two thirds of these in sub-Saharan Africa.

The lack of a reliable source of power is a huge break on the potential of the world's least developed countries, and Sub-Saharan Africa in particular, to grow economically and to alleviate poverty. A World Bank Study indicates that countries with underperforming energy systems looses up to 1-2% of growth potential. But not only that. Schools and hospitals can not function without reliable sources of energy. Our Millinium Development Goals are closely intertwined with energy acces.

But not only are our chances of attaining the Millium Development Goals small without energy access, so are our changes of attaining our climate change goals.

At present, an average African citizen emits only a tiny proportion of average EU emissions, let alone the average in the US. Africans are today the lowest emitters of CO2 on the planet.

It is clear that the need to address climate change cannot be a reason to limit the economic aspirations of the world's poorest citizens. However, without action to limit emissions in the developing world, irrespective of cuts in the developed world, climate change will almost certainly become a fact. These changes will result in a disproportionately high negative effect on Africa.

But the negative changes will affect all of us, so we need to work together in partnership. We either swim together, or sink separately.

But if the challenges are great, so are the opportunities.

Africa’s untapped resources

Africa has enormous untapped renewable energy resources, ranging from hydro, to solar, wind, geothermal and biomass, which could be utilised to produce a large part of the electricity that Africa needs.

Furthermore, as many areas are not yet covered by transmission and distribution infrastructure, the possibility thus exists in sparsely populated rural areas to 'skip' a technological generation and, by using locally based renewable production, avoid the significant costs that comes with electricity distribution infrastructure. This in turn improves very significantly the competitiveness of renewable generated electricity compared to more traditional forms, such as coal and gas based generation. Clearly for significant population centres, grid-based electricity from large scale electricity generating plants will also need to be pursued, possibly also in a regional context.

This will require regional cooperation, clear regional agreements, and regulatory stability building upon the ongoing development of the regional power pools in Central, East, Southern and Western Africa.

For those countries in Africa which are fortunate to have hydrocarbon resources, opportunities exist in the capture of associated gas, gas which is currently flared to no use. This could be an additional source of revenue to be used for the good of the country.

Coordinated action and EU contribution

However, in order to create a real step change in the way Africa generates and supplies energy to its citizens, determined and coordinated action is needed. Without this it is unlikely that these sustainable sources will be exploited, or at the very least it will happen far too slowly. Too slowly in terms of avoiding new fossil based generation that, once built, will emit CO2 and burden the economy of African nations with energy import bills for generations to come.

Thus, we need to determine with our partner countries, how the EU can contribute to catalysing this change.

We need to build on the partnership that we have, but to come to a real step change in our relations. We will need new Energy Partnership Agreements.

Financing

Financing will obviously be an important aspect of these partnerships. The EU has already committed significant funds for the developing world for climate change actions as part of the Copenhagen Accord.

Mobilising these funds to catalyse a renewable energy revolution in Africa could have substantial benefits in terms of climate change mitigation and development policy.

I am currently looking on how to use innovative financing for these investments, at the same time it is important to keep in mind that investments in renewable energy produces an income stream, even if in the beginning it would not be sufficient to cover all initial capital and operational costs. This is important; development funding alone will never be able to finance the investments necessary to provide every African citizen with sustainable electricity.

By utilizing highly leveraged EU development funds to promote investments in renewable energy and equally using some of the funds committed as a consequence of the Copenhagen Accord, a real difference can be made. The EU might commit to combine part of its development and climate change funding, bringing together its various development banks with other international financial institutions and in particular the African Development Bank, and developing new instruments from loan-grant blending to risk-sharing facilities.

It means focusing the aid granted on areas where there is a real advantage and added value in acting at Community level.

But it is not only about money. The EU can also contribute in areas such as research into Renewable energy sources, as well as technical training. These areas are as necessary as funding projects, since we need solutions that are adapted to the reality of Africa as well as energy facilities that can actually be maintained.

But we are never going to be successful if the European Union will drive this process. This is a partnership, it is cooperation. A Renewable revolution will never take place without an enabling environment.

This means that our African partners will need to provide the right business environment, clear and stable regulatory framework and regional cooperation that eventually can lead to regional markets.

As a first step, I am pleased to announce our Renewable Energy Cooperation Programme.

The Africa-EU Renewable Energy Cooperation Programme

As we have a common interest to accelerate the use of renewable energy in the EU and in Africa, we have jointly formulated the Renewable Energy Cooperation Programme. It is intended to be a 10 year programme, with the primary objective to contribute to the African renewable energy targets for 2020. The programme, which is not a new financing instrument for investments, will provide added value to ongoing initiatives and thus work mainly on a regional and continental level.

I am pleased to announce here today, that the European Commission has allocated a first 5 million Euros from the fast start climate action grant financing to support a three year start up phase of the programme. This is in addition to our larger contributions to renewable energy investments provided under the Infrastructure Trust Fund and the Energy Facility.

The key areas of the programme aim at:

  • Strengthening the renewable energy industry and markets in Africa.

  • Implementing renewable energy policies and measures. Focus will be on a set of measures aiming at creating stable and 'renewable friendly' administrative and legal frameworks.

  • Mobilising existing and new financial instruments to support renewable energy in Africa.

  • Renewable energy research, education and technology transfer.

It is my firm belief, that with the necessary political will, it will be possible to make substantial progress on all of these issues in the programme and to intensify the interaction between EU and Africa to the benefit of both continents.

On the EU side, I would like to see this effort joined by as many EU member states as possible.

The Africa-EU Renewable Energy Cooperation Programme, if fully supported, will be an important first step in a new EU-Africa energy partnership. The opportunities are huge, and the targets are achievable.

With these final words, I now invite you, Your Excellencies and dear Colleagues, to join me in pronouncing the Africa-EU Renewable Energy Cooperation Programme launched !

Thank you for your attention.


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