1.0. Preamble
Energy transition, which refers to the switching away from fossil fuels or the transformation of the global energy sector from fossil-fuel dominated energy systems to zero-carbon emission sources, has fundamental implications for emerging petroleum economies, especially in Africa. While the desire, determination and diligence to switch is not conjectural, the key challenge is how to optimally balance energy sustainability, security, and equity without petroleum resources in the energy supply mix. Africa’s endowed petroleum resources are huge and the dependability of such economies on petroleum for economic development is conspicuous.
Interestingly, these emerging petroleum economies in Africa are marginal contributors to global CO2 emissions with carbon emissions cumulative share estimated at less than 3% by 2040, according to IEA 2019. The imperative of IEA that defunding petroleum assets as the only road to attaining zero carbon emissions in 2050 is worrisome and unbalanced. How would nations in Africa fund national economic development if they were to give up on exploration and exploitation of its endowed petroleum resources because of global climate concerns? Live on Foreign aids and grants?
This op-ed aims to espouse the plausible rationales for the expectedness of petroleum in the energy supply mix in Africa and perhaps, worldwide, beyond 2050. It underscores specific strategic and thoughtful options for Africa in the global race to net-zero targets in 2050, which are to be anchored on petroleum resources development. Ironically too, energy hardly transits fully. It tends to evolve for one dominating energy resource to the other resources as technology adaptability evolves, economic incentives prevails and public policy development emerges and improves to favor one energy over the other in an affordable and adaptable manner.
2.0. Energy Resources Prospects and Transition Opportunities
There seems to be a global urgency and determination to shift global energy mix towards renewable energy system, which has a unique attribute to produce energy with no associated emission of greenhouse. To the extent that some are debating whether natural gas is green enough to be the consensus transition fuel. Of course, that renewable energy offers a clear path to net-zero emissions is not conjectural but the transition speed to zero carbon emissions is conjectural with respect to a prescribed homogeneous optimal pathway for all. A historical review of renewable energy contribution to primary energy mix shows the extent of the daunting task ahead and why proffering uniform approach to effectively mitigate global warming by mandate is less likely to succeed.
Here are some important facts on primary fossil fuel energy sources—coal, crude oil, and natural gas. First, Coal supplies a third of all energy used worldwide and makes up 38% of electricity generation, as well as playing a crucial role in industries such as iron and steel. Coal reserves grew by 20 percent from 2010 to 2020, perhaps because of declining consumption and nearly 50% of the growth was in the Asia pacific region. Secondly, Crude oil is the base for lots of products. These include transportation fuels such as gasoline, diesel, and jet fuel, which accounts for about 30% of primary energy consumption worldwide. They also include fuel oils used for heating and electricity generation. Crude oil also creates petroleum products. When combined with other chemicals, oil is the base for over 6,000 items. Petroleum byproducts are tar, asphalt, paraffin wax, and lubricating oils. Crude oil reserves increased by 26% from 1,300 billion Barrels in 2010 to 1,637 billion barrels in 2010. Despite rising production worldwide, the estimated crude oil reserves at the beginning the year 2021 was 1,732 billion barrels. Certainly, the world is not running out of oil but into oil.
Natural gas supplies 22% of the energy used worldwide, and makes up nearly a quarter of electricity generation, as well as playing a crucial role as a feedstock for industry. The hydrocarbon is a versatile fuel, and its growth is linked in part to its environmental benefits relative to other fossil fuels, particularly for air quality as well as greenhouse gas emissions. The estimated 6,800 TCF of as reserves can last 50 years at the current global consumption level. Thus, natural gas fits the gap as a global transition fuel very well as the world seeks green energy with net zero carbon emission. Reserves year in non-OECD countries, however, is significantly higher at 70 years compared to OECD reserves production ration of just 13.7 years. The Middle East has a gas reserves life index of 110 years, while Africa has about 56 years. It is going to be foolhardy to not investigate Natural Gas in the Middle East and Africa as a legitimate transition fuel to green energy in the transition era.
The forces shaping the global energy landscape and trend to 2050 and the key parameters surrounding the evolution of the global energy landscape are not deterministic. In fact, they are stochastic. The key players in the global energy supply dynamics are many, with diverse interests and attaining the global transition goals requires a heterogeneous approach rather than homogenous strategy. For example, the energy transition era has not changed OPEC strategic objective, which is to maximize the economic wellbeing of its citizens through optimal petroleum resources development. The petroleum importing countries, represented mostly by the G7 Countries or IEA countries, consider energy affordability, energy availability, and energy accessibility to be very paramount to the economic wellbeing of their citizens, as well.
Thus, one thing held in common among all energy stakeholders, worldwide, is enhancing the quality of life of human beings, which petroleum has sustained over, at least, my lifetime. Some will argue that petroleum created the current global quality of life the world has gladly embraced or in pursuit of. Energy trilemma dimensions—security, sustainability, and equity–suggest that not paying attention to one at the expense of the other two dimensions is likely as detrimental to enhance human quality of life, as environmental sustainability. Like recently suggested, the world should be more worried about cutting emissions than cutting petroleum production. For regions that are energy poor, like Africa South of Sahara, there is the anxiety, and rightly so, that transitioning rapidly to renewables from fossil fuels, will more likely than not, reduce the ability to supply reliable and affordable energy to households and commercial users in such regions in Africa making the region very vulnerable in terms of energy equity.
Africa remains the region with the lowest average consumption (15 GJ/head) and four (4) out of five (5) people in African use some form of wood fuel as their primary source of domestic energy. Additionally, even with petroleum produced in these African countries, physical and economic access to modern energy sources is still a major challenge buttressing home that fact that having resources without being resourceful can be detrimental to energy equity and security in the long run. Adopting energy transition in Africa, requires a lot more strategic thinking and apolitical planning than sentiments or mantra, like the decade of gas mantra, in Nigeria.
3.0. Petroleum in the Energy Supply Mix Strategy is a Win-Win
Evolving energy landscape demands that Africa, and Nigeria in particular, thinks strategically on how to find an optimal balance between energy security, equity, and sustainability. Africa petroleum producers must keep talking the energy transition talk, embrace the transition philosophy not uniform transition rapidity, and strategize to find optimal roadmap to net-zero emission in 2050. An energy mixed roadmap with natural gas as the transition fuel seems to be worthy of exploration. Fortunately, Nigeria as the case is for many Africa petroleum producers has taken the right steps with the adoption of a gas-to-power strategy along with hydroelectricity expansion, and renewable energy policy. In fact, the design of the Nigeria fiscal framework in the Petroleum Industry Act 2021 lends credence to the decade of gas mantra of the Federal Government in Nigeria.
The benefits of energy supply mix strategy are substantial, balancing energy security in terms of current and the future at a reliably affordable price and energy sustainability in terms of high environmental quality in production and use of energy. Additionally, energy mix enhances optimal resource depletion path limiting high petroleum price volatility and shocks to the global economies. Of course, energy equity is maximized when it is affordable and available. For Africa with a cumulatively low emissions so far and abundant natural gas resources in the golden Gulf of Guinea, waiting to be explored and extracted, the energy transition dynamic is not complicated though a transformational leadership mindset is required to recognize the importance of using petroleum rent for sustainable development of HOG national economies.
Further, energy mix strategy anchored its petroleum resources offers Africa to rapidly ameliorate the growing energy poverty even as technology advancements help to mitigate carbon emission from oil and gas production and enhances production efficiency with competent petroleum professionals.
4.0. Concluding Remarks and Recommendations
Energy is life, its consumption drives prosperity and sustainability. Africa must go after a robust energy mix driven purely by economics, technology, public policy, and good governance. Through strategic thinking, which disavows political expediency, government in Africa needs energy transition framework that balances energy security, equity, and sustainability in an efficient, effective and equity manner with a transparent and accountable mindset. The essential steps to finding an optimal transition pathway rest on government, because energy transition is a policy issue. Government must set the transition agenda and perhaps the AU needs to have an AU strategy like its counterparts in the EU.
First Africa must embrace without delay the adoption of the energy transition by using oil and gas revenues to accelerate green investments especially deepening renewable energy to promote optimal energy sustainability, accessibility, and equity. Second, Africa petroleum producers must develop advantageous petroleum barrels with emphasis on economic efficiency as against political expediency. Only the best projects that deliver on overall economics are likely to attract upstream capital investments in the energy transition era. All petroleum producers in Africa must encourage and support upstream investment or run the risk of accelerated production decline faster than necessary and chancing energy supply vulnerability and economic crisis. Third, there is a global acceptance of natural gas as the global transition fuel. Thus, gas to power represents a promising way to decarbonize the upstream oil and gas sector in Africa and offer optimal solutions to energy transition trilemma.
Finally, regional cooperation is pivotal to facilitating cross-border trade and investment flows to the petroleum and wider energy sector. Empirical evidence supports the mantra that energy transition is not static but dynamic. It takes about 50 to 60 years to transit from one energy source to the other, using the key example of the unending transition from coal to crude oil. Thus, it is more likely than not that oil will not disappear overnight rather it will take many decades. The displacement of a dominant energy source does not automatically eliminate that energy source from the energy supply mix with the displacement happening only through a smooth demand decline.
Evolving energy landscape is not a trilemma but an opportunity to expand the global energy base and perhaps the word transition is an abnormality in the characterization of emerging energy evolutionary process. It is an era that comes with many changes and opportunities, hence if high-cost petroleum producers can manage a reduction in cost of production then, they can benefit from the evolution and extend the oil market era. Empirical evidence supports the assertion that the displacement of a dominant energy source does not automatically eliminate that energy source from the energy supply mix. Empirical evidence also suggests that the world is not running out of crude oil, and it seems, less likely than not, that the world will run crude oil out of the global energy supply mix without daring macroeconomic consequences and energy sustainability complexities, especially in Africa. Fasten your seat belt, petroleum engineering is not going away in the evolving energy landscape. Indeed, the world is not running out of petroleum, neither can petroleum be run out of the evolving world energy landscape without economic insecurity.
OMOWUMI O. ILEDARE, PhD,
Snr. Fellow USAEE, Fellow NIPetE,
Fellow EI. Professor Emeritus,
LSU Center for Energy Studies,
Baton Rouge, USA & Executive Director Emmanuel Egbogah Foundation Abuja, Nigeria.