Trillions available to support the global energy transition – time to scale up investment

The Sustainable Energy Fund for Africa is a multi-donor Special Fund managed by the African Development Bank which supports investments in renewable energy and energy efficiency.

• The just energy transition has already kicked off in Africa.
• There are trillions of dollars available in the global economy to support a just energy transition, says an African Development Bank (AfDB) official.
• The AfDB’s Dr Olufunso Somorin says countries must consider the transition at a regional level, as this could direct investment strategies.

The just energy transition has already kicked off in Africa, but it is going to require the scaling up of investment in renewable energy and there is enough finance already available in the global economy, according to an official from the African Development Bank (AfDB).

The bank’s regional principal officer Dr Olufunso Somorin was this week one of the speakers of a virtual panel discussion on how the just energy transition be supported in Africa. The discussion was hosted by the South African Institute of International Affairs.

“When it comes to resources needed to scale up investment in renewable energy, we have enough money in the global economy. The challenge is distribution,” said Somorin.

There are trillions of dollars to support a just energy transition, he added. “We need to question global commitment and regional commitment to scale up investment,” he said.

The AfDB in May announced that the Sustainable Energy Fund for Africa extended a $1 million grant to help accelerate African countries’ transition to flexible green grids and other clean power solutions. Over half of the bank’s financing focuses on climate change adaptation and resilience, Fin24 previously reported.

Somorin went on to explain that policies must suit national contexts or regional issues. The World Bank estimates that about 600 million people in sub-Saharan Africa lack energy access. Somorin highlighted that electricity consumption in the region is dwarfed by that in the US and the EU. The just transition should not only be a shift to cleaner energy, but should also address electricity access, he explained.

The potential for renewable energy such as solar PV, wind, natural gas and geothermal, is huge in Africa, he added. “If you have got enormous potential what is the challenge in unleashing potential to solve the problem you have?” Somorin said the barriers to key policy instruments to enable a transition should be better understood.

Somorin said that over 90% of annual investments from the bank went towards renewable energy. These investments could unlock further renewable energy investments, particularly from the private sector.

Opportunities in the region

There may be opportunities to develop regional just transition strategies too, Somorin said. For example, if Ethiopia can produce electricity cheaper than Tanzania or South Sudan, then the investment strategies of the other two countries would be to develop transmission lines instead of building generation capacity.

The just transition could potentially go beyond national borders, if countries take advantage of regional opportunities, he said.