China has a unique opportunity to drive forward an energy revolution in Africa, but it must first reverse nearly two decades of neglect of green power investments there, research from Boston University showed on Tuesday.
Beijing has emerged as the continent’s biggest bilateral trading partner since the start of the century and has financed billions of dollars worth of large-scale infrastructure projects.
Three years ago, Chinese President Xi Jinping said the country would not build new coal-fired power projects abroad, pledging to deal with climate change by supporting the development of green and low-carbon energy.
Although Africa’s green energy potential is one of the highest in the world, Chinese lending and investment has so far provided relatively little support for the continent’s energy transition, according to a report from Boston University’s Global Development Policy Center and the African Economic Research Consortium.
Lending for renewables, such as solar and wind, from China’s two main development finance institutions constituted just 2% of their US$52-billion of energy loans from 2000 to 2022, while more than 50% is allocated to fossil fuels.
“Given current economic challenges and future energy opportunities, China can play a role in contributing to Africa’s energy access and transition through trade, finance and FDI (foreign direct investment),” the report said.
Chinese development finance institutions have been focused on investing in the extraction and export of commodities to China and in electrification projects.
Back to China
Chinese lending has targeted many of the same sectors that produce the oil and minerals that flow back to China. At least eight hydropower projects financed by the Export-Import Bank of China (Chexim), which represent 26% of all hydropower lending, are intended to support the extraction of various metals.
“Although this track has led to export revenues for African economies, African countries are not yet receiving the full benefits of renewable energy technologies,” the report said.
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In 2022, fossil fuels accounted for around 75% of total electricity generation in Africa and about 90% of energy consumption, the report said. — Anait Miridzhanian, (c) 2024 Reuters