Four priorities for sustainable and inclusive energy security in Eastern Africa
Energy plays a central role in modern economies. Addressing challenges hindering energy security in Eastern Africa is a crucial first step in the achievement of the SDGs in the region.
The adoption of the Sustainable Development Goals (SDGs) in September 2015 demonstrates the global political apiration to transition into a more inclusive and sustainable economic model. Under SDG 7, countries have committed to ensure access to affordable, reliable, sustainable, and modern energy for all. The realisation of this goal by 2030 in the economies of Eastern Africa would go a long way in contributing to poverty alleviation, enhancing food security, and promoting efforts towards industrialisation. Previous economic growth in the region has not been structurally-driven, sustainable, nor inclusive. While poverty rates in Eastern Africa varies among countries, it is generally observed that a significant percentage of the population lives in poverty. Eastern African countries still feature in the bottom 40 of the United Nations Development Programme’s Human Development Index.
Since all the countries in the region signed the Paris Agreement on climate change adopted on 12 December 2015, their future efforts towards energy security must be environmentally sustainable. The Paris Agreement marked the first formal multilateral climate agreement after 18 years. Unlike the Kyoto Protocol that took effect 8 years after its signature, the accord will enter into force next month, less than a year after its adoption. The Paris Agreement aims at stabilising global average temperatures below a two degree Celsius rise from pre-industrial levels, while ensuring best efforts to limit the increase in temperatures to a 1.5 threshold. Achieving stabilisation in global temperatures is especially important for Eastern Africa, as the region would be among the worst affected by the effects of climate change.
Energy security in Eastern Africa
Energy insecurity is a major challenge in the Eastern African region, with governments having problems in providing affordable, reliable, sustainable, and modern energy. A recent economic forecast by the IMF projects that Ethiopia is set to overtake Kenya as the leading regional economy in 2016. This recent economic forecast might be unlikely, considering the current political turmoil in the country, with the government recently declaring a state of emergency. Despite significant spending by the Ethiopian government on infrastructure, energy poverty is still an issue in the country. Data from the World Energy Council shows that Ethiopia ranks low on indicators related to energy equity, energy security, and environmental sustainability in the energy industry.
Inequitable access to energy in Ethiopia is mirrored across the region. There is a huge divide in terms of energy access between urban and rural areas. While previous rural electrification programmes have improved access, the limited geographic coverage of most power grids limits the potential of such programmes. The cost of access faced by rural households within the geographic coverage of the electricity grids is also high compared to their low level of income. The high cost of access also affects households living in informal and semi-formal settlements in urban areas.
The Eastern African population relies heavily on biomass for both cooking and heating, with biomass being the only source of energy in rural areas and informal settlements in urban areas. Data from the International Energy Agency (IEA) shows that over 80 percent of households in the region rely primarily on biomass for cooking and heating. The reliance on biomass poses serious challenges related human health and environmental sustainability. Further, recent years have seen an increased demand for biomass as a result of population growth. This has led to an increase in deforestation, with a country like Ethiopia estimated to have lost over 95 percent of its forest cover in the past 50 years.
There is therefore an urgent need in the region to work towards addressing the issue of energy insecurity in a sustainable manner. As the G7 summit noted in 2016, access to energy plays a central role in the achievement of the targets in the Paris Agreement. Similar sentiments were echoed during the 2016 G20 summit, where G20 leaders stated that energy plays a crucial role in enhancing quality of life, poverty reduction efforts, and economic growth. Thus, if Eastern Africa is to meet its economic transformation and industrialisation targets, governments need to increase the percentage of citizens with sustainable and affordable access to energy.
Current challenges in the region
Political and regulatory instability poses one of the main challenges to energy security in the region. A good example is the Great Renaissance Dam Project started by the Ethiopian government in 2009. The main purpose of investing in the project was to create surplus energy for export, especially to neighbouring countries. However, the construction of the dam currently faces political challenges, since Ethiopia is seen to have commenced the project without consulting Egypt. The two countries are presently negotiating policies that might reduce the risks for Egypt once the dam is operational. The delays in the project are nonetheless expected to affect the potential benefits of energy trading in the region.
There is also an overreliance on on-grid solutions to meet the energy demands. Most Eastern African governments have adopted policies to ensure energy access, with different levels of ambition and timelines: Burundi has the objective of increasing its population’s access to energy to 25 percent by 2020; Kenya aims for 100 percent by 2030; Rwanda’s target is 70 percent by 2017; and Uganda aims for 98 percent by 2020. While such policies are a positive sign of political will, the challenge of implementation remains. Moreover, most policies have a strong bent towards the electricity sector, with limited focus on alternatives, in particular renewables, which are largely off-grid. This limits the creation of a wider energy mix, further contributing to energy insecurity. Almost all public expenditure towards energy focuses on extending on-grid electricity services, especially to rural areas.
Considering the scale of the problem of energy insecurity, Eastern African governments would be better placed in meeting their targets by widening their focus to include off-grid solutions, as many communities and households live far from the existing grid. There is still significant room for improvement when it comes to the adoption of solar panels, wind turbines, or small hydro power systems. This is largely due to the initial costs of adoption and a general slow pace in the adoption of new technology in the region.
At the regional level as well, Eastern African countries are predominantly relying on on-grid solutions. A good example is the establishment of the Eastern African Power Pool (EAPP) in 2005, whose objective is to support energy security in the region by promoting power exchanges between utilities in Eastern Africa. The EAPP, which focuses on the electricity sector, aims at pooling resources with a view to reducing the cost of electricity transmission and increasing energy efficiency. However, the establishment of the East African Centre for Renewable Energy and Energy Efficiency (EACREEE) in 2015 is a welcome sign of political will to move away from overreliance on the electricity sector and widen the energy mix in the region.
A wider energy mix would be a welcome move, as it might reduce the percentage of households that use biomass to meet their cooking and heating needs. Not only does the use of biomass causes important health problems, but it also contributes to deforestation. It is estimated that the use of biomass in the region is a direct cause of more than 50,000 deaths annually. Consistent population growth in the region increases the demand for biomass, leading to deforestation, which further worsens the effects of climate change. Inconsistent weather patterns as a result of the reduction in forest cover also negatively impacts the production of hydropower.
The way forward: Four priorities
For the countries in the region to meet their national energy access targets and achieve SDG 7, they must focus on four priorities. For starters, it is important to have stable political and regulatory environments to attract investors. Eastern African governments might for instance choose to ratify the International Energy Charter, the only multilateral framework that focuses on the energy industry. Political and regulatory stability is largely dependent on strong institutions that provide a positive signal to international investors. Considering that the financial needs for further developing the energy industry largely outstrip government spending, policies aimed at attracting and retaining foreign direct investment (FDI) would strongly increase the possibility for these governments to meet their energy access targets and achieve SDG 7.
Diversifying current energy policies and improving their implementation is another way for governments to strengthen their efforts to alleviate energy insecurity in the region. In the current context, investors are clearly signalling their preference for renewable energy sources. In 2015, developing countries surpassed industrialised countries as a destination for FDI flows targeting the renewable energy industry. Nevertheless, FDI in renewables in the region is still relatively low compared to other regions. Initiatives such as the EACREEE might contribute to further investment in renewables. Such an increase is necessary if Eastern African governments are to succeed in providing affordable, reliable, sustainable, and modern energy for all, while contributing to meeting the targets of the Paris Agreement on climate.
Governments in the region should also leverage existing partnerships and aim at creating new partnerships that would contribute to alleviating energy poverty. Endeavours such as the US’ Power Africa initiative are welcome efforts in meeting some of the financing gaps that need to be overcome in order to achieve energy security. Partnerships with institutions such as the Africa Development Bank, the World Bank, and other development organisations are strongly needed considering the scale of the efforts required to boost access to energy. There is also a need for better coordination between various relevant ministries of different national governments, as well as with regional institutions. In order to meet the 2030 target of SDG 7, it will be necessary to pool efforts, share technical capabilities, and foster more targeted investment.
Lastly, as providing energy security for citizens is ultimately the responsibility of national policymakers, Eastern African governments must first work on ensuring that the relevant ministries possess the necessary technical capacity. Despite the lack of political stability which still constitutes an important challenge in the region, it is also up to the governments to create the best possible regulatory environment to attract FDI. This is crucial considering that energy demand in Eastern Africa is expected to increase by around 4 percent annually as a result of population growth within the next 10 years. Governments must ensure that the right policies are adopted and implemented, invest in a wider energy mix, and collaborate in their efforts to reach energy security. This multipronged approach is likely the best way for governments in the region to meet their energy access targets in an environmentally sustainable and inclusive manner.
The views expressed in this article are those of the author and do not in any way represent those of the institution with which he is affiliated.
Author: Francis Osiemo, Trade Policy Officer, Development Alternatives Inc. (DAI), FoodTrade East & Southern Africa programme.