. Requires $2trn investments to reach net zero
For Africa to achieve industrialisation targets and create jobs and wealth for its growing populations, then it cannot toe the path to economic prosperity that developed nations have pursued, management consulting firm, McKinsey & Company has warned.
The company notes that as one of the most vulnerable continents to climate change and climate variability, Africa has a strong incentive to join global efforts to reduce greenhouse gas (GHG) emissions and bolster its adaptive capacity, but cannot achieve much economic success through the same measures as the industrialised world.
A report released yesterday by McKinsey & Co., titled: Africa’s green manufacturing crossroads: Choices for low-carbon industrial future, further warned that unchecked growth in emissions in the continent could be counter-productive.
In particular, the report said the decarbonisation of the manufacturing sector and economic growth and industrialization in Africa can go concurrently but the choices made will be critical for its future success and prosperity.
The wrong choices would therefore “lead to economic impacts, including reduced financing options and emissions-related export penalties, which could weigh on long-term growth and well-being.” This is even as countries struggle to cut their greenhouse gas (GHG) emissions by 2050, “to limit a rise in global average temperatures that scientists warn will bring ever-more extreme weather events and a catastrophic rise in sea levels, fuelling hunger and migration.”
Manufacturing, power investments
In the race to net zero, McKinsey & Co. feared that Africa’s manufacturing sector could become uncompetitive and unable to export globally. “Many countries outside Africa have committed to ambitious abatement goals and are starting to pass laws and implement taxes on GHG emissions of imported goods. This could leave the continent even more dependent on international development support.”
To underscore the continent’s precarious situation, the report said to reach Net-Zero, Africa will require about $2 trillion of additional investments in manufacturing and power over the next 30 years, adding that financing the power sector’s green growth would be a key enabler of decarbonisation efforts.
Broken down, “About $600 billion would be needed to decarbonize existing manufacturing industries and power networks—both through investments to retrofit brownfield manufacturing facilities and into new greenfield facilities that are zero-carbon by design.
“The remaining $1.4 trillion could help create new, low-emitting substitution businesses that replace or supplement high-emitting legacy sectors, specifically coal-to-liquids, petroleum refining, and cement,” the report said.
Many countries outside Africa have committed to ambitious abatement goals and are starting to pass laws and implement taxes on GHG emissions of imported goods. This could leave the continent even more dependent on international development support.
Citing some climate solutions, the report said that cross-laminated timber is a sustainable replacement for traditional cement and could be used to build new green infrastructure, while charging stations to power the growing electric vehicles market could supplant the need for coal-to-liquids technology and reduce the need for petroleum refining by up to 70%.
Michael Turner, Director, Actis, a leading global growth markets investor, was quoted as saying: “As African economies industrialize and energy demand increases, the availability of affordable green energy will be vital. Without green power, it will not be possible to realize Africa’s green manufacturing potential.”
To this end, the report called for a macro shift towards renewable energy sources, of which the continent has in abundance, and suggested that “Existing transmission and distribution networks would need to be upgraded to absorb a higher share of intermittent (renewable) power.”
“Even in countries where solar and wind are less abundant, such as Nigeria, there is scope for a marked shift towards renewables. Companies like Auxano—the first privately owned solar photovoltaic manufacturing company in Nigeria—and Nayo Tropical Technology have been active for several years providing solar inverter solutions and manufacturing solar panels and other components for mini-grid and solar home systems respectively,” it noted.