Source: OilPrice.com
COVID-19 and the resulting fall in oil prices and demand has helped to accelerate a global shift towards renewable energy. While a number of sub-Saharan African countries continue to rely heavily on fossil fuels, the region is expected to benefit from the growing market for minerals central to this shift.
The move towards renewable energy technologies is likely to result in a significant drop in global demand for hydrocarbon fuels like coal, oil, and gas.
In a sign of the impact that the pandemic could have on the energy market, the “World Energy Outlook 2020” report – released by the Paris-based International Energy Agency (IEA) in October – estimated that global energy investment fell by 18.3% last year. While investment in oil, coal, and gas was projected to have fallen by 8.5%, 6.7%, and 3.3%, respectively, investment in renewable projects was expected to increase by 0.9%.
Looking forward, the report also included a projection model stating that renewables could meet 80% of all energy demand growth over the next decade, largely at the expense of coal and oil.
Given that hydrocarbons accounted for 48.5% of sub-Saharan Africa’s exports between 1995 and 2018, the transition could have a significant impact on the region.
The extraction industries account for around 50% of GDP and 89% of exports in Angola, while in Nigeria, the continent’s largest oil and gas producer, the sector makes up an estimated 86% of exports and generates $64.8bn in revenue annually.
While the shift is likely to create some short- to medium-term challenges for sub-Saharan African countries, the transition to renewables is also expected to provide opportunities for the expansion of mining.
Indeed, given the abundance of minerals in the region, sub-Saharan Africa is in a unique position to benefit from this expected explosion in demand.
