A RECENT study conducted by Boston University indicates that China stands at a pivotal juncture to spearhead an energy revolution in Africa. However, this opportunity is stifled by nearly two decades of neglect in green power investments on the continent. Professor James Smith, lead researcher from Boston University, underscores this challenge, stating, ‘Despite emerging as Africa’s largest bilateral trading partner, China’s financial backing has predominantly favoured fossil fuel projects over renewable energy initiatives.’
Since the turn of the century, Beijing has financed multibillion-dollar infrastructure projects across Africa, solidifying its status as a significant economic player in the region. Nonetheless, Chinese lending for renewable energy sources such as solar and wind has remained minimal, comprising merely 2 percent of the total $52bn energy loans extended from 2000 to 2022. ‘This stark contrast is a significant impediment to Africa’s energy transition,’ emphasises Dr. Wang Li, co-author of the report from the African Economic Research Consortium.
In 2018, President Xi Jinping declared a halt to new coal-fired power projects abroad, vowing to combat climate change by promoting green and low-carbon energy solutions. Despite this pledge, the report from Boston University’s Global Development Policy Centre underscores the inadequate support provided by Chinese development finance institutions towards Africa’s energy transition. ‘China’s commitment to green energy needs to be translated into concrete actions in Africa,’ emphasises Dr. Li.
The study highlights that Chinese financing has predominantly concentrated on sectors aligned with the extraction and export of commodities to China, as well as electrification projects. ‘Notably, hydropower projects, backed by the Export-Import Bank of China (CHEXIM), are geared towards facilitating metal extraction, comprising 26 percent of all hydropower lending,’ reveals Dr. Zhang Wei, co-author of the report.
‘While these initiatives have bolstered export revenues for African economies, the full benefits of renewable energy technologies are yet to be realized by African nations,’ asserts Professor Smith. Despite Africa’s immense green energy potential, fossil fuels continue to dominate the energy landscape, accounting for approximately 75 percent of total electricity generation and 90 percent of energy consumption in 2022.
As Africa grapples with the imperative to transition towards sustainable energy sources, China’s pivotal role in driving this transformation cannot be understated. ‘China can play a crucial role in contributing to Africa’s energy access and transition through trade, finance, and foreign direct investment,’ concludes Dr. Wang Li. The report underscores the need for China to redirect its financing strategies towards green energy investments, thereby fostering Africa’s energy access and facilitating a meaningful transition towards a sustainable future.