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Accelerating Africa’s Energy Transition

Rebalancing Africa’s energy mix to include greener forms of power is an environmental and economic imperative. But the most efficient way for Africa to move away from fossil fuels will be to recognize that the oil sector still has a vital role to play in Africa’s energy future.

PARIS – For much of Africa, the transition from fossil fuels to cleaner forms of energy is seen as an environmental imperative. With fossil fuels comprising a majority – as high as 70% in some cases – of the energy mix, the situation on the continent is indeed ecologically dire.

But Africa’s energy transition is economically urgent as well. Each year, oil subsidies consume 1.5% of the continent’s GDP – roughly $50 billion. That is enough money to provide solar power to some 300 million people. If the continent could rebalance its energy portfolio, moving away from hydrocarbons slowly, those subsidies could be reallocated in ways that would yield both environmental and economic benefits.

Today, neither oil exporters nor importers are adequately insulated from price shocks. When oil prices declined rapidly in 2015, for example, Africa’s energy importers spent less on oil, while exporting countries suffered financially. When prices rebounded, the relationship switched: energy-exporting countries’ revenues inched up, while importing countries struggled to maintain consumption levels.

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