Europe blamed for 'hypocrisy' in offshoring climate policy to Africa

With Europe facing an energy crunch, countries are not only reopening coal plants on the continent, but actively looking to develop new sources of fossil fuel abroad — including in low-income countries where they had previously worked to block investments in the sector.

Germany, for example, is in talks with Senegal on helping the West African nation exploit its offshore natural gas resources for export to Europe — with the first shipments likely in 2024. France and Italy are also on the prowl in North Africa for new sources of energy.

It’s a kind of whiplash: In a historic move just last year at the 26th United Nations Climate Change Conference, COP 26, in Glasgow, some 20 high-income countries pledged to stop financing fossil fuel projects abroad by 2022. Signatories included the United States and United Kingdom.

This followed years of policy reforms that led to institutions such as the World Bank effectively stopping all new public sector financing for fossil fuels, largely at the behest of wealthy shareholders and activist groups.

What changed is the Russian invasion of Ukraine, which has drastically altered Europe’s energy supplies and is threatening a winter of colder homes and power outages.

The amount of uncertainty on the European continent is truly daunting. In the latest blow to energy security, Russia halted on Wednesday all gas flow through the Nord Stream pipeline for three days. The move raises serious concerns about what will come later this year.

At the same time, the split-screen of key European nations pushing for developing gas fields in Africa while calling for a ban on development funds for gas in Africa also raises questions about what will happen at COP 27 this fall in Egypt.

African nations are increasingly organizing a united front ahead of the summit, demanding more international support to adapt to the impacts of climate change, which, they note, has mostly been caused by emissions from high-income nations.

European ‘hypocrisy’

While Europe’s plans for developing new energy sources are getting pushback from environmentalists, the contradictions between their promises and recent actions are stark, says Vijaya Ramachandran, an energy expert at the Breakthrough Institute.

“It’s just making less and less sense,” says Ramachandran, who has studied energy and development policies at the World Bank and other multilateral lenders. She argues that the high-income-nation shareholders of the banks and the International Monetary Fund are making huge pushes for a climate agenda while sidelining the anti-poverty fight these institutions were created to tackle.

Even prior to the invasion of Ukraine and the recent push for new gas sources, Ramachandran had argued that high-income nations — which continue to benefit from their own investments in oil and gas — were making an error by banning use of their development funds for investments in fossil fuels in low-income countries. The bans alone  “will do little to propel growth of renewable energies across Africa,” she said. For one thing, the bans did not consider countries’ development needs.

Lately, the situation has gotten even stranger, she said, as  

Africa is “not a significant source of greenhouse gas emissions,” according to the United Nations. World Bank data show the U.S., which has cut per capita carbon emissions over the last 20 years, still has levels at nearly 15 metric tons per person, but in Africa that figure drops to less than 1 per person. Some measures say African countries have the lowest emissions of all.

However, African nations are on the front lines of severe climate change. At the same time, for low-income nations, access to gas is also a matter of health and safety. For example, studies have shown that millions of deaths in countries like Bangladesh are caused by open traditional cookstoves, which don’t use gas.

Ensuring a ‘just transition’

Even if some African countries were to totally cut their gas use, the impact on the planet would be negligible.

Higher-income countries should therefore allow for “tradeoffs” to ensure that African nations’ development is not stunted while also keeping in mind a green future, according to Kevin Urama, acting chief economist at the African Development Bank.

“Gas is central for the sustainability of the energy systems,” he said in an interview with Devex in July, calling it a “transition fuel.”

Africa, he said, needs to harness new, clean technologies, including solar, while also ensuring its fight against poverty does not take a back seat as it develops a new energy mix.

AfDB excludes some upstream oil and gas from its project allocation. But groups like E3G, a think tank focused on climate change, have warned the bank’s fossil fuel policies are vague. The bank has made investments in some major energy projects in recent years, even as it touts a push towards more renewables.  

In a statement to Devex, the African bank said it has not made any investments in coal for the past decade and that as of 2021, the “current energy policy also stipulates that the institution will not support oil and gas exploration activities.”

AfDB’s broader comments on the need for a steady energy mix reflect views from African leaders. Muhammadu Buhari, the president of Nigeria, has called out the inconsistency of Western countries and “contradiction on green energy policy.” Other leaders have made similar remarks.

Lower-income countries are likely to make specific demands at COP 27 in Egypt later this year for more funding from the major polluters that will not only help them transition away from dirty sources of fuels, especially coal, but to adapt to the realities of climate change in a way that keeps the focus on reducing poverty and creating jobs and economic growth. There is a growing sense of unity among low-income countries in their calls for a fairer deal.  

U.S. Treasury Secretary Janet Yellen convened the multilateral development banks for a meeting in early July that specifically focused on adaptation financing, urging the lenders to prioritize the issue.

Yellen “urged the MDBs to increase their attention to climate adaptation and resilience, which will support so many sectors of economies, including food security and agricultural productivity,” according to a statement.

Making development work for climate goals

However, researchers like Ramachandran say that so far, high-income nations have not themselves backed the adaptation finance that low-income countries need to stave off the worst effects of climate change while growing their economies. And climate finance in general has been far below the $100 billion in annual funding promised more than a decade ago by the world’s historically largest polluters.

The best way forward is to make development work for climate goals, says Sarah Colenbrander, the director of the climate program at the Overseas Development Institute think tank in London. But she admits it is not always easy, in part because of large upfront costs.

“Most of the things that you do for development, particularly most of the things you do for climate, have opportunities to advance development. And if done well, they're actually better than your conventional high carbon options,” she said.

She focuses on the example of transportation. While the cleanest option, and safest in terms of accidents, would be to transform metropoles like Hyderabad or Nairobi into state-of-the-art electric public transport networks, the task of getting that done is enormous compared to building a few better roads.

The role that development banks can play, she says, is in identifying the best low-carbon options and helping make them into a reality.

When David Malpass took over as the president of the World Bank in 2019, there was strong pushback from many corners, including environmentalists who worried about the nominee of then-U.S. President Donald Trump. Last year, dozens of environmental groups called for Malpass to be fired, accusing the bank of not sufficiently clamping down on all fossil fuel funding.

Earlier this year, the World Bank pushed back, saying it was fully committed to aligning itself with the Paris protocol and arguing it could both fight poverty and pursue a green agenda.

Speaking with Devex earlier this year, the head of the bank’s operations, Axel Van Trotsenburg, argued it was like “walking and chewing gum.”

The Washington-based lender allocated $26 billion last year for climate finance, a record, and says that going forward, 35% of its financing will have a climate focus. The bank has also been tracking climate migration trends, warning that 216 million people may be forced to move in the coming decades, and in June released its first Country Climate and Development Report.

This latter tool, still in its nascent stages, is being touted as key to aligning the bank’s lending with climate goals. Heading into COP 27, the bank’s work on this area is going to be a key space to watch.