Can African countries prosper by going green?
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The average Malian consumes less electricity each year than the average Londoner uses to power their tea kettle. Yet when delegates from Mali, and other poor countries like it, arrive in Glasgow for COP26 next month, the expectation will be for them to do everything they can to stop their emissions from rising.
The well-trodden path to industrialisation and national prosperity — from the UK in the 18th century to South Korea in the 20th — has gone something like this: get dirty, get rich, get clean. China, the world’s biggest emitter of carbon, is still in the get-rich phase, with emissions set to rise further before peaking in 2030.
But what about countries that have missed the industrialisation boat? Fossil fuels don’t just provide the electricity that roughly half the 1.3bn people living in Africa still lack. Historically, they have also been needed to produce the fertiliser, steel and cement that have been the essential ingredients of economic take-off.
Are poorer countries now expected to power their future with wind, solar and hydrogen? In short, is there such a thing as a green industrial revolution? A new report from McKinsey argues that there is. Low carbon industrial development is not only feasible, it says, but unavoidable. “In some ways, it’s not a choice,” says Kartik Jayaram, senior partner at McKinsey and co-author of the report. “Economic development that destroys the environment is no longer a real option.”
Europe is already in the process of erecting tariff barriers against carbon-intensive imports. Many banks and development agencies are refusing to lend to fossil fuel projects. Even China has said that it will no longer finance coal-fired power stations overseas. In this environment, the erstwhile advantages of being “cheap and dirty” are fading fast.
Fortunately, argues McKinsey, poorer countries have options. Of the 440 megatons of carbon produced by African manufacturers, 80 per cent of direct emissions are accounted for by five industries: cement, coal-to-liquid, iron and steel, oil refining and fertiliser production. Just four countries — South Africa, Egypt, Algeria and Nigeria — account for three-quarters of those emissions.
This concentration presents an opportunity. Much of what has already been built can be retrofitted, sometimes surprisingly easily, argues McKinsey. It estimates, for example, that the carbon intensity of African mining could be cut 40 per cent simply by upgrading the vehicles used. Regulation could force cement manufacturers, the biggest emitter, to cut the carbon-intensity of clinkers, an intermediary product, and to practise carbon capture.
More promising still, says McKinsey, is the fact that, even on existing growth trajectories, some 50 per cent of Africa’s potentially carbon-emitting manufacturing capacity in 2050 has yet to be built. Its modelling suggests that, even assuming a carbon price of zero, about half of all greenfield carbon neutral manufacturing investments would pay for themselves by 2030.
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McKinsey highlights several potential new net zero industries, many of which are emerging, but proven, technologies. One of 24 promising areas is cross-laminated timber, a carbon-sequestering material that can replace concrete and steel in houses and has already been used to construct moderately high-rise buildings in Europe.
Another is bioethanol to replace fuel for transport as well as firewood and charcoal for cooking. A third is local assembly of electric vehicle taxi-motorbikes that are already being piloted on the streets of Nairobi and other cities. Yet another is using food and other waste to produce black soldier flies for animal feed.
McKinsey estimates it would take $2tn of investment over 30 years, $600bn to decarbonise existing capital stock and power networks and $1.4tn to create new net zero businesses. As pension and investment funds shift towards net zero opportunities, money is likely to be available for the right projects.
Understandably, there is scepticism that such a technological vault is possible. If you’re a poor country, insistence on net zero can seem like a ploy to keep you that way. Ivory Coast recently discovered up to 2bn barrels of offshore oil. It has every intention of exploiting it.
If McKinsey is wrong, then the global enforcement of net zero may indeed be an intolerable imposition on poorer countries. But if it is right, and government and businesses work out how to use innovative technology to create jobs and opportunities, then going green really could be the best way of becoming better off.
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