Africa Energy Transition Bank A catalyst for development or an inst of climate delayism?

In response to the decreasing global investment in the oil and gas industry, the African Petroleum Producers Organization (APPO) partnered with the African Export– Import Bank (Afrexim-bank) to establish an institutional framework known as the African Energy Transition Bank (AETB) through a multilateral treaty. The AETB, which has an initial capital of USD 5 billion, was officially established with the signing of its founding agreement and charter on June 3, 2024, in Cairo, Egypt, and is anticipated to commence operations in the first quarter of 2025. This institution is designed as an independent, supranational, pan-African entity dedicated to energy development, aiming to finance the advancement of all energy sources across Africa to address the existing energy poverty. Its main goal is to support African economies dependent on fossil fuels in transitioning systematically and equitably towards low-carbon and climate-resilient economies by ensuring efficient and predictable capital distribution between fossil fuels and renewable energy sources.

The African Petroleum Producers Organization (APPO) was founded on January 27, 1987, with the purpose of promoting the use of petroleum resources to strengthen energy security, foster sustainable development, and support economic diversification across Africa. Its mission encompasses creating a collaborative framework for African nations engaged in petroleum production, aiming to maximize the developmental and welfare benefits derived from petroleum exploitation for its member countries and the broader African continent. Since its inception, APPO’s membership has expanded from eight member states in 1987 to a current total of eighteen members.

APPO does not dispute the scientific consensus on climate change or the associated risks, nor does it oppose mitigation of climate change’s threats or transition to alternative energy sources. However, the organization argues that Africa should not “be forced to take the fast track of energy transition as demanded by the Western world”, especially since the continent is frequently mentioned “in passing, or at best as an appendage” in global energy policy discussions. APPO asserts “that measures and policies introduced to check climate change should not be uniformly imposed on all societies without regard to their special circumstances, like their levels of socio-economic development and energy poverty (APPO, 2023e)”. The organization emphasizes that “Africa cannot afford to abandon any form of energy….[but]….need all the energies we can get”. Afreximbank stands as the leading Pan-African multilateral financial institution dedicated to facilitating and enhancing both intra- and extra-African trade. The institution’s initiatives integrate climate change considerations with developmental objectives, advocating for a fair energy transition and fostering sustainable development by aligning climate action with its trade and development finance responsibilities.

The debate persists regarding whether the establishment of the AETB should be viewed as a developmental initiative for Africa or as a means of institutionalizing climate delayism. Delayism refers to a deliberate and organized approach aimed at fostering unwarranted fear surrounding various climate initiatives, ultimately seeking to hinder or postpone these efforts indefinitely. This approach exploits the notion that tackling the climate crisis will negatively impact daily life, thereby attempting to prolong reliance on fossil fuels for as long as possible. Proponents of the AETB argue that Africa should leverage its significant oil and gas reserves to achieve developmental parity with the Global North and enhance its climate resilience. This argument is heavily influenced by legacy emissions debate; a common argument among African nations is that developed countries contribute more to pollution, which justifies their pursuit of energy poverty alleviation and the right to achieve similar levels of development through the use of fossil fuels. Conversely, environmental advocates call for a complete shift away from fossil fuels, asserting that Africa should bypass traditional fossil fuel reliance by harnessing its abundant renewable energy resources as the most effective strategy for fostering development. Supporters of this perspective can highlight the stark reality that nearly half of Africa’s population lacks access to electricity, with approximately 900 million individuals, or 75 percent, without any form of modern energy. Many countries on the continent depend heavily on oil and gas revenues to fulfill governmental responsibilities, including security, healthcare, education, and essential infrastructure for socio-economic advancement. Consequently, oil revenues remain crucial for the continent’s economic growth, human development, and political stability. The APPO has warned that the repercussions will not be confined to Africa. The current dangers of crossing the Mediterranean into Europe will seem trivial compared to what the world will witness if Africa is pressured to abandon its fossil fuels and is unable to access the promised renewable energy sources.

The environmental movement’s camp acknowledged that energy poverty is a significant barrier to development in Africa. However, they contended that delay in addressing this issue poses a serious threat to the well-being of the African population. The continent is highly vulnerable to the adverse effects of climate change, exacerbated by the interaction of multiple stresses occurring at various levels, dependence on climate-sensitive industries, and limited capacity to adapt. Africa is endowed with abundant renewable energy resources, and as the costs of new renewable technologies continue to decrease, they are becoming more affordable than the least expensive fossil fuels. This positions Africa to potentially achieve universal energy access while simultaneously lowering the carbon intensity of its growth and reducing carbon dioxide emissions. The concept of climate delayism—postponing climate action until Africa attains higher economic development and improved social conditions driven by short-term economic interests or political inertia, will incur long-term costs of inaction that far exceed any immediate advantages. As highlighted by Afreximbank, the cost of immediate and decisive action is far less than the cost of inaction and delayed efforts. The implications of delaying action are too critical to ignore.