Remarks by Angel Gurría
28 October 2019 - Paris, France
President Condé, Ministers, Ambassadors, Distiguished Guests, Ladies and Gentlemen,
I am delighted to open this joint event of the Development Centre, the African Renewable Energy Initiative (AREI) and the European Union on Advancing Access to Clean Energy in Africa. Let me begin by thanking President Condé for joining us, and also recognise his efforts in leading the Africa Renewable Energy Initiative. It reached its Phase One objective of adding 10 Giga Watts from renewable sources one year ahead of the 2020 deadline. This is great news !
Advancing access to clean energy across Africa is essential. Over 645 million people still lack access to electricity across the continent, and around 40% of formal businesses report a lack of access to electricity as a major constraint. Indeed, firms in sub-Saharan Africa experience 8.5 electricity outages on average per month. The IEA Renewables Market 2019 report reveals that, despite recent progress, a great disconnect between Africa’s huge potential in renewables and current trends in investment remains. Africa has the highest potential for renewable energy use, but least access to modern energy. A clean energy revolution in Africa is urgently needed also for improving the health and well-being of women and children, who largely bear the cost of the widespread lack of clean cooking through premature death and sickness.
The OECD is increasingly working with Africa to address these challenges. But we can do more, we want to help more. How can we doe this ? Let me share some ideas.
First, the OECD is promoting good practices on regulatory frameworks to accompany the energy transition. Improving regulatory frameworks is central to support countries in their low-carbon transitions and to mobilise private investment. We have developed instruments like the Policy Guidance for Investment in Clean Energy Infrastructure that help strengthen regulatory frameworks and advance existing regional initiatives. Regional power pools could help attract more FDI, reduce operational costs, and facilitate the creation of institutional frameworks for electricity trade. We estimate that in Africa, in a fully integrated energy supply scenario, they could create savings of USD 41 billion per year by 2040.
Second, mobilising greater financing for green infrastructure. Increasing clean energy financing to at least USD 1 trillion a year could reduce annual global greenhouse gas emissions by around 5.5 and 7.5 Giga tons in 2030. But, while public revenues are the main source of infrastructure investment in Africa, they are not enough to close the existing financing gap. This is why we support African governments in increasing their tax revenues and mobilising additional private finance. Actually, the BEPS Inclusive Framework, the Global Forum on Taxation, and our work on natural resources and illicit financial flows have already delivered good results.
The OECD’s 2019 FDI Qualities Indicators show that FDI in renewables is growing faster than FDI in fossil fuels. It accounts for more than 60% of all FDI in the energy sector in OECD countries and more than 80% in Brazil, Russia, India and China. However, while it is picking up in Sub-Saharan Africa, FDI in renewables, in absolute terms, remains at a relatively low average of 10% of total energy investment. FDI stocks are mainly concentrated in fossil fuels, with significant CO2 emissions from the energy sector.
Third, combining public-private sources in development co-operation. This is vital to move forward, and their role is actually increasing, including in renewable energy. Between 2012 and 2015, development finance helped mobilise USD 81 billion of private investment. To accompany this trend, the OECD developed the DAC Principles for Unlocking Commercial Finance for the SDGs and created the OECD Centre on Green Finance and Investment to engage and align institutional investors, governments, regulators, civil society and other key stakeholders.
Fourth, designing tools and strategies that better integrate energy challenges and help advance the SDGs. Eleven African countries are full members of our Development Centre. Many more participate in our work on natural resources and production transformation. For instance, Guinea steered our collaborative work on “getting better deals” in the extractive sector, resulting in the Guiding Principles for Durable Extractive Contracts. We also conduct country-specific programmes, including our Multi-dimensional Country Reviews with Côte d’Ivoire, Morocco and Senegal; and our engagement with Egypt on a production transformation policy review.
Additionally, our forthcoming Africa’s Development Dynamics 2019 Report, done in co-operation with the African Union, and the IEA’s World Energy Outlook 2019, provide evidence, policy analysis and recommendations to expand access to clean energy and accelerate a productive transformation.
Finally, in the context of the G20 Compact with Africa, we started to work with Guinea and other countries in the region to explore how the OECD’s standards can be used as benchmarks for reform efforts. And we look forward to further strengthening co-operation in this area as well.
President Condé, Ministers, Ambassadors, Ladies and Gentlemen,
“Today we are faced with a challenge that calls for a shift in our thinking, so that humanity stops threatening its life-support system. We are called to assist the Earth to heal her wounds and in the process heal our own.” These words of the Kenyan environmental activist Wangari Maathai certainly boost our efforts to advance clean energy in Africa.
Let’s keep working together, let’s keep learning from each other. We will only solve our environmental challenges if we act together, and the African nations must be central players.
The OECD is committed to working with all of you, and partner with AREI, the European Union, the private sector and all interested stakeholders to design, develop and deliver better clean energy and environmental policies for better lives in Africa. Thank you.