Critical decisions surrounding this transition were at the heart of discussions at the first Africa Regional Extractive Industries Knowledge Hub (AFREIKH) online course, Introduction to Extractive Industry Governance: Policy and Practice, hosted by the Extractive Industries Center (EIC) at Nairobi’s Strathmore University Law School, in partnership with NRGI.
 
After the course concluded, participants cited the Africa-specific content and the opportunity to learn from peers and mentors as key draws. I spoke with six of our distinguished learners to find out more about what the energy transition means for development in Africa, and how to achieve good governance. These were:

• Feyisayo Ayeni, from Nigeria, operations lead at NC Future Concepts
• Nelly Busingye, from Uganda, development expert, civil society activist and PWYP Africa’s membership engagement manager
• Bernard Kwofie, from Ghana, independent consultant
• Wanjiku Manyara, from Kenya, general manager of the Petroleum Institute of East Africa based in Nairobi
• Thandazile Moyo, from Zimbabwe, researcher at the Minerals to Metals Initiative, University of Cape Town
• Learnmore Nyamudzanga, from Zimbabwe, independent consultant

Clockwise from upper left: Manyara, Moyo, Feyisayo, Nyamudzanga, Busingye, Kwofie.

As you’ll see below, their perspectives were candid, providing insight into what future interventions in the sector should look like. The issues facing the extractive sector are global, but some of the challenges are context-specific. This raises a question regarding the response and whether an Afrocentric approach to addressing problems in extractive sector governance is needed. 

As we plan AFREIKH’s next course, we will continue to explore the insights and focus on Africa’s position in this rapidly changing environment. As countries around the world come together to join their efforts to combat climate change, Africa’s policy actors and leaders are challenged to engage in this global discussion and reshape their actions on climate change, the energy transition and the future of extractive industries to avert misgovernance of the extractive sector, mitigate climate risks and seize the opportunities from the energy transition.

Moses Kulaba: What are your thoughts about the potential impact of the energy  transition on your country’s development?

Moyo: I am concerned that my country may be too slow in implementing clean energy strategies. As a Zimbabwean living in South Africa, I am familiar with the challenges associated with the use of thermal power, as both countries rely on this energy source. In addition, coal mining creates employment opportunities and contributes to the economy. Given this, I worry that these two countries may fail to take advantage of the opportunities presented by the transition.
 
Kwofie: Ghana has always been a resource-dependent country, and the discovery of oil and gas in commercial quantities has further increased the country’s resource base. In 2019, oil revenues accounted for nearly 10 percent of non-aid fiscal revenues, and this share is expected to double by 2022. Most households depend on liquefied petroleum gas for domestic activities, such as cooking and, in cities, lighting. Even though energy tariffs, including for electricity, are expensive, moving away from the current system to a new energy economy may lead to a wider energy gap and resource poverty. This could widen inequality and deny citizens access to affordable energy. Both the government and the economy will face fiscal challenges in the form of lost revenues from extraction, and the country will have to look for alternative sources of revenue mobilization. This may eventually impact infrastructure development and growth. The government may miss fiscal targets due to budget constraints.
 
Nyamudzanga: The reality is that our world is moving from fossil fuels to renewable resources and that fossil fuels have serious negative impacts on our environment. In my country, Zimbabwe, we have good policies but are not “walking the talk.” The issues around energy transition are looked at from a political point of view, which sometimes leads the government to turn a blind eye to the concrete impacts of climate change. In our country, we are experiencing droughts, heatwaves, floods and cyclones as a result of climate change, but at the same time we are celebrating investments in fossil fuels, using electricity from coal, upgrading our thermal power plants and still taking pride in new coal mining.

What should your country do in response to the quickening energy transition?

Kofie: Ghana’s government needs to develop the capacity of its experts to engage effectively with other players in the extractive sector and review its investment plans in the energy sector to focus more on renewable energy. The government should also avoid investing in long-term oil and gas projects and reconsider the national oil company’s focus on its role as an operator. And the government needs to start mobilizing private sector investment in clean energy. 
 
Nyamudzanga: The energy transition must be phased and well managed to reduce energy poverty. Zimbabwe must begin implementing plans to replace fossil fuels with green and renewable energy, because that is the way the world is going. Climate change is real. The younger generation must lobby for this transition because they are the most affected.
 
Busingye: Uganda needs to facilitate debates on the energy transition. The energy transition is here with us. The various stakeholders must therefore come together to address it politically, socially and economically, so that the transition to greener energy is inclusive and just. Having completed this course, I would like to mobilize other civil society organizations to discuss the energy transition, focusing on the context of emerging producers like Uganda.
 
Manyara: The breadth and depth of the energy transition haven’t taken root in Kenya. As far as I can perceive, we need to sit down and create a roadmap and action plan for the country’s energy transition, which should then be entrenched and effectively implemented across all ministries’ policies. Developing an objective, pragmatic and realistic roadmap for energy transition in Kenya is paramount, and should not be done as a reaction to the approaches and views of other jurisdictions in the world. We, Kenyans, should discuss and shape this roadmap based on our own capacities and ambitions regarding energy transition.

What does energy transition mean to you and what is one message you have for leaders and policymakers in your country on what they should prioritize?

Moyo: Africa should think of “energy access,” not energy transition. Africa will provide “just energy access.”

Nyamudzanga: [We should] move away from fossil fuels such as coal, crude oil and gas and begin to use renewable energy such as hydro, wind and solar. Let us have policies that promote the use of climate-friendly renewable energy.

Ayeni: The energy transition is an opportunity for developing countries to leapfrog some of the challenges associated with fossil-based resources. I hope that our leaders and policymakers will prioritize the development of public institutions that foster better and sustainable decision-making. For my part, having taken the course, I have gained included an understanding of the specific challenges such as extractive revenue management and energy transition in the context of long-term sustainable development in resource-rich countries and the leading governance and policy strategies used to achieve this. 
 
Respondents’ statements have been edited for length and clarity.

National oil companies (NOCs) are set to spend about USD 2 trillion on new oil and gas projects over the next decade. With such sizable investments expected, it is urgent to develop robust advocacy strategies to avoid dangerously pushing the world past 1.5°C.

It is also important to tailor such strategies to suit different contexts given that some countries are more exposed to international markets, some NOCs are more indebted than others, and not all NOCs are equally positioned to pivot into renewable energy. Yet, unlike international oil companies (IOCs), which experience pressure from shareholders and consumers, NOCs are more often subject to domestic political pressures.

Given these challenges, what factors drive NOC decision-making and what are their implications for climate action? In particular, what levers may lead to more ambitious climate action from NOCs? On 13 July, the final webinar in the “National Oil Companies and Climate Change” series, hosted by  the International Institute for Sustainable Development (IISD) and the Natural Resource Governance Institute (NRGI), explored these questions in depth.



Alexandra Gillies of NRGI opened the discussion by framing the fundamental challenge: the climate emergency requires more concerted action by NOCs (and their governments), but stakeholders, campaigners and environmental advocates have not yet translated the incentives and tactics most commonly applied to international oil companies (IOCs). She noted that while incremental emission reduction steps may seem more feasible in the short run, these pale in comparison to the scale and urgency of the climate crisis.

Laurie van der Burg of Oil Change International shared lessons from her work campaigning for change within IOCs and the May 2021 Shell climate case win, which forced the company to reduce its CO2 emissions 45 percent from 2019 levels by 2030.

Chido Muzondo from IISD discussed how insights she gained from engaging with state-owned companies, such as highly coal-dependent power producer Eskom in South Africa, could apply to the NOC context. In particular, Chido explored which engagement strategies could lead to positive outcomes on the ground for workers, the utility company, and the climate.

Paasha Mahdavi from the University of California Santa Barbara analyzed the political economy of reform and key drivers for change in different NOC contexts. He mentioned that, in the complex relationship between governments and NOCs, influence tends to flow both ways, with both actors holding conflicting priorities at times.

In turn, Lourdes Melgar from the Baker Institute Center for Energy discussed how political leadership and government priorities, particularly in Mexico, play an important role in shaping NOC decisions.

Within and across countries, four main lessons emerged:

Interdisciplinary collaboration and tailored messaging are essential. Chido Muzondo highlighted how in South Africa, it has been crucial to engage in constructive dialogue with Eskom and build on the utility company’s initial progress on electricity sector reform and renewable energy investment. Acting as a subsidy watchdog and throwing a spotlight on public bailouts of the company has also been an effective way to gain public traction and pressure Eskom to improve financial performance. Laurie van der Burg agreed that climate advocates should collaborate across disciplines, using tactics including investigative journalism, climate protests and litigation to increase public pressure on oil majors. Not only does employing such a range of approaches increase the chances that some will succeed, they can also mutually reinforce each other—for example, shifting public opinion in the Netherlands helped create the conditions for a court to rule against Shell.

Four main levers can influence NOC behavior: political leadership, internal pressure, domestic public pressure and international pressure. As Paasha Mahdavi and Lourdes Melgar pointed out, political leadership by far exerts the most power upon most NOCs, which receive their mandate from their governments and must respond to national economic and environmental priorities. The other levers tend to be weaker influences on NOCs than IOCs, but they can still make a difference, even when government priorities are not fully aligned with climate goals. NOCs can both drive change internally and influence their governments, especially where they have a strategic interest in doing so. The Kuwait National Petroleum company, for example, invested in solar energy not primarily for climate reasons but to reduce the risk of energy imports and improve the recovery of oil from mature wells. Non-petroleum industry pressure can also influence NOC ambitions, as in Iran where domestic industries’ energy needs caused them to push back on the NOC’s plan to increase liquefied natural gas (LNG) exports; in South Africa, trade unions have vocally engaged Eskom around its strategic future. In terms of international pressure, NOCs that require international finance to satisfy long-term demand may be the easiest to influence.

Political motives and government signals can delay or accelerate the energy transition. In certain cases, officials or departments within the government might disagree on how to push the NOC to make more ambitious climate plans. Chido Muzondo mentioned that in South Africa, the president’s willingness to shift away from fossil fuels often conflicts with the views of the Department of Mineral Resources and Energy. In other contexts, a new political ideology may cast the NOC as crucial to the economy’s future. This has happened in Mexico, where the government has heavily invested in Pemex and future oil refining projects. In any case, neither governments nor NOC management teams are monolithic, and advocates should look for opportunities to play to their internal differences.

While incremental change may be necessary, it is important to focus NOC and government attention on rapid transition. A managed and equitable phase-out of oil and gas production is critical for the planet. But panelists emphasized that reaching this goal may require smaller steps along the way, such as first ending unconventional or deepwater production, and that the timing of reforms will vary in different contexts. That said, in oil-dependent countries with large NOCs—where phase-outs are the most contentious—decision-makers may be tempted to limit reform or to ignore the implications of a fast-transition scenario. Many of these governments believe an energy transition will happen, but unrealistically think their NOC will be the last one standing. Almost all will be wrong. And as Laurie van der Burg pointed out, change can come very fast as we’ve seen this past year, making previously implausible scenarios possible or likely. As such, analysts and advocates should focus government and NOC attention on the implications of (and the need for) rapid transition.

There are ample opportunities to influence NOCs on climate change—but those trying to use them will be most successful if they understand the dynamics at play and how to leverage them.

In order to further distill the lessons learned from the “National Oil Companies and Climate Change” webinar series, NRGI and IISD will publish a policy brief in the second half of 2021 which will synthesize key conclusions and make recommendations for governments in oil producing countries, NOC leaders, climate advocates, and the parties to international climate agreements.

Joachim Roth is a policy analyst with the International Institute for Sustainable Development's (IISD) energy team. Patrick Heller is an advisor at NRGI and a senior visiting fellow at the Center for Law, Energy & the Environment, University of California, Berkeley. Greg Muttitt is senior policy advisor for energy supply at IISD.