Africa, despite its low contribution to global emissions, is feeling the brunt of climate change. To address this, African nations have ambitious plans (NDCs) that require significant funding.
This article highlights the outcome of the Climate Change Global Business Summit on Africa, held in Nairobi, Kenya, in March 2024.
Discussing the potential of decarbonizing Africa's transportation sector, emphasis was made on the need for a multi-faceted approach that involves financing, infrastructure development, clean technologies, and international collaboration.
Financing the Green Transition
“Africa faces climate change effects while contributing to 2-3% of global CO2 emissions, but its green transition is underfinanced.”
While Africa contributes only a small percentage of global CO2 emissions, the continent feels the harsh impacts of climate change. To address this, African nations have put forward Nationally Determined Contributions (NDCs) outlining their path to a greener future. However, these plans face a significant funding gap.
Here's a breakdown of the situation:
The Cost: Implementing Africa's NDCs will require an estimated USD 2.8 trillion between 2020 and 2030.
The Funding Sources: African governments have pledged about 10% of the total cost. The remaining 90% is expected to come from:
International public funds
Domestic and international private-sector investments
Investment Opportunities:
Mitigation Actions: These actions aimed at reducing emissions represent the biggest chunk of the funding need (66% or USD 1.6 trillion). The transport sector alone requires 58% of this amount.
Adaptation Measures: Building resilience to climate change impact is also crucial. Adaptation measures account for 24% of the total funding need (USD 579 billion).
In short, Africa needs significant financial support from various sources to achieve a sustainable future.
Looming Challenges
“The transport sector accounts for almost 1/3 of the continent’s total energy-related CO 2 emissions, expected to keep growing”
Africa’s rapid urbanization and increasing transportation demand are anticipated to lead to a rise in greenhouse gas emissions. Projections show these trends could cause these emissions to skyrocket by 130% by 2050, compared to 2015 levels.The Barriers to Decarbonisation
“The African journey toward decarbonizing and electrifying the transport and logistics sector faces several barriers”
Strides Made, But More Needed
“The regulatory landscape is still in the development phase and there is a lack of relevant, reliable, and real-time data”
While some African governments are making progress in reducing fossil fuel dependence, more coordinated efforts are needed to regulate the transportation sector effectively. This is especially true for freight transport, which contributes over 40% of all transport emissions.
Unfortunately, a lack of recent data makes it difficult to measure the impact of these efforts. This is due to limited monitoring tools and the complex nature of collecting data across various transportation systems.
Infrastructure Deficits and Investor Confidence in African Transport
“High transition and investment costs are coupled with a lagging infrastructure development”
Africa needs an estimated USD 20-25 billion annually just for basic infrastructure development. However, a significant infrastructure deficit creates major hurdles for investors:
High production and transaction costs
Long delays and complex border procedures
Transit tariffs and market access barriers
Extreme weather events
These challenges, coupled with low investor confidence (only 7% of greenfield foreign direct investment in East Africa went to transport and logistics between 2017-2022), are a major roadblock to attracting the funding needed for a greener transportation sector in Africa. “However, in Africa there are positive signs that can be seized as opportunities”.
Frameworks and Strategies for Building A Sustainable Future
“Transport and infrastructures are at the core of the African NDCs and decarbonization policy.”
Africa is setting ambitious goals for its future. Agenda 2063 aims to transform the continent, with a focus on boosting intra-African trade from less than 12% to 50% by 2045. The Africa Union's Climate Change and Resilient Development Strategy further emphasizes regional collaboration for a sustainable future.
To achieve these goals, Africa is looking beyond its borders. The Global Gateway Africa-Europe Investment Package promises at least €150 billion to support a green transformation aligned with Agenda 2063. This investment prioritizes sustainable infrastructure in energy, transport, and digital sectors, empowering African countries to implement their green transition plans (NDCs).
Trade Agreements Paving the Way
Several international trade agreements are also paving the way for a more prosperous and sustainable Africa:
African Continental Free Trade Area (AfCFTA): This agreement aims to create a single market for goods and services across Africa, boosting trade and economic development.
Common Market for Eastern and Southern Africa (COMESA): COMESA promotes regional integration and economic development among its member states.
East African Community (EAC): The EAC fosters economic integration and cooperation among East African countries.
Tripartite Transport and Transit Facilitation Program Eastern and Southern Africa (TTTFP): This program aims to improve transport and trade efficiency in Eastern and Southern Africa.
By combining ambitious domestic plans with international support and trade agreements, Africa is positioning itself for a greener and more prosperous future.
Multilateral and National Development Banks as Funding Channels
“The use of mobilized capital flows solutions from MDBs and NDBs is pivotal”
East Africa allocates a significant portion (24%) of its climate finance to transportation and urban development projects. In Kenya, for example, 3% of climate funds are directed towards transportation and 20% towards urban development.
Harnessing Africa's Green Potential: EVs and Renewable Energy for Sustainable Transport
“The continent’s significant renewable energy potential could help decarbonizing the transport sector”
Africa's abundant renewable energy resources are a game-changer for its transportation sector. This opens the door to electrifying vehicles and logistics networks, significantly reducing emissions. Studies by the African Development Bank Group show that switching from traditional gasoline-powered vehicles (ICE) to electric vehicles (EVs) could lead to dramatic carbon emission reductions, with projections indicating savings of up to 90% in some countries. Even moderate improvements are achievable, with 27 African countries having the potential to cut emissions by 40-50% through electrification.
This shift towards EVs would enable the adoption of environmentally friendly solutions across the transportation chain. Imagine clean last-mile delivery services and efficient electric rail systems powering people and goods across the continent. The possibilities for a greener future are vast.
Digitalization and Green Logistics for a Competitive Africa
“Digital technologies and the adoption of sustainable logistics practices support the transition”
Africa's logistics sector is undergoing a dynamic transformation driven by two key trends:
1. Digitalization for Efficiency and Sustainability: Technologies like big data analytics, IoT, and GIS tracking are empowering Africa to tackle logistics challenges and seize new opportunities. These technologies not only improve the effectiveness and reliability of transport services but also pave the way for a greener future by enabling new business models and data-driven approaches to renewable energy production.
2. Sustainable Practices for Growth and Climate Action: African nations are embracing sustainable supply chain management. This translates to reducing energy consumption through fewer vehicles and optimized operations. These practices, including green packaging, route optimization, fuel efficiency measures, carbon emission tracking, and reverse logistics, not only contribute to climate goals but also enhance international competitiveness and drive productivity gains.
Africa has a unique advantage in this space - leapfrogging. This allows them to adopt innovative solutions without being burdened by outdated technologies or unsustainable practices. By embracing digitalization and sustainable practices, Africa can build a thriving and environmentally responsible logistics sector for the future.
Africa's Clean Fuel Options
“Africa’s natural characteristics could boost an extensive transition to green fuels and carbon-neutral alternatives”
Africa’s production for green hydrogen and its derivatives mt, (2030-2050)
Africa is well-positioned to lead the way in clean transportation fuels.
Hydrogen: The continent boasts vast resources for producing green hydrogen, with estimates exceeding 50 million tons per year by 2025. This clean-burning fuel can also be used to create derivatives like ammonia, which has applications in the transport sector.
Sustainable Aviation Fuels (SAF): Studies suggest Africa could produce up to 200 million liters of SAF annually from used cooking oil (UCO) by 2030. This would significantly reduce emissions from air travel.
Shipping: Many African countries are members of the International Maritime Organization (IMO) and support its 2023 Strategy. This strategy aims to cut carbon intensity in long-range maritime transportation by 40% by 2030 and promote zero-emission technologies and fuels. Africa's commitment to clean shipping aligns with global efforts for a sustainable maritime industry.
By embracing these clean fuel options, Africa can reduce its transportation sector emissions and become a leader in the global transition to a greener future.
Successful stories: Rwanda and Jordan emerge as pioneering forces in the transition toward transport electrification
Rwanda
2011: introduction of the Green Growth and Climate Resilience Strategy (GGCRS) to become a developed, climate-resilient, and low-carbon economy by 2050
2012: the emergence of Rwanda Green Fund as a platform designed to stimulate climate finance inflows to implement the GGCRS, with a total project value of USD 142 million.
2023: GGCRS revision
Results: The value-added of the green industry to Rwanda’s GDP will nearly double, from 18% to 33% (2020-2050).
Jordan
2017: approval of the National Green Growth Plan (NGGP) identifying green growth and the transport sector as critical components to achieve national climate change targets
2017-2023: introduction of innovative policies to support electric transportation
2023: evolution of the Jordan Integrated Adoption of Electric Mobility 2023-2026: project to boost e-vehicle adoption across the country
Results: investment in the Jordan EVs market will grow by 35% (2019–2025). In 2019, the total number of EVs in the country had already experienced an almost 750-fold increase compared to 2010.
Conclusion and Recommendations
Given the systemic nature of the sector, collaboration and shared actions among stakeholders are crucial
- Policy frameworks drive the allocation of resources, The implementation of initiatives on green transport and decarbonization solutions within current and future regulatory policies would support financing, development, capacity building, and technologies, leading to sustainable transport and more efficient transportation networks.
- Effectively mobilizing the financial resources of Institutions, alongside the financial and private sectors, could attract further investment, thereby contributing to driving innovation and efficiency.
- Enhancing capacity building across Africa through skills development, knowledge, and resource provision could help countries improve their economic performance while achieving sustainable development.
- Accessing and adopting modern technologies would support green practices throughout the entire transport supply chain. Innovative, carbon-efficient solutions and digitalization, contribute to the reduction in GHG emissions.
By prioritizing these five key areas and fostering collaboration among stakeholders, Africa can navigate the transition towards a greener transportation sector. This transformation will not only benefit the environment but also unlock economic opportunities and propel the continent towards a sustainable future.
