The conundrum of helping everyone finance the transition and securing energy access unity

Decarbonising the world will not be a one-size fits all process and developing countries will require an easier route to finance as they join the journey. These were the major messages during a Global Business Leadership Panel in which how the transition process would be paid for came into focus.

Speaking on Securing and strategically deploying the multi-trillion dollar investments needed to achieve net zero goals, Oritsemeyiwa Eyesan, Chief Strategy & Sustainability Officer at NNPC, said the reality was that the climate issue was global, not regional, but nuances existed. “In Africa, climate change solutions are different from elsewhere, and that’s really stemming from the level of energy poverty that inundates Sub-Saharan Africa…we are grappling with the basics.

“We are defaulting to an area of competitive advantage, which is gas; we have huge gas resources, so bringing the renewable equation to the table is not high on our priority, but it’s there. So it cannot be one solution for everybody.” With the International Renewable Energy Agency’s price tag for decarbonisation and deployment of renewable energy investment by 2050 having risen to $3.1 trillion a year, cost is an epic challenge for many nations.On the subject of COP28 expectations, Eyesan said: “One of the biggest challenges is raising finance for transition, so it will be important that we have a clear structure to access finance.

“We go to the same markets and you tell me my projects are not bankable. Why are they not bankable? Because the risk profile is high, blah, blah, blah, and then I’m not able to access financing. “There must be some enhancement, to put me on the same pedestal with everybody else and give me access to financing to ensure I transition at my own pace.”

Even for renewables, institutions provide greater difficulty for regional Africa to get a credit rating to have access to financing. It’s completely contradictory to our objective.

Tellurian President and CEO Octavio Simoes said Africa also struggled with credit rating, meaning higher interest rates, and he revealed hundreds of African entrepreneurs had ready decarbonisation solutions, but couldn’t secure funding. “Even for renewables, institutions provide greater difficulty for regional Africa to get a credit rating to have access to financing. It’s completely contradictory to our objective.” In turn, fuel poverty could present a barrier to a universal transition already failing to lower emissions, he said.

“If we think we’re going to solve the issues without lifting people out of poverty, we’re kidding ourselves. “How can we decarbonise and at the same time lift people out of energy poverty? For that, we need all the fuels, but we need a lot more people in the debate that actually understand what’s going on.” Simoes continued: “It’s time to say, ‘wait a minute, why am I going in the wrong direction?’ The reason is very simple; we have 4 billion people that earn less than $7 a day. So when we’re talking about $300 trillion for the energy transition, where’s that going to come from?
“When you cannot afford what we’re trying to tell the world, they’re going to burn more wood, more animal excrement and more coal than ever before…that gap continues to grow.”

Don Dimitrievich, Nuveen’s Portfolio Manager for Energy Infrastructure Capital & Senior Managing Director, said climate change was obviously a global issue, “but the solution to it from a current commodity perspective, a cost perspective, and a geopolitical perspective, is inherently local”. He said: “The result is we don’t have a linear solution. From my perspective, in terms of financing, we’re committed to sustainable energy and decarbonising the energy complex, but the path we choose to get there will be a holistic solution.” Kelvin Wong, DBS Bank’s Deputy Head of Energy, Renewables & Infrastructure said his bank was “committed to the pathway” to net zero, “but there are a lot of solutions in the toolbag that need to be explored”.

Saugata Saha, President of S&P Global Commodity Insights said he was optimistic about the transition. “I’m pretty sure we’ll get it done, the path is going to be turbulent. There is a vision, what’s missing really is a strategy and execution plan that gets us there. “You need more technocrats, people who understand technology entrepreneurs, venture capitalists who are willing to allocate capital to get that done.”

Simoes added: “We all want to do the right thing, we all agree that needs to be done, but unfortunately, when you have politicians who gave up maths, physics and chemistry early in their high school, it’s very hard to have a rational debate. “You can do things but it requires everybody in the street to start speaking up otherwise we’re watching somebody driving into a wall.”