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Tech News & Podcast | Africa

China Positioned to Lead Africa’s Renewable Energy Transformation

Since the turn of the century, Beijing has emerged as Africa’s primary bilateral trading partner, financing numerous large-scale infrastructure projects worth billions of dollars. A recent study from Boston University has shed light on China’s unique opportunity to spearhead a renewable energy revolution across the African continent. However, it’s essential for China to address nearly two decades of neglect in green power investments in the region.

Three years ago, Chinese President Xi Jinping announced that the country would cease building new coal-fired power projects abroad, committing instead to combatting climate change by supporting the development of green and low-carbon energy solutions.

Despite Africa boasting one of the highest potentials for green energy globally, Chinese lending and investment have thus far provided limited support for the continent’s energy transition. According to a report by Boston University’s Global Development Policy Center and the African Economic Research Consortium, financing for renewable energy projects, such as solar and wind, from China’s primary development finance institutions, amounted to a mere 2% of their $52 billion energy loans from 2000 to 2022. In stark contrast, over 50% of these loans were allocated to fossil fuel projects.

China Energy Landscape: Fossil Fuel Dominance in Africa

The report emphasizes that China can significantly contribute to Africa’s energy access and transition through trade, finance, and foreign direct investment (FDI), especially given the current economic challenges and future energy opportunities.

Chinese development finance institutions have historically prioritized investments in commodity extraction and export to China, as well as electrification projects. However, these investments often target sectors that contribute to the extraction of oil and minerals, with at least eight hydropower projects financed by the Export-Import Bank of China (CHEXIM) aimed at supporting metal extraction.

While these investments have bolstered export revenues for African economies, the continent has yet to reap the full benefits of renewable energy technologies, according to the report.

As of 2022, fossil fuels accounted for approximately 75% of total electricity generation in Africa and about 90% of energy consumption. The report underscores the urgent need for increased investment in renewable energy to address Africa’s energy needs sustainably.

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