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September 11, 2013

Power Africa or Power Oil and Gas Profits?


Slowly but surely, one of the most pressing development issues facing the international community, energy poverty, is getting the recognition it deserves. Most notably, President Obama announced a signature initiative, Power Africa, to address the issue, replete with $7 billion in U.S. taxpayer dollars. One of the smallest agencies in the U.S. government, the Overseas Private Investment Corporation (OPIC) is a big part of that effort. That’s great news for Africa because OPIC punches well above its weight when it comes to clean energy finance, especially for the poor. The problem is that oil and gas companies are upset that OPIC now overwhelmingly supports clean energy. The polluters’ solution is to gut OPIC’s environmental and climate standards to enable them to dramatically expand oil and gas infrastructure across Africa. It’s a solution that will not only pad their profits, but confine millions of Africans to darkness.

In order to increase their investments in dirty fossil fuels, they need government agencies to give up any and all climate safeguards. While the oil and gas industry has never been a beacon of responsible stewardship of Africa’s natural resources, its message continues to be: We don’t need safeguards or regulation -- trust us.

The big polluter argument has drawn supporters like Bono’s ONE campaign which supports a new legislative effort to gut the greenhouse gas emissions cap at OPIC. Worse, gas manufacturers have succeeded in getting the U.S. House of Representatives to pass a bill that may direct OPIC to deregulate its investments. Now they are pushing hard to pass an extreme version of this bill in the Senate which would guarantee that OPIC’s investments would be deregulated to enable an expansion of dirty energy.

But just like the Greek Sirens of old, gutting climate safeguards at OPIC will lead us anywhere but the clean energy future we need. This business-as-usual approach will fail to end energy poverty and will instead saddle the continent with an outdated and heavily polluting grid at a time when cheap, clean energy is becoming widely available thanks to the help of development banks and decreased construction of dirty sources of energy like coal plants.

The truth is, according to the International Energy Agency (IEA), a business-as-usual approach defined as investments in grid extension and large-scale centralized (mostly) fossil fuel power plants will still leave 1 billion people in the dark – two-thirds of which will live in sub-Saharan Africa.  In order to deliver universal energy access, the IEA says we need at least least 60 percent of all investment flowing to decentralized off-grid clean energy – not oil and gas. That investment will power 70 percent of all rural populations – the vast majority of the energy poor – or 325 million people in Sub-Saharan Africa. That means regardless of climate concerns the right tool for the energy access job is decentralized off-grid clean energy.


It just so happens that a vast amount of entrepreneurial energy is laying the foundation for decentralized clean energy to succeed. From piggybacking on mobile phone infrastructure by deploying Tower Power and Community Power, to deploying 30 to 40,000 solar home systems every month in some countries, decentralized clean energy is delivering where oil and gas have failed. The best part is that it’s delivering on a time scale that matters – now. Even better, it avoids the resource curse, which after decades of research, has conclusively shown that Oil and Gas development has been anything but a boon for Africa.

That leaves us with our present dilemma. OPIC happens to be an outlier with President Littlefield championing clean energy, and especially off-grid clean energy entrepreneurs. That’s why OPIC is one of the few institutions that is home to a dedicated pot of finance for off-grid clean-energy entrepreneurs -- the African Clean Energy Finance (ACEF) program. They are doing exactly what they should do to support energy for the poor. If it were up to President Littlefield, they wouldn't touch the cap. She said as much at a recent event in Washington, D.C., saying, “the constraint on OPIC is staffing, not the GHG cap.”

So if OPIC doesn’t want this, if what they really need is simply staffing, what gives? To answer that, we need only look at who would benefit from deregulation of the President’s signature initiative – the list starts with oil and ends with gas.

Their efforts would directly undermine the President’s leadership on climate, which is picking up steam overseas. From the World Bank’s announced restrictions on coal finance, to the European Investment Bank following suit, to Nordic countries also banning overseas coal investments at the G20, the U.S. is moving back into a position of leadership and authority on climate disruption.


But at the end of the day, this debate isn’t about the climate. It’s about technological progress. So I’ll leave you with this: American telecom operators are busy ripping copper out of the ground because centralized landline networks are obsolete in the age of the mobile phone. If it were up to the oil and gas guys, we’d all still have landlines, but we’d also get a loud and heavily polluting diesel generator set in our backyards to power this obsolete network. That’s basically what they have planned for Africa when they push an outdated centralized, heavily polluting grid at a time when we have cheaper, more effective clean energy technologies.

Let’s make this time different. It’s time to leave OPIC’s greenhouse gas cap alone, and let them get back to the great work they’re doing supporting the entrepreneurs who are out there building the future we need to see – one where climate and development are solved with 21st-century clean-energy technologies – not the mindset, policy framework, and 19th century technologies that have and will leave hundreds of millions of Africans in the dark.

--Justin Guay, Sierra Club International Climate Program Representative


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