Remarks as delivered by Development Reimagined CEO Hannah Ryder during the FOCAC Dialogue on Environment & Climate Change – “Sino-African Cooperation on Green and Low-Carbon Development: New Initiatives and EVs”
August 27, 2024
FULL SPEECH BELOW
Good afternoon, dear Ministers, excellencies, distinguished guests and ladies and gentlemen. I would like to extend our heartfelt gratitude to Ministry of Ecology and Environment and the Belt and Road International Green Development Coalition for extending this gracious invitation to us. I am speaking on behalf of CCICED Special Policy Study on Green Opening-up and South-South Cooperation China-Africa working group. We hope the research can bring insights for the future China-Africa cooperation on green development.
We all know that Africa has a great potential in renewable energy. I don’t need to repeat the statistics. But in case you forgot them let me give you just one to make the point.
We all know that Africa has 55 countries, all very different. But just one, as an example – Namibia, has 1.38 times greater solar potential than that of China.
In the quest for a green world, the African continent is crucial. Going green without Africa will be more difficult and expensive for everyone.
And African countries are ambitious. From submitting UN plans to announcing renewable targets or net zero goals – we are always at the forefront.
However, to date, when it comes to the good flows of finance to make this happen, for solar energy or other renewable energy, Africa has generally been at the back of the queue. That means Africa hardly gets the finance for renewables, meaning despite the potential, and despite the ambition, Africa has less than 2% of the total.
In contrast, our partner China has a different story. China’s ambition has ramped up massively over time and China has had the finance to invest, meaning despite being a third the size of Africa, China is way ahead on renewable energy and environmental goods manufacturing.
That makes China a fundamental partner for African countries. And the good news is that the partnership is there – China-Africa climate cooperation has progressed even just over the past three years.
At FOCAC 8 we saw the launch of the Declaration on China-Africa Cooperation on Combating Climate Change, which only committed China to not financing coal on the continent. It didn’t commit China to any other major climate-related targets when it came to Africa.
Despite this, what we at Development Reimagined have seen – from collating reports from diverse open sources, including CABC newsletter, BRI Overseas Project Weekly Report, press release from SOEs, and other news platforms etc – we’ve found that:
- From December 2021 to end of May, 2024, 122 climate-related projects in Africa were delivered with some sort of input from Chinese stakeholders – from simply building the energy in EPC projects, to also financing them with loans or co-financing them in PPPs, and these 122 projects had a total installed capacity of around 27GW expected to be delivered once completed.
- Among the 122 projects, 61% were solar projects, and 37% hydro projects.
There were of course other renewable energy projects delivered without Chinese stakeholders involved – but if you recall the fact that by the end of 2022 the African continent had just 56GW of renewable energy in total, and compare that to the 27GW initiated over the past 3 years, that means China has been and will be fundamental to meeting African renewable energy goals, and therefore the world’s renewable energy goals.
This rings true also for other environmental goods. And in different ways.
For instance, the world’s top ten solar PV manufacturing equipment suppliers are all located in China, and they are all highly competitive against each other. As the global solar council reports, over the last five years, the price of solar panels has fallen by 50%, and in 2023 alone there was a further 42% price fall.
There is a very similar story when it comes to electric vehicles, which is of course good for African governments and consumers.
And of course, this competition creates more incentives to look for new markets, new models of profitability from the Chinese side.
So what next, given this exciting and positive context, does FOCAC9 even need to even say anything about future goals on climate? Is the job done? Is it good enough? Especially with the competitive forces in China I mentioned earlier, the Nairobi declaration for Africa to raise its renewable capacity from 59GW to 300 GW by 2030, and with various African countries launching so many new goals, like Ethiopia banning imports of non-EV vehicles, or Zimbabwe and Namibia banning the export of raw lithium so that they can climb the value chain for battery production, with the support of African financial institutions like the AfDB or AFC, and the entrepreneurial spirit of African business people, all of whom we will hear from today…
Well, with several partners through the CCICED, we have been exploring these questions collectively. And together we have concluded that all of this progress is of course excellent, but it can be even greater if it is shaped even more strongly by both the Chinese side and African side, for both finance and policy.
But how?
We are proposing three models that can help Africa and China to shape and scale up green development together, in partnership.
Let me share these three with you briefly.
The first model is to target building green Infrastructure – energy and transport – with concessional finance from China. In fact, this is a model already known. Over the past 10 to 15 years, for example, hydro projects accounted for 58% of overall Chinese investment in renewables which are driven by Chinese state-owned companies, in many cases utilizing concessional and semi-concessional financing from Chinese banks such as China Exim Bank and China Development Bank (CDB). But some of this finance has been more expensive and somewhat limited. That means it limits the ability of African governments to take it up, and also limits the ability of Chinese companies, who then have to rely on high prices in African countries to make sure they get the return on their investment. But this is not socially helpful or responsible. So, we propose a continuation and expansion of this financing, especially the most patient capital so that energy and electricity on the African continent is as cheap as in China for both factories and people to use, and also including cross-country transport infrastructure such as rail to build a stronger and more efficient green logistics network across African countries.
At Development Reimagined we project that, for example, if Chinese finance were deployed to such a degree as to enable “China speed” of renewable building to happen in Africa, Africa could achieve 245GW of renewable energy in 2030.
The second model is all about linking production and consumption in Africa, value addition, or beneficiation as it is known in some African countries. As you know, environmental goods if we define broadly, are those goods that measure, prevent, limit, minimize or correct environmental damage. This includes solar panels, wind turbines, EV and so on. Yes, competition is already driving some Chinese firms to look at sales in African markets and even some small but greatly progressive manufacturing units, like Jinko solar or BAIC’s factories. But if we are really being strategic the exciting next step is to be the first movers to find a way to leverage Africa’s critical minerals and strategic export position to establish a new global manufacturing supply chain with Africa as the hub, especially in the manufacturing of photovoltaic products, lithium batteries and new energy vehicles. Indeed, in our analysis we note that China’s practice in developing specialized economic zones, cross-country (cross-province) logistics, the renewable energy industry and a value-addition oriented trade policy framework will contribute to the strategic steps. So more targeted work and commitments to this in FOCAC itself – even to the degree of saying explicitly that China supports the banning of raw exports and again putting aside cheap finance to support regional green special economic zones, could be really exciting to move cooperation forward over the next 3 years.
Last but not least, as we know alongside flagship projects, in the BRI China is keen to do more small but beautiful projects. In China, we have seen such projects in the climate arena for ecological conservation and rejuvenation of rural and/or degraded areas. In practice, the model involves a partnership between a local government and private firms, the latter that commit to environmental conservation and/or rehabilitation on the basis of an entitlement to the future spillover benefits from the area, such as domestic tourism revenues, and so on.
In our analysis, we propose that model would be very appropriate for African countries, especially with so much unused land. The model could be piloted in some African countries and could, for instance, incorporate solar and wind deployment as a standard requirement.
Ministers, excellencies, distinguished guests and ladies and gentlemen.
Africa stands at a critical juncture, committed to act on climate change and pursue fast, responsible industrialization, both for its own benefit and the rest of the world’s benefit, but without the cheap finance, technology, and innovative models to do so. At the same time, China also stands at a critical juncture – needing to shift to a new economic model while also remaining green, and maintaining markets its already created and shaped massively.
There is a sweet spot of collaboration that meets the goals of both sides over the next three if not thirty years.
We hope our ideas in the SPS so far can and will contribute to using FOCAC to help create the policy environment and direction from both the African and Chinese side to meet this “sweet spot”. The time is now.
