October 2021 Research Insight – ‘Navigating the Energy Transition in Africa, The Fate of Nascent Petroleum Economies in an Accelerating Global Transition’

Oil and gas producing countries are under pressure to join the current energy transition process driven by the global climate change legal regime to mitigate the causes and effects of climate change. As the energy landscape transforms at a breakneck pace, it is clear that this transition will have far reaching implications for emerging oil and gas producing nations. These changes create uncertainty about how the petroleum sector will evolve. For countries that have recently discovered natural resources, the difficulties in navigating the energy transition come as a surprise and seem without precedent. This paper undertakes an analysis of four African states, Kenya, Mozambique, Tanzania, and Uganda, each of which falls into that category, even if there are nevertheless some differences among them.

The aim is to examine their prospects for petroleum wealth development, in relation to their wider energy needs, and their approach to transition policy. This article also examines the concept of environmental sustainability vis-à-vis the utility function of resources, in order to better understand these countries’ energy transition and development needs. The critical question is whether emerging oil and gas producing countries can position themselves in the energy transition era so that they can ensure long-term sustainability while also generating revenue from their resources (growth).

Through a dissection of global events and trends, the research shows the need for the countries to embrace the energy transition even as they strive to get value from and develop their petroleum resources. It makes a case for balancing the sustainability concerns and the utility potential of petroleum resources. Finally, it sheds light on the new players’ challenges and provides insight into the policy options available for balancing the transition and socio-economic needs of the countries.

More comprehensive recommendations include decarbonising oil and gas activities, intermediate development of natural gas energy, systematic investment in renewables, and, most importantly, pursuing their individual transition paths considering their unique growth needs and resources.

Keywords: Energy Transition, Nascent Oil and Gas Producers, Sustainability, Utility