Blog: An Interview with Lundi Ndundane
By Humphrey Olugbue
This transcript is part of a series of Top Voice interviews brought to you by IBR Group International on the topic of sustainability. To learn more about our Top Voices in Sustainability interviews or to discover how you can contribute, please contact us directly.
Q1: Tell us a bit about your role with Clean Energy 4 Africa?
My role at Clean Energy 4 Africa is one of advocacy and thought leadership. At Clean Energy 4 Africa my main aim is to leverage the experience of our cross-functional team to bring to the fore awareness and participation by African youth in the renewable energy space.
Q2: Do you believe renewable project financing initiatives such as the climate bond initiative, creates an adequate financing mechanism for achieving net zero emissions by 2050?
The Climate Bond initiative plays a significant role in the journey towards achieving net-zero emissions by 2050. The cost of achieving net-zero is a mitigating factor in whether this financing mechanism is successful or not. It is estimated that new investment of between US$1 trillion and $2 trillion per year is necessary for about the next 30 years - provided that decisive action is taken immediately. So, it is evident that cost can be easily accommodated by capital markets, in 2019 global debt markets had an outstanding value of $105.9 trillion.
To answer the question in clear terms, the level of investment in climate bonds falls below the current required rate to meet domestic national carbon reduction targets and as such in its current levels it fails to meet net-zero targets. A steady number of governments and private companies have made pledges to balance greenhouse gas emissions to zero through reduction and offsetting. While this is encouraging, this is not enough, for instance, China and Brazil, one of the major emitters, do not issue a green bond as yet transition to a net zero economy, and mitigate any adverse consequences.
Q3: In your opinion, how are African economies approaching the breadth and significance of the global decarbonisation challenge?
In response, African governments have introduced legislation and accompanying policy instruments towards the attainment of clean and renewable energy in a bid to fight climate change -a quicker conversion to clean energy is the most effective option for combating climate change. Choices of policy instruments along with their designs need to be designed and customized to the specific country context, whilst being cognisant of the state of available technology and the energy market as a whole, along with the country-specific developmental aims that can be met.
A perfect example of an enabling policy framework is that of Rwanda, through its National Energy Strategy, seeks to combine integrative and enabling policies whilst aiming to alter consumer behaviour. Rwanda's strategy pushes for the diversification of energy sources but also advocates for the efficient use of energy to avoid energy wastage. This is evidenced by conducting energy audits on industries and grid extension. Rwanda utilizes instruments such as biofuel blending in the transport sector in the short term but also utilizes long-term strategies such as capacity-building programmes with a strong focus on capacitating female expertise in renewable energy technology.
The policy responses however admirable have to be far-seeing and cognisant of potential unintended consequences. For instance, Africa is the largest market for second-hand cars - the United Nations Environment Program notes that western countries are using low-income countries as dumping grounds for their second-hand cars. Only Sudan, Egypt, and South Africa have banned the importation of banned cars. With the phasing out of internal combustion vehicles, it is likely vehicles will be dumped in Africa's second-hand market. Should this happen, the fight against climate change will be stalled as Africa will experience further pollution.
Countries such as South Africa, Zambia, and the Democratic Republic of the Congo will supply raw materials to support the EV market. It is imperative that countries that are supplying the EV market beneficiate the mining process by localizing components of the manufacturing process. It is very important to safeguard the mining process from illicit elements who would seek to use child labour and unfair labour practices.
Q4: The IEA's recent clean energy investment report on financing clean energy transitions in emerging and developing economies calls for a "focus on channeling and facilitating investment into sectors where clean technologies are market-ready" - what do you believe are the headwinds, tailwinds or otherwise, if any, to the adequate financing of clean and affordable energy in Africa?
I believe the headwinds to accessing adequate financing of clean and affordable energy in Africa would be that African country's transition journey is not uniform and different countries find themselves in different destinations of the journey so a monolithic response would not be appropriate. African countries looking to intensify clean energy investment face a range of challenges, which would in turn adversely affect the risk-adjusted returns to investors and the availability of bankable projects. Challenges include the availability of enabling infrastructure and the creditworthiness of counterparties.
I believe the tailwinds to channelling and facilitating investment into sectors where clean technologies are market-ready, particularly in the sectors of renewables is that the groundwork for scaling low carbon fuels is already exists.
Q5: It's widely known amongst pressure groups and climate-focused NGOs that there is a financing gap in accomplishing SDG7. Where do you see new finance positioning itself along the spectrum of affordable and clean energy?
I believe that the new finance positioning will focus on delivering socio-economic co-benefits. Finance approaches that seek to close the gap in financing for SDG7 will have to account for socio-economic impacts and the accompanying snowball effects. For instance, if SDG7 had adequate funding the effects of Covid19 would not have been felt so immensely - access to reliable affordable energy would have helped in the storage of the vaccinations.
Q6: Would you consider the promise that major international oil firms in countries like Nigeria have established as being of significant value to the Paris objective?
I believe major oil international companies are not of value to the Paris objective, unless they adopt a diversification strategy that aims to embrace cleaner energy sources whilst concurrently seeking to reduce their presence in the fossil fuel sector. It has been encouraging to see that French energy company Total has started chartering this journey, they have pledged to devote more than 20% of their investment budget towards renewable energy sources. Chevron's recent announcement that it will be selling oil interests from Nigeria should not be seen in the same light as it is a reaction to regulatory challenges in the Nigerian market and a signal of embracing any of the Paris objectives.