How Africa Can Reap The Benefits Of A Net-Zero Future

  • Deloitte Africa releases report during COP27 titled ‘Building Climate Resilience: Opportunities and considerations for Africa in a net-zero future.
  • Deloitte estimates that the continent could lose US$16 trillion between 2021 and 2070 due to climate change.
  • The global economy stands to lose 14% of GDP (or US$2.1 trillion) in 2070 alone if average temperatures rise by 3°C and the world does not achieve net-zero by 2050.
  • Report identifies seven areas of opportunity for the continent that arise from decarbonisation.

Deloitte Africa has released its latest report titled: Building Climate Resilience: Opportunities and considerations for Africa in a net-zero futurewhich laysbare the devastating consequences that climate change is having and will continue to have on the African continent but also outlines seven opportunities that the continent has in the drive towards a global net-zero future.

The report was inspired by the Deloitte Global Turning Point series and has been launched to coincide with the COP27 conference, currently underway in Egypt. It will also be the subject of a virtual discussion hosted by Deloitte Africa next week Tuesday.

“Damage caused by extreme weather events and a changing climate is already being felt across Africa,” says Mark Victor, the Environment, Social and Governance (ESG) Leader at Deloitte Africa. Climate change has led to loss of lives, destruction of infrastructure, and an increasing imbalance in natural ecosystems, as well as food shortages and major socio-economic challenges. “Unless immediate action is taken, the African continent will be among the worst-affected regions in the world,” Victor added.

The report also notes that Africa is faced with a conundrum. “While industrialisation is key to eliminating poverty and raising living standards, replicating other countries’ path to industrialisation will increase the continent’s relatively low greenhouse gas (GHG) emissions, having an even greater impact on the effects of climate change and the cost of transition.”

Africa is likely to experience some of the worst effects of climate change. Deloitte estimates that the continent could lose US$16 trillion in Net Present Value (NPV) terms between 2021 and 2070 due to climate change and stands to lose 14% of GDP (or US$2.1 trillion) in 2070 alone if global average temperatures rise by 3°C and the world does not achieve net zero by 2050. A loss of this scale is larger than the current combined economies of Egypt, Kenya, Morocco, Nigeria, and South Africa.

The report highlights the increasing frequency and volatility of the physical impacts of climate change as drought and floods in various parts of the continent from South Africa to Nigeria, Kenya, and Morocco to cyclones in Mozambique, rising sea levels in Mauritius as well as wildfires in North and South Africa.

Climate change is already impacting the agricultural sector through erratic production and food shortages including in Southern and East Africa where agriculture, forestry, and fisheries accounts for 15% of GDP and 60% of employment. The phenomenon is also impacting mining and the oil and gas industries through, for example, water shortages, the tourism sector through loss of biodiversity, manufacturing through the disruption of global supply chains as well as healthcare through the rise in infectious disease and contamination of food and water.

Despite these challenges, or perhaps because of them, Deloitte sees an opportunity for African economies as the world moves towards a net-zero future. One of these is the supply of minerals required for producing clean energy and electric cars and batteries. These range from Platinum Group Metals (PGMs) to vanadium, nickel, cobalt, copper, and rare earth elements (REEs). South Africa and other parts of the continent have these in abundance but to fully exploit increased demand, the continent must invest in downstream industry infrastructure including beneficiation, regional value chains and alternative business models.

The other opportunity identified is investing in a greener energy mix by unlocking opportunities for green hydrogen, Concentrated Solar Power (CSP), geothermal and wind in various parts of the continent and investing in renewable energy while decentralising power generation.

The report notes that African countries have a unique opportunity to industrialise their economies by following a relatively clean energy path and create climate resilient industry with funding and technology from developed countries. South Africa, as the continent’s most industrialised economy, should examine carbon emissions in its value chain, including energy production, and invest in cleaner manufacturing technologies to maintain competitiveness and be able to export to key regions in the world beyond a certain point in the future.

Other opportunities are identified in adapting agricultural practices to enhance food security and harnessing the continent’s natural adaptation and mitigation capabilities such as the Congo Basin Rainforest, which can be used for carbon absorption. The continent can also make use of carbon credits, which were highlighted as key mitigation instruments at COP27 last week.

The last two opportunities are to be found in city planning and infrastructure upgrade, which was brought to sharp focus by devastating floods in Durban, South Africa earlier this year as well as reconfiguring public health systems, starting with providing more facilities, fixed and mobile and building in early warning systems for disasters and emergencies.

Victor notes that to achieve these goals, Africa needs to mobilise adequate funding, with the US$8.5 billion pledged by rich countries at COP26 being small but an important start. The continent needs to pursue a just and fair transition, with adequate consideration for example for workers and communities in South Africa’s coal mining industry and adopt a collaborative approach between countries.

“The cost of global inaction in the face of climate change is significant, particularly for Africa, and the need for action has moved from being a future challenge to an integral part of daily life.”

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