PODCAST | African moves to harness renewable energy

With the UN Climate Change Conference (COP27) grabbing global headlines, Business Law Focus editor Evan Pickworth spoke to Mohamed Ghannam, managing partner of Baker McKenzie in Cairo; Oludare Senbore, partner at Aluko & Oyebode in Nigeria; and Kieran Whyte, partner and head of the energy, mining and infrastructure industry group at Baker McKenzie in Johannesburg, about the efforts taken by the governments in their countries to address this urgent need to harness renewable power. Such efforts are expected to provide exciting opportunities for investors in the African energy sector.

Listen to the discussion, here: 

The future of the planet came under intense discussion at COP27, with participating states shedding light on various global climate change-related areas, including climate adaptation, climate financing, renewable energy, cutting greenhouse gas emissions, as well as challenges with regard to food, agriculture and fossil fuels. In this regard, Egypt had already taken steps towards mitigating climate change and intensifying green initiatives. For instance, Sharm el-Sheikh, the COP27 host city, was recently declared a green city, with hotels powered by solar energy and transportation powered by electricity.

There have also been a number of green campaigns that were launched during 2022, such as planting 100-million trees in different cities in Egypt. Renewable power is another key discussion area at the climate conference, as the country is currently focusing on renewable energy projects with an aim to increase the supply of electricity generated from renewable sources to 20% by 2022 and 42% by 2035. The government of Egypt has now also expressly recognised the production, storage and export of green hydrogen and green ammonia among the areas falling within the state’s economic development strategy.

In Egypt

Article 20 of the Investment Law No 72 of 2017 (Investment Law) provides that companies that are established to develop a strategic or national project that contributes to achieving development, or projects in partnership with the private sector and the state, the public sector or the public business sector, in the area of public utilities, infrastructure, new or renewable energy, roads, transportation or ports, may, by a cabinet decree, be granted a “single licence” for the establishment, operation and management of the project, which will include a construction permit and an allocation of real estate property required for the project.

Such a licence will be effective without the need for any further procedures and may include other additional incentives for the project provided in the Investment Law. The government of Egypt has now also expressly recognised the production, storage and export of green hydrogen and green ammonia among the areas falling within the state’s economic development strategy. It has passed a decree that would allow green hydrogen and green ammonia projects to benefit from a wide range of state support under the country’s existing Investment Law, including tax incentives. This is a key development for Egypt’s hydrogen economy and we expect that it will stimulate private investment and the development of new green hydrogen and ammonia projects in the country.

In Nigeria

On August 24, the Federal Government of Nigeria launched its Energy Transition Plan (ETP). The ETP, which was launched by the vice-president on behalf of the government, has a double-pronged objective of achieving universal access to energy by 2030 and a net-zero emission target by 2060. An additional legislative action by the Federal Government of Nigeria is the Petroleum Industry Act of 2021, that empowers the Nigerian National Petroleum Ltd (a state-owned oil company) to engage in the business of renewables.

This further confirms the country’s drive for energy transition, as do proposed amendments to the Electric Power Sector Reform Act, which provide that distribution companies must ensure that a portion of the electric power that they purchase must be from renewable sources. This is supposed to provide support for the growth of renewable power projects. An additional legislative action by the Federal Government of Nigeria is the Petroleum Industry Act of 2021, that empowers Nigerian National Petroleum Ltd (a state-owned oil company) to engage in the business of renewables. This further confirms the country’s drive for energy transition, as do proposed amendments to the Electric Power Sector Reform Act, which provide that distribution companies must ensure that a portion of the electric power that they purchase must be from renewable sources. This is supposed to provide support for the growth of renewable power projects.

In SA

On November 7, during the World Leaders Summit at COP27,  President Cyril Ramaphosa launched the new Just Energy Transition Investment Plan (JET-IP) for SA. It was at COP26 in November 2021 that it was first announced that the governments of France, Germany, the UK, the US and the EU had pledged $8.5bn in first round financing to assist SA with energy transition projects as part of the Just Energy Transition Partnership (JETP) between the countries. In October 2022, the SA cabinet approved a five-year investment plan for the $8.5bn package. The JET IP plan is aligned with the cabinet-approved National Just Transition Framework.

The SA government said the plan outlined the investments required to achieve the country's decarbonisation commitments, while promoting sustainable development, and ensuring a just transition for affected workers and communities — in other words, a whole society approach is required. 

The plan covers electricity, new energy vehicles (NEVs) and green hydrogen, and identifies $98bn in financial requirements over the next five years, to come from both the public and private sectors. The goal of the JET-IP is to decarbonise the SA economy to within the NDC target range of 350-million to 420-million tonnes of CO₂ by 2030, in a just manner. The JET-IP is centred on decarbonisation, social justice, economic growth and inclusivity and governance. The investment criteria for the plan include projects that deliver on greenhouse gas emissions reduction and just-transition outcomes, and are catalytic in nature and ready to implement.