KPMG has released a new report highlighting Africa’s significant investment opportunity in renewable energy, detailing nearly US$250 billion untapped green investment opportunities in areas such as solar, wind and hydrogen.
As it stands, Africa will need US$277 billion annually between 2020 and 2030 to reach its Paris Agreement targets and implement its nationally determined contributions, to contribute to limiting global warming to 1.5°C, according to the Climate Policy Initiative. Despite this, it currently only receives US$29.5 billion in annual climate finance, revealing the significant inflows of both public and private finances required from domestic and international sources.
The report ‘Climate Investing in Africa’ reveals that, as Africa fast approaches an anticipated period of economic prosperity, and as a home to mineral and resource rich land, there is an obvious yet untapped investment opportunity for private sector financiers.
Pieter Scholtz, KPMG’s ESG Africa Partner Lead, said: “It is unlikely that global climate change mitigation efforts can be successful without taking Africa into consideration. The continent offers some of the planet’s biggest and most profitable options for investments in the global energy transition.”
Despite its abundant renewable energy resources and vast non-arable land, Africa currently receives only three percent of global renewable energy investment, a stark contrast to the continent hosting 20 percent of the world’s population. The whitepaper details why private sector investment will therefore be vital to close the electricity gap in Africa and help decarbonise industries and economies, in order to support the region in a just transition.
The power of green hydrogen, despite the fact that Africa has some of the greatest potential worldwide for producing hydrogen and ammonia from renewables at relatively low cost, the current use of low-carbon hydrogen on the continent today is minimal. Should existing commitments to reduce emissions be met by governments globally, it is projected that demand for green hydrogen projects will increase dramatically.
