Africa can benefit massively from seizing opportunities presented by the global green revolution, including by leapfrogging existing technologies, but this will not happen spontaneously and will require green industrial policy to facilitate developments, German Development Institute sustainable economic and social development head of department Dr Tilman Altenburg said this week.

The complexities of the current global clean energy revolution – compared with earlier industrial revolutions that centred on a technology or a related set of technologies – make the planning and sequencing of changing industries and economies to use renewable energy difficult, as the clean energy revolution is expected to impact on a significant range of industries, as well as on mobility, social and economic activities, he stated.

Further, he said, there were reasonable arguments for adopting clean energy systems soon, as well as for continuing with polluting technologies and then cleaning up later, but an obvious benefit of adopting clean energy systems early is a healthier environment.

"In the long run, it is clear that we need to find ways to do business that do not destroy the natural environment. There is no life or economy on a dead planet," he emphasised during a public lecture on green industrialisation in Africa hosted by the Department of Science and Innovation/National Research Foundation South African Research Chair in Industrial Development at the University of Johannesburg and the Centre of Competition, Regulation and Economic Development.

Countries that start moving towards clean energy systems may also get preferential access to international green funds, of which the Just Energy Transition partnership deal of South Africa is a good example, he pointed out.

Additionally, such countries can improve their energy sovereignty and reduce imports, which can increase the fiscal space they have available to them to pursue other development objectives.

Similarly, an environmental tax on polluting industries and companies can be recycled to spend on social initiatives.

If African countries move to position their economies and industries to seize green industry opportunities early, they will avoid the increased costs of switching to green systems later. The longer economies stick to unsustainable pathways, the more difficult and costly it will be to switch, particularly for infrastructure with long investment cycles, such as fossil fuel power plants and the way cities are built, Altenburg said.

"Africa is urbanising rapidly. Urban design over the past century was optimised for car transport. If we design cities like this, we will lock in high-carbon infrastructure," he said.

Conversely, there are reasonable reasons that countries may opt to defer moving to clean energy, including retaining employment, such as that provided by South Africa's internal combustion engine (ICE) automotive sector, and to gain short-term benefits.

Additionally, adopting clean energy systems early will reduce the fiscal space available to implement other developmental initiatives, and may come at a higher cost than switching later once other countries have developed mature versions of technologies.

"These considerations are not trivial, especially for poorer countries, and the sequencing of transitioning an economy's sectors to clean energy is a deep and complex issue," he noted.

However, there are risks of not moving early; for example, once Europe phases out the sale of ICE vehicles in 2035, there will no longer be a market for South Africa's automotive sector vehicles, he added.

INDUSTRIAL DEVELOPMENT
Meanwhile, a late move to clean energy will reduce African countries' ability to increase their agency and role within new clean energy and green industrial value chains, and thereby lose out on potential jobs and industrial development opportunities.

"Energy sovereignty is a clear no regret option for Africa to move early to clean energy and green industries. Countries that perform well are also likely to receive international support, and there may be opportunities to start and deepen their role in leveraging renewable energy to produce green hydrogen, alongside other opportunities, such as low-carbon agricultural exports and developing the bioeconomy," Altenburg highlighted.

Further, an early move to clean energy will also support import substitution in African countries, most of which import a lot of green technology.

However, there are trade-offs for moving early, not least that early mover advantages tend to accrue to countries with strong innovation and research and development capabilities. This means that advanced countries that had invested heavily in research and development have a better starting position, he added.

Despite this, African countries can take a long-term perspective to attract energy-intensive industries to their locations.

"Renewables and green hydrogen supply can serve as a significant pull dynamic, such as for aluminium smelting and steelmaking. This also presents a clear sequencing for an economy to build renewable energy plants, develop its electrolyser industry and then the green hydrogen and chemicals industries.

"Further, attracting energy intensive industries, such as green steelmaking, can also serve to draw in industries that use these products, such as steel processing industries like the automotive industry, which is actively looking for more sustainable materials," Altenburg said.

Following this, African countries that are pursuing green industrialisation can focus on local uses for the products, such as green ammonia for the fertiliser industry, or the production of battery electric vehicles that can use the renewable energy being produced, as well as diverse smaller projects that tend to be less risky and more technology-leaning on average.

Additionally, Africa should also aim to increase its role in the supply and processing of industrial minerals, which it hosts in many regions, and not once again become subject to "extractivism".

"However, what is needed is a clear assessment of what the different pathways entail. All of this [transition to clean energy economies] will not happen unless there is a clear vision of where the country is heading.

"It is also a question about politics and the political economy. The transition to clean energy is systemic and requires more market intervention than previous industrial policies and industrial revolutions because markets have to internalise environmental costs that have so far been external to the economy.

"Owing to the systemic nature of the clean energy transition affecting many industries, there must also be a focus on overcoming coordination failure," Altenburg noted.