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Justin Guay Headshot

Power Africa or Power Oil & Gas Profits?

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Slowly but surely one of the most pressing development issues facing the international community, energy poverty, is getting the recognition it deserves. Most notably, President Obama announced a signature initiative, Power Africa to address the issue replete with $7 billion in US Taxpayer dollars. One of the smallest agencies in the US Government, the Overseas Private Investment Corporation (OPIC) is a big part of that effort. That's great news for Africa because they punch well above their weight when it comes to clean energy finance - especially for the poor. The problem is oil and gas companies are upset that OPIC now overwhelmingly supports clean energy. Their solution is to gut OPIC's environmental and climate regulations to enable them to dramatically expand oil and gas infrastructure across Africa. It's a solution that will not only pad their profits, but confine millions of Africans to darkness.

The oil and gas solution? Africa needs 'cheap' energy at 'scale.' That means pumping billions into oil gas, and coal and extending the grid to everyone. In order to achieve this solution we also need one thing: to remove any and all pesky climate regulations that might get in the way. After all, these are poor Africans, they need energy so badly we simply can't stop to see what impacts our energy choices might have. This is after all the oil and gas industry a beacon of responsible stewardship of Africa's natural resources. Their message: we don't need safeguards or regulation, trust us.

Apart from that glaring red flag the logic is simple, concise, and alluring. That's why it has drawn supporters like Bono's ONE campaign who support a new legislative effort to gut the Greenhouse Gas Cap (GHG) at the Overseas Private Investment Corporation. Worse, gas manufacturers have succeeded in getting the house of representatives, to pass a bill that may direct OPIC to deregulate its energy investments. Now they are pushing hard to pass an extreme version of this bill in the Senate which would guarantee that OPIC's investments would be deregulated to enable an expansion of dirty energy.

But just like the Greek Sirens of old gutting climate regulations at OPIC will lead us anywhere but the future we want. Instead, this business as usual approach will fail to end energy poverty instead saddling the continent with an outdated and heavily polluting grid. This at a time when cheap clean energy is becoming widely available thanks to the help of development banks who are shunning dirty sources of energy like coal plants that are no longer being built.

You see the truth is according to the International Energy Agency (IEA), a business as usual approach defined as investments in grid extension and large scale centralized (mostly) fossil fuel power plants will still leave 1 billion people in the dark - 2/3 of which will live in sub-Saharan Africa. What the IEA says is needed in order to deliver universal energy access is at least 60% of all investment flowing to decentralized off-grid clean energy - not oil and gas. That investment will power 70% of all rural populations - the vast majority of the energy poor - or 325 million people in Sub Saharan Africa. That means regardless of climate concerns the right tool for the energy access job is decentralized off-grid clean energy.

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It just so happens that a vast amount of entrepreneurial energy is laying the foundation for decentralized clean energy to succeed. From piggybacking on mobile phone infrastructure by deploying Tower Power and Community Power to deploying 30 to 40,000 solar home systems every month in some countries decentralized clean energy is delivering where oil and gas have failed. The best part is that it's delivering on a time scale that matters - now. Even better it avoids the oil curse which after decades of research has conclusively shown that Oil and Gas development has been anything but a boon for Africa.

That leaves us with our present dilemma. You see OPIC happens to be an outlier with President Littlefield championing clean energy and especially off grid clean energy entrepreneurs. That's why OPIC is one of the few institutions home to a dedicated pot of finance for off grid clean energy entrepreneurs the African Clean Energy Finance (ACEF) program. They are doing exactly what they should do to support energy for the poor. If it were up to President Littlefield they wouldn't touch the cap. She said as much at a recent event in D.C. saying 'the constraint on OPIC is staffing, not the GHG cap.'

So if OPIC doesn't want this, if what they really need is simply staffing, what gives? To answer that we need only look at who would benefit from deregulation of the President's signature initiative - they start with oil and end with gas.

Their efforts would directly undermine the President's leadership on climate which is picking up steam overseas. From the World bank's announced restrictions on coal finance , to the European Investment Bank following suit to Nordic countries also banning overseas coal investments at the G20, the US is moving back into a position of leadership and authority on climate.

But at the end of the day this isn't about climate, it's about technological progress. So I'll leave you with this. American telecom operators are busy ripping copper out of the ground because centralized landline networks are obsolete in the age of the mobile phone. If it were up to the Oil and Gas guys we'd all still have landlines but we'd also get a loud and heavily polluting diesel gen set in our backyards to power this obsolete network. That's basically what the they have planned for Africa when they push an outdated centralized, heavily polluting grid at a time when we have cheaper, more effective clean energy technologies.

Let's make this time different. It's time to leave OPIC's GHG cap alone, and let them get back to the great work they're doing supporting the entrepreneurs who are out there building the future we want to see. A future where climate and development are solved with 21st century clean energy technologies - not the mindset, policy framework, and 19th century technologies that will leave hundreds of millions of Africans in the dark.

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