Dealing with market volatility is a global issue. Since the start of 2016, drops in the Dow Jones index, Nikkei and the FTSE100 have highlighted that many economies around the world are operating with a GDP level that is well below potential. Oil producing countries have been selling financial assets in order to mitigate the impact of falling oil prices. This has had a destabilising effect on the markets and the challenges of surviving and thriving amidst a climate of market volatility are particularly pronounced in Africa.
Advancements in technology in all types of energy are leading to cleaner solutions. The potential of new technologies is rendering the “clean v dirty” energy debate a moribund point. The scale of the challenge ahead requires much bigger ideas about how to work together to ensure all forms of energy become as affordable, secure and as clean as possible.
Sustaining growth while simultaneously reducing economic dependence on volatile oil prices places huge pressure on developing nations. Creative and sustainable debt restructuring and use of macro financial instruments are helping many African nations to partner their way to growth. Similarly, large scale infrastructure projects are attracting expertise and investment from around the world.
The recent development of the Chad-Cameroon pipeline by the Cameroon government serves as an example of this. This project also highlights how partners can work together to deliver something tangible that makes a difference to the lives of local citizens.
Governments across Africa are facing a number of economic challenges in 2016. The impact of the decline in commodity prices has brought the challenge of sovereign debt into sharp focus. The shift towards international capital markets and new bilateral lenders, including China, has brought with it increased complexity and the demand for more strategic support with restructuring negotiations.
Many African countries remain locked in the process of negotiating payment terms with the hope of easing economic constraints sufficiently to sustain long term economic growth. As commodity markets creak, the fear of a sovereign debt crisis remains. Negotiating sustainable long term resettlements requires genuine partnership, which is exemplified by the Seychelles renegotiation of 100 loans from 27 creditors. The deal involved a complex 45% write-off agreement and securing terms from 2018 over a 20-year period with a five-year grace period.
Scale of Middle East ambition provides partnership opportunities
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Dubai’s Mohammad Bin Rashid Solar Park is one of the world’s largest solar energy projects and aims to generate 1,000MW of power by 2020, increasing to 5,000MW by 2030, with total investments of US$13 billion. The park is expected to reduce the carbon emissions of the UAE’s most populous city by 6.5 million tonnes annually. Over 100 green car chargers have also been installed to make electric car charging easier right across Dubai.
Saudi Arabia has also been playing a leading role in driving forward hugely ambitious renewable energy projects in recent times and this trend looks set to continue. More than US$100 billion in Saudi renewable energy projects were recently announced at the World Future Energy Summit in Abu Dhabi, UAE. The Kingdom’s energy demand is expected to grow by 45% from 69 gigawatts in 2014 to 100 gigawatts in 2040. According to a recent report by Frost & Sullivan Research this amount is nearly as much as the rest of the GCC combined. To help deal with energy demand Saudi Arabia plans to spend US$109 billion to install 54 gigawatts of renewable energy by 2040. By 2020, the Kingdom’s projects alone will account for 70% of the total value of the GCC’s renewable energy projects. One of the development areas enjoying the strongest growth is solar power. Saudi Arabia has set a target to install 41 gigawatts of solar power by 2040.
Australia also remains at the forefront of global innovation in renewable energy. Australia’s Renewable Energy Target is expected to create more than US$28 billion worth of investment before 2030. Although the commitment is long term, the opportunities exist in the near term also. Between 30 and 50 major projects are planned to be built within the next five year period alone.
Meanwhile in Europe, France has just announced solar panels will be installed on 620 miles of roads in the next five years. If successful, this project could supply five million people (8% of the country’s population) with electricity. The French government has also been working to lower solar feed-in tariffs driven by the need to counter inflation in the photovoltaic sector.
France has also joined forces with India in launching a new international solar alliance with the goal of bringing clean and affordable energy within reach of all citizens. The Indian government estimates that over 100 countries already rich in solar energy will become part of the alliance. China and the US are also involved in the alliance that aims to mobilise US$1 trillion of investment in solar projects by 2030.
However, while much focus is on the future development of renewable energy, traditional energy sources continue to play a huge role in meeting the demands of the world’s population.
Investment in making these traditional energy sources clean will remain an important priority for developed nations. With coal supplying over 40% of global electricity demands, China and the USA are leading the efforts to dramatically reduce the harmful effects of coal production.
The GreenGen facility in Tianjin is one of the most advanced global efforts to develop carbon capture and storage technology (CCS) on a grand scale. Many leading environmental researchers and campaigners now consider CCS as critical in helping to avert future climate change disasters.
The GreenGen project is a prime example of global partners collaborating to solve commercial challenges with huge societal consequences. The facility is built by a Chinese state owned utility company in partnership with US firm Peabody energy, the world’s largest private coal company.