LNG, arugula, and righteous climate justice
What to worry (and not worry) about with East Africa’s coming gas boom
The boom that almost wasn’t might be back on. A decade ago, it looked like Mozambique and Tanzania would become major gas players. Then the projects stalled. Both East African gas markets now seem to be gaining momentum again – driven partly by new European demand for non-Russian gas and partly enabled by recent improvements in political conditions. A resumption of investment in offshore gas is thus being welcomed in Maputo, Dar es Salaam, and multiple European capitals. I have worries about what comes next, but my concerns are very different from the climate garment-rending you’re likely to find in the pages of the Guardian.
Gas back in the COP crosshairs
With COP28 hosted by UAE, expect lots of attention on gas – and lots of confused arguments about financing gas infrastructure in poor countries. A breathless piece from the Guardian ahead of the last COP is a perfect example of the arguments to come: alarm bells about the scary implications of African gas used to justify zero tolerance for overseas gas financing, such as a tightening of a 2021 pledge to “end new direct public support for the international unabated fossil fuel energy sector within one year.” Such calls may be well-intentioned but they’re upside down on climate justice.
What’s just happened:
Mozambique has had multiple offshore gas discoveries over the past decade, but a $20 billion investment led by France’s Total ground to a halt after a deadly insurgency in 2021 put construction on hold. Rwanda sent troops to stabilize the region and Bloomberg is now reporting that things look closer to restarting.
Tanzania also has sizable gas finds, but for years disputes between the government and developers looked insurmountable. Now, with a new Tanzanian president and growing interest in buying African gas, Bloomberg is reporting that a $40 billion export project led by Norway’s Equinor (with Shell and ExxonMobil), may also be close to a deal.
To say upfront, I have no idea if these specific deals are good ones for Mozambique or Tanzania. I similarly have no insights into whether guardrails around revenue will hold up to the inevitable political pressures that arise when a poor country is hit in the face with a pile of money. I wrote Oil to Cash, a book that argued why citizens should receive direct payouts from extractive projects, modeled in part on Alaska’s permanent fund dividend. (I explain the idea here with jellybeans 🤓.) But neither country seems inclined to try that approach — at least not yet.
Before I get to my specific worries, here are two irrefutable facts about Mozambique and Tanzania:
They’re poor. GDP per capita is just $492 per person (yep, that’s $1.35 per day) in Mozambique and $1,100 in Tanzania ($3/day). Their citizens earn less each day than a single cup of basic Starbucks coffee.
They don’t emit any carbon. Mozambique and Tanzania are among the very lowest emitting countries, both registering per capita CO2 emissions of just 0.2 tonnes (versus 14.7 tonnes in the US). They’re literally a rounding error.
My Three Big Worries
So what am I worried about? Here are three big mistakes that I see all the time – and expect to see again this year:
1. Conflating upstream oil & gas production for export with downstream gas for local development.
Poor people do not benefit enough from their own natural resources. Digging oil, gas, or minerals out of the ground rarely creates a lot of local employment or spin off businesses. The chain of potential benefits is even longer and more broken when resources are exported to richer nations and then citizens have to wait for the government to receive the income and ideally pass it down through public spending. So many ways this goes wrong.
That’s exactly why tying more direct benefits to the local economy is so crucial. Good development policy would, for instance, bundle every LNG export facility with local economic activity, such as a fertilizer factory, cooking gas, or electricity. (Even better: all three!) This is how to turn the geological lottery win of offshore gas, not just into cash, but investments in the expansion of agriculture, commerce, and industry. In other words: jobs.
But many arguments (ahem, Guardian) leap blindly from “oil exports haven’t developed Africa” (true) to “thus, Africans should not burn gas.” And then, worst of all, “if Africans won’t stop on their own, foreign activists should force development agencies to cut them off.”
At heart is a misunderstanding between upstream (gas extraction and export) and downstream (using that gas to provide electricity, cook food, or manufacture goods). They have very different impacts on development and very different financing options today. (I’m sorry, but if you don’t already understand this, you have no business writing about infrastructure finance or being quoted in a newspaper.)
The actual public finance debate that matters today – the one driving new rules at development agencies like the World Bank, the US Development Finance Corp, or British International Investment – is all about investment rules for downstream infrastructure.
The upstream debate is largely settled. Scarce public investment isn’t needed for oil & gas production. The big international companies, like those developing gas fields in Tanzania and Mozambique, can finance the projects themselves because they are rich & creditworthy while the exports will be sold to rich & creditworthy buyers. (Yes, sometimes companies ask for publicly-backed insurance to prevent future expropriation or short-term trade finance for equipment, but LNG production and export facilities are largely privately-financed commercial projects.)
The same is not true for local use. Downstream projects to use gas in countries like Mozambique and Tanzania absolutely require public finance. The factories or power plants don’t exist yet, while the buyers are neither rich nor creditworthy. That’s exactly the gap the IFC, DFC, and BII were created to fill. In fact, without such support, African countries will only export.
So the real climate justice position on gas-fired power in Tanzania and Mozambique→ not blocking projects, but rather insisting they be financed to ensure Tanzanians and Mozambicans benefit.
2. Ignoring Africa’s elected leaders.
I don’t think it’s controversial to say that Joe Biden is the most climate-friendly US president ever. And Olaf Scholz heads a ruling coalition with Germany’s Green Party. Yet both leaders have openly embraced natural gas for their own countries' energy security, and both have used gas investment as a way to build overseas alliances. While of course not everyone agrees with their choices, people seem to generally understand that short term jobs or energy security are political priorities that take precedence over long term climate concerns. Roger Pielke Jr calls this the Iron Law.
The Iron Law applies to African leaders too. Most take climate seriously but have to manage short term priorities of jobs and energy security. To his credit, President Biden’s Africa strategy released in August 2022 responds to the blunt entreaties from African leaders by explicitly recognizing gas:
“The United States will work closely with countries as they determine how to best meet their specific energy needs, which include… gas-to-power infrastructure.”
The World Bank too has shown new flexibility. Germany has, as far as I can tell, mostly decided to just live with its hypocrisy of shopping for African gas while still insisting it will only finance hydrogen or other non-fossil projects. (If this has changed, pls LMK).
Yet somehow it still seems ok in some circles to just ignore the views of African leaders when they want to use their own gas for their own countries’ development. (My favorite punching bag Guardian piece cites three activists but not a single elected African official.)
This isn’t hard. The leaders of Malawi, Uganda, Senegal, and both the recent Nigerian President and Vice President have published their views on this exact topic. Mozambique's President Nyusi and Tanzania’s President Hassan have been personally involved in concluding gas investment deals.
So the real climate justice position on gas-fired power plants in Tanzania and Mozambique→ listening to the needs and priorities of elected leaders.
3. Losing perspective on where emissions really matter (AKA why Africa’s gas is like hydroponic arugula).
I’ve written elsewhere about my geeky amateur obsession with vertical farming. High tech indoor vegetable growing seems like a cool idea for healthier local food that’s also better for the planet – or so I thought. Tamar Haspel’s Climavores podcast has a terrific episode that explains not only why greens are pretty irrelevant to my health, but that the climate benefits are exceedingly small. Agriculture matters to climate, but it’s mostly beef and the big crops like rice, corn, wheat, and soy. Worrying about the climate impact of lettuce is meaningless.
Worrying about the climate impact of Africa’s consumption of gas is also meaningless. No plausible scenario exists where African emissions blow the carbon budget. (And by plausible, I mean any analysis grounded in actual data and realistic investment pathways, not made up back-of-the-envelope hypotheticals.)
If there’s any African country to worry about it’s Nigeria. The country has plentiful oil and gas and will soon have the world’s third biggest population. Nigeria’s energy transition plan includes up to 10,000 MW of new gas-fired power by 2030. If that sounds like a lot… it’s not. The US has 557,000 MW and is building 27,000 MW more by 2025.
And if Nigeria’s emissions are too small to create a global problem, why would you even bother worrying about Mozambique or Tanzania?
More to the point, if all of Africa’s electricity consumption tripled overnight using only gas, the additional CO2 would equal 0.6% of global emissions (here is the math). And, of course, that’s not going to happen and no country would ever go gas-only. They, sensibly, want to exploit cheap wind and solar as much as possible. But those without ample hydro or geothermal options – and who are exporting gas to Europe or Asia – would likely find it practicable to use at least some of their gas at home for balancing power from renewables, to create industry, and as a cooking fuel that’s cleaner and safer than wood or charcoal.
So, if I want to change my diet to help the climate, I should cut down on beef and not worry too much about how my arugula is grown. And if I want to cut global energy sector emissions to help the climate, I should focus on the big emitters and not worry too much about how very poor countries meet their basic needs.
So the real climate justice position on gas-fired power plants in Tanzania and Mozambique→ squeeze the culprits, not the victims.
Fantastic and important article. Two more:
The Obvious Climate Strategy Nobody Will Talk About
Economic development is the only proven path to climate resilience
https://foreignpolicy.com/2022/11/06/climate-cop27-emissions-adaptation-development-energy-africa-developing-countries-global-south/
Green energy gridlock
https://www.npr.org/2023/05/16/1176462647/green-energy-transmission-queue-power-grid-wind-solar
Well balanced article. The reference to the “breathless” Guardian article made me smile. There seems to be a genre of breathless/doomer writing, exemplified by The Unhabitable Earth -- exciting reading but in the end not a lot of quality information or analysis.