African countries depend on fossil fuels. Only 2% of Chinese loans are allocated to renewable energies such as photovoltaics and wind.
China has a unique opportunity to drive an energy revolution in Africa, but first it must reverse nearly two decades of neglect of green energy investments there, research from Boston University showed on Tuesday.
Beijing has become the continent’s largest bilateral trading partner since the turn of the century and has financed billions of dollars in large-scale infrastructure projects.
Three years ago, Chinese President Xi Jinping said the country would not build new coal-fired power projects abroad and pledged to address climate change by supporting the development of green, low-carbon energy.
Although Africa’s green energy potential is one of the highest in the world, Chinese loans and investments have so far provided relatively little support to the continent’s energy transition, according to a report by the University’s Center for Global Development Policy of Boston and the African Economic Research Consortium.
Loans for renewable energy, such as solar and wind, from China’s two main development financial institutions constituted only 2% of their $52 billion in energy loans between 2000 and 2022, while more than 50% is allocated to fossil fuels.
“Given current economic challenges and future energy opportunities, China can play a role in contributing to Africa’s energy access and transition through trade, finance and FDI (foreign direct investment),” the report says.
Chinese development finance institutions have focused on investing in the extraction and export of raw materials to China and in electrification projects.
Chinese loans have gone to many of the same sectors that produce the oil and minerals that return to China.
At least eight hydropower projects financed by the China Export-Import Bank (CHEXIM), accounting for 26% of all hydropower loans, are intended to support the extraction of various metals.
“Although this avenue has generated export revenue for African economies, African countries are still not receiving the full benefits of renewable energy technologies,” the report says.
In 2022, fossil fuels accounted for around 75% of total electricity generation in Africa and around 90% of energy consumption, according to the report.
