The West must show more commitment to fossil fuel transition, says Otchere-Darko

Chair of the Ghana hub of the Advisory Board of the Commonwealth Enterprise and Investment Council (CWEIC), and Senior Partner at Africa Legal Associates (ALA) Gabby Asare Otchere-Darko, has called on the developed world to demonstrate more commitment to the fossil fuel transition and by extension, the fight against climate change, particularly in Africa.

The West, according to Mr Otchere-Darko, continues to engage in all the activities that have contributed to and continue to contribute to the climate crisis the entire globe is struggling with and when it is inconvenient to them, then they turn to talk about climate sustainability.

“Sustainability means different things to different folks. From where I come from, it means sustaining livelihoods, moving from mere sustenance to a better living standard,” he said.

Contributing to a panel discussion at the Commonwealth Trade and Investment Summit taking place at the Glaziers Hall in London, United Kingdom (UK) on 27 November 2023, Mr Otchere-Darko said a critical look at the credit carbon emission arrangements will show that it is about big multinationals in the West being able to “greenwash” and sustain their profits because the big countries in the west continue to pollute so long as they can afford to buy carbon credit from other developing countries like Guyana, among others.

“The fossil fuel transition must be based on a country’s capacity first to develop because if you have 900 million people in the world without access to electricity and 600 million are in Africa, do they care about the source of energy… for them [the 600 million in Africa], sustainability is actually staying alive,” Gabby Otchere-Darko remarked.

“Germany was very high in terms of [energy] transition until they got hit by the gas crisis and they moved back to coal. There is a lot of hypocrisy and if they [the developed economies] are not willing to fund the energy transition in Africa and elsewhere then they have to allow Africa and the developing world to exploit their fossil fuels” the Chair of the CWEIC Advisory Board, Gabby Otchere-Darko further remarked.

He called on Africa’s development finance institutions, banks and private equity funds to do more to invest in the needed infrastructure to get Africa to develop quickly because since 2019 we have seen a policy shift from the World Bank and western financial institutions from investing in fossil fuels. But the meaning of energy transition is to first secure energy supply and to invest in transition fuels as gas.

Panellists

The panel discussion was chaired and moderated by The Rt Hon Ruth Kely, Chair, Water UK, and the panelists included; Mr Thulci Aluwihare, Deputy Managing Director, CHEC Port City, Mr Niro Cooke, Group Director, Capital Maharaja Group, Mr Bony Dashaco, President and CEO, Dashaco Holdings Africa Mr James Fisher, Head of Strategic Partnerships, Building Research Establishment, Mr Yofi Grant, Chief Executive Officer, Ghana Investment Promotion Centre, Mr Nkongho Agbor Tommy, Co-Managing Partner, KMN Law Firm and Mr Danilo Ventura, Director for Business Development, OPAIA Group.

The rest were Ms Toyin Sanni, Executive Vice-Chair, Emerging Africa Group, Ms Roxana Slavcheva, Global Built Environment Lead, World Resources Institute, Dr Bimal Kantaria, Managing Director, Elgon Kenya, Mr Pranav Khamar, Portfolio Manager, Gemcorp Capita, Mr Daniel Mouen Makoua MEng, Co-Founder, Zulu Ecosystems Mr Blaise Moussa, General Manager (CEO), CamWater, Mr Peter Obor, President, Commonwealth Association of Architects, Mr Derrick Roper, Managing Director, Novare Equity Partners, and Mr Andrew Smith-Maxwell, Senior Adviser, Corporate Finance and Infrastructure, Honeywel Group.

CTIS motivation

The panel discussion was motivated by the fact that the Commonwealth is currently home to around 2.5 billion people. According to UN projections, the cumulative population of the Commonwealth is expected to increase by an average of 6.6% every five years, outpacing the worldwide average of 4.4%, and reaching a peak of 4.4 billion by 2100.

The shifting demographics and increased urbanization demand creative solutions to ensure success and inclusivity for populations, encompassing well-planned cities and dependable, essential infrastructure that align to the Sustainable Development Goals.

The path to sustainable cities would be impossible without a strong partnership between governments, developers, financiers, and other ecosystem enablers. Private sector investment and improved investment planning are crucial to ensuring that rapidly developing cities are expanded and managed orderly and sustainably.

The 2016 New Climate Economy Report presents sustainable infrastructure as the only way to build cities with better air quality and connectivity, ecosystems that are robust and resilient, and energy systems that can curb climate change.

The growing focus on sustainable infrastructure stems from its potential financial and economic advantages. These benefits arise from reduced material usage due to enhanced design, emphasis on pollution prevention leading to lower carbon emissions, improved valuation of environmental services, and stronger labour and community relations.

However, the challenge of bridging the infrastructure finance gap persists, with the world confronting an anticipated USD 15 trillion shortfall in infrastructure financing by 2040.

Critical questions

This roundtable panel discussion to this end, delved into the critical need for infrastructure projects to possess manageable risk profiles, demonstrate clear commercial returns, establish sustainability credentials, and exhibit financial attractiveness.

It also examined how the public and private sectors can best work together to reduce the infrastructure gap and promote sustainable development. Given the substantial gap in infrastructure financing, it’s simple to overlook the necessity for sustainable infrastructure.

Critical questions and issues came up for consideration. Among them were; “How can we ensure new projects are environmentally conscious throughout- considering economic, financial, social, and institutional aspects?

There is a wide consensus among the global financial community that the main obstacle to more infrastructure investment isn’t the absence of funds but the scarcity of bankable’ projects. What enduring obstacles persist in developing these ‘bankable’ projects?

How can governments, financial institutions, and the private sector collaborate to strengthen public-private partnerships (PPPs) as a pivotal tool for achieving infrastructure development goals while considering sustainability?

Many low- and middle-income countries rely on hard currency, and long-term concessional lending, exposing them to currency risk and increasing debt service costs over time.

How can development finance institutions (DFIs) collaborate with private financial firms to scale up risk mitigation programs and address the challenges associated with accessing local currency finance for infrastructure projects?

What alternative financial instruments, such as green bonds or infrastructure investment funds could be effective in attracting institutional investors towards sustainable infrastructure projects and diversifying sources of finance?

Apart from increased risk mitigation, a solid legal framework for project financing is crucial – what are the main legal and regulatory challenges and how can the legal sector support the viability of sustainable infrastructure investment?

To emphasize his point, Mr Otchere-Darko, who is also the Chairman of ALA Strategic Consult in Georgetown, Guyana, use the Caribbean economy as an example.

He said Guyana, from studies in 1974-1976 realised its major hydropower capacity in the Amaila Falls with enough capacity to support the power demand of Guyana.

But the project never kicked off over the four decades because of lack of funds. Now that they have discovered oil with guaranteed revenues of over $1 trillion, Guyana, which has completely depended on heavy fuels to power its electricity plants can afford to develop its hydropower potential.

“The issue is not that there is no money for alternative energy but are customers willing to pay more for cleaner fuels? Are the profit margins attractive enough for investors, especially now with interest rates so high,” he told the high-powered gathering of business executives from Commonwealth countries.

Reporting by Wilberforce Asare in Accra

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