In Africa, prioritizing fossil fuel excavation and production over green energy projects could be key to securing significant energy funding from the current U.S. administration.

For the past five years, Africa has been a lucrative investment destination despite global economic crises. “Africa demonstrated remarkable resilience in attracting FDI, underscoring the continent’s adaptability amid an uncertain global economic climate,” a report from Ernst & Young (EY) published in December said. “The continent’s 2023 FDI doubled since [2021].”

Last year, the U.N. Conference on Trade and Development noted Africa was the only region that saw FDI increase, recording an 84% surge over the previous year, mostly due to the Ras el Hikma Triangle project in Egypt. Excluding this project, the continent’s FDI still rose 23%.”

The EY report noted, “Key regions like North and West Africa, along with leading countries such as Egypt, South Africa and Nigeria, displayed strong investment appeal.”

Achieving energy self-sufficiency should amplify that investment momentum. Africa has “vast untapped resources and demand for investments [that can] bridge energy poverty and drive development,” according to a December blog post by the Wilson Center, a think tank. “For African nations, energy sovereignty is not merely a development issue. It is also a cornerstone of political and economic independence.”

With Africa needing about “$200 billion in investments to meet its energy needs,” according to the International Energy Agency, it is crucial for African governments to secure cooperation from willing deep-pocket investors and partners.

Finding balance

Amid increasing environmental concerns, more African governments are prioritizing a smooth energy transition. To meet short-term needs, African nations are still expanding their use of hydrocarbon fuels “despite promises made at the [2023] UN Climate Change Conference in Dubai,” reported Thaïs Brouck, a reporter for The African Report, a news platform.

Those projects run parallel to long-term renewable energy investments. “Africa’s abundant energy sources (sun, wind and water) and its commitment to renewable energy generation [is] drawing substantial investment,” the EY report said, “accounting for half of all foreign direct investment in 2023.”

In the next four years, that balance could tilt to non-renewables as the current U.S. administration has reversed foreign energy policy, touting fossil fuel investments while making clean energy projects harder to fund.

New U.S. policy

In March, U.S. Secretary of Energy Chris Wright said during the Powering Africa Summit held in the United States, “This government has no desire to tell you what you should do with your energy system. It’s a paternalistic, post-colonial attitude.”

However, he hinted the United States would invest only in fossil fuel energy projects, especially coal, which, according to the International Energy Agency, is the most polluting fossil fuel. “We’ve had years of Western countries shamelessly saying don’t develop coal; coal is bad,” Wright said. “That’s just nonsense, … coal transformed our world and made it better.”

According to the Africa Energy Council (AEC), a think tank, “Wright’s words challenge the years-long Western narrative discouraging African nations from developing coal, oil, and natural gas. [His] message signals a new era where Africa’s right to energy security is recognized and respected.”

Another change the AEC highlighted is shifting the U.S. role from energy development aid to investment. “Africa does not need handouts or restrictions; it needs capital, technology, and infrastructure to exploit its resources fully,” it stressed.

That change in foreign energy policy should make the United States a significant energy investor in Africa. “Over 600 million people on the continent still lack electricity, a crisis that cannot be solved with unrealistic energy transition policies,” the AEC said.

U.S. energy funding

To attract American fossil fuel investors, African governments need to ensure their domestic business environments align with international expectations. “African leaders [need] to seize this moment by fostering investment-friendly, enabling environments that attract capital to exploration and production, refining, trading, petrochemicals, gas monetization and infrastructure projects across the continent,” AEC said.

In March, Energy Capital & Power (ECP), an African investment firm, launched the United States-Africa Energy Forum (USAEF) “to connect US investors with Africa’s vast energy opportunities while strengthening the foundation of ECP … across Africa.”

It offers American investors “a direct gateway into Africa’s energy sector, featuring high-profile … licensing rounds, LNG development, and deepwater and large-scale renewable projects,” said ECP.

AEC believes the number and value of U.S. fossil fuel investment agreements in Africa will surge in August when the USAEF holds its first conference. “Africa’s energy sector is primed for investment, and we’re excited to partner with [USAEF] to connect American investors with the continent’s most promising energy opportunities,” N.J. Ayuk, executive chairman of the AEC, told ECP’s website in March.

Risking green energy

One of Africa’s most significant achievements has been becoming an attractive destination for green energy. “Investment in renewables has surged more than eightfold since 2019,” the EY report said.

However, the current U.S. administration is not likely to finance that transition further. In March, the Trump administration quit the Just Transition Partnership (JTEP) initiative, which the United States launched in 2021 to “support several developing countries in their shift away from coal to clean energy.” The decision froze “$45 billion in climate finance pledges,” reported Vivian Chime, a reporter for Climate Home News.

The United States also halted Power Africa, a 2013 initiative that provides development aid to African countries to make their power grids sustainable. “Since its inception, the program received just over $1 billion, which facilitated approximately $29 billion in power project financing from other sources,” Capital Markets in Africa, an online research platform, reported in March.

Chime also noted the $4 billion in “rescinded pledges … to the Green Climate Fund” after the United States withdrew from the 2015 U.N. Paris Agreement, a binding climate treaty. Thandolwethu Lukuko, director of Climate Action Network in South Africa, told Climate Home News that the decision is “worrisome” as it “could affect other countries’ ability to meet their climate goals.”

Those climate investment decisions set “a dangerous precedent,” Norly Mercado, Asia regional director at environmental advocacy group 360.org, told Climate Home News. They signal to the world that “the second-biggest emitter of planet-heating gases will no longer be accountable for its climate obligations,” Mercado noted

Choices, choices

Ultimately, African governments need to decide whether to capitalize on America’s willingness to support fossil fuel projects or persist with their long-term clean energy strategies.

The proverbial “elephant in the room” is the current U.S. administration’s unpredictability and what could transpire from it. A case in point is South Africa. In February, Trump froze aid to South Africa because of a new local land law. In March, South Africa’s Ambassador to the United States criticized the decision. Days later, Secretary of State Marco Rubio declared on social media, “South Africa’s ambassador to the United States is no longer welcome,” adding, “We have nothing to discuss with him.”

Katie Auth, former deputy director of Power Africa, told The New York Times in March such unpredictable decisions and reactions are the crux of the issue facing African countries chasing U.S. investments. “The biggest question is whether the United States can be a credible partner,” she said.

Ultimately, the decision to rely on U.S. energy funding is most likely one that each African government must make alone. Ayuk of AEC stressed that while “Wright’s message is a long-overdue recognition that Africa needs investment, not interference,” the reality remains that “Africa’s energy future must be decided in Africa, not dictated by foreign governments pushing policies.”