How a UK government-backed company has fuelled gas power in Africa

§ Gas expansion

Globeleq describes itself as “the leading independent power producer in Africa”. It currently has roughly 1,794MW of electricity generating capacity across several African nations.

More than two-thirds of this capacity – 1,207MW – comes from fossil fuels. This mainly consists of three gas power plants in Cameroon, Ivory Coast and Tanzania, as well as an 88MW heavy fuel oil plant in Cameroon.

In 2023, Globeleq generated over five times more electricity from fossil fuels than it did from renewables, a ratio that was essentially unchanged from 2019. 

The company has a climate strategy, which commits to “progressively decarbonising our own portfolio in a manner that is consistent with our core mission of delivering affordable and reliable electricity in Africa” and achieving net-zero emissions by 2050. 

Globeleq says it plans to “focus on renewables”. BII, the UK government body that owns Globeleq, has stressed its role in influencing a “pivot towards renewables”, with its climate change director Amal-Lee Amin calling this the “direction of travel for the company”.

Yet, over the past five years, the expansion of Globeleq’s renewable portfolio has been outstripped by an increase in the power generated from its gas plants, according to Carbon Brief analysis of figures from the company’s annual sustainability reports. The share of electricity it generates from fossil fuels has remained the same – around 85% – up to 2023. 

The amount of gas power Globeleq produces is still growing. A 253MW expansion of the Azito plant in Ivory Coast was completed at the end of 2023, and the 450MW Central Térmica de Temane plant in Mozambique is set to start generating this year.

As the chart below shows, these projects will nearly double the amount of electricity that Globeleq generates from gas, according to Carbon Brief analysis of company figures.

By contrast, the three solar projects that the company added to its roster this year are relatively small. This means that, based on new projects operating since the end of 2023, the share of the company’s annual generation from fossil fuels would increase to 89%.

Globeleq has more clean energy schemes in the pipeline, including a 35MW geothermal plant in Kenya due to start up in 2025, as well as a 120MW windfarm in Mozambique and a large battery project in South Africa. 

Until recently, it also had another large gas plant in early development – the 540MW Qua Iboe plant in Nigeria. However, a spokesperson for Globeleq tells Carbon Brief that it has officially withdrawn from this project.

§ Globeleq and BII

Globeleq, which has a head office in London and a registered office in Guernsey, was originally set up in 2002 by the UK Department for International Development (DFID), a precursor to the Foreign, Commonwealth and Development Office (FCDO). It was part of a broader strategy to support the private sector in developing countries.

Since then, the company has undergone changes in focus and ownership. Having sold off its assets in other emerging markets, Globeleq now works exclusively in Africa.

As of 2015, 70% of Globeleq’s shares are held by BII, formerly known as CDC Group. According to reporting by Bloomberg, BII’s stake in Globeleq’s portfolio of gas power plants and other projects is valued at around $1bn.

The remaining 30% of its shares are held by Norfund, Norway’s development finance institution. 

BII is 100% owned by FCDO, but says its “day-to-day operations and investment decisions are independent of government”. The institution is supported primarily through returns from its existing investments, as well as new injections of funding from the UK aid budget. It uses these funds to invest in the private sector in developing countries.

Globeleq is BII’s main subsidiary for power sector development, and in 2020 NGOs flagged it as a major component of the UK’s fossil-fuel spending overseas. Over the past decade, analysis by aid agency CAFOD concluded that BII had committed hundreds of millions of dollars towards Globeleq energy projects – primarily based on fossil fuels.

BII’s commitments to the company continue to this day, with the institution’s most recent annual review recording another £19.2m ($25.1m) for Globeleq in 2023. As a recent government press release put it, Globeleq is “backed entirely with official development assistance (UK aid)”, with its money deriving from aid or returns on previous investments.

While Globeleq is an independently run company, Sandra Martinsone, policy manager on sustainable economic development at the international development network Bond, tells Carbon Brief:

“With majority ownership, BII can steer a company in any direction it wants. So, it is not a technical issue. It’s a question of will.”

§ ‘Conflict’ with climate 

The involvement of the UK’s government and money in BII and Globeleq has raised questions about the nation’s pledge – alongside other major economies – to stop overseas fossil-fuel investment.

Under the previous Conservative government, the UK committed to ending new overseas fossil-fuel funding beyond March 2021. Globeleq’s Temane power plant in Mozambique reached financial close in December 2021.

However, both the government, and BII itself, included exemptions in their pledges – dubbed “loopholes” by some observers – that allow for continued funding of some gas power plants if they align with achieving net-zero emissions by 2050 and “cannot viably be replaced” by renewables. The Temane project was deemed to fit these criteria.

(Norway has also committed to ending international public finance for fossil fuels. However, Norfund – which owns the other 30% of Globeleq – tells Carbon Brief that it, too, is still allowed to invest in gas plants if they are aligned with net-zero by 2050.)

More broadly, BII’s role in UK development aid has come under scrutiny in recent years. 

A report last year by the International Development Committee of MPs pointed out that the then-government’s international development strategy pledged to align aid with the Paris Agreement. It said around 10% of BII’s investments were “exposed” to fossil fuels, noting:

“Under the current arm’s-length relationship, BII holds some investments that conflict with the UK government’s policies, such as those relating to fossil fuels, and there have been few attempts by BII to adapt its legacy investment portfolio to align with UK interests.”

As an example, the report specifically highlights BII’s involvement in the Temane plant in Mozambique “while the FCDO works in disaster response and climate resilience” in the same country.

The committee said BII “lags behind other peer institutions” in divesting from fossil fuels and switching to “green energy”, adding that it “must divest” from investments that do not align with the UK’s broader goals. 

Martinsone from Bond agrees BII has “no clear plan” for phasing out its fossil-fuel investments and says the government could push it to do so. The UK government had not provided Carbon Brief with a comment at the time of publication.

With the foreign aid budget especially tight following years of cuts, Martinsone adds that public development finance should be focused on “making transitions from fossil fuel to renewable energy financially feasible”.

In response, a spokesperson for BII tells Carbon Brief: 

“In the last year, BII did not make a single new commitment to fossil-fuel assets. By contrast, in the last two years BII has invested over £1bn to address the climate emergency, in sectors such as renewable power, water infrastructure and electric vehicles. In 2023, 42% of the energy generated by our investees was from renewable sources and this will rise significantly as new projects come onstream and legacy thermal assets reach the end of their lives.”

§ Gas for Africa?

Under the scenario compatible with the Paris Agreement aspiration of limiting warming to 1.5C, set out by the International Energy Agency (IEA), global demand for gas would drop by 55% from 2021 to 2050.

Yet BII says that in countries such as Mozambique, where only around 40% of people have access to electricity, gas power is “essential”. It argues that such nations often lack “baseload” power provided by gas, which can allow the integration of more renewables.

(Mozambique does, in fact, have a large source of “baseload” power in the form of Africa’s third-biggest hydropower plant. However, thanks to a colonial- and apartheid-era deal, the electricity from this dam supplies South Africa with electricity rather than Mozambicans.)

This position has been supported by many African governments, with many advocating for the development of their own gas reserves. 

Many have noted that Africa currently produces a tiny share of the planet’s emissions and is home to nearly 600 million people without electricity access. Scaling up fossil fuels could be a route to development and wealth, they say.

However, some African civil society groups have pushed back, arguing that nations could be “locked in” to fossil fuels, leaving them vulnerable to fuel price spikes and health impacts for communities nearby to plants. 

Mohamed Adow, director of the thinktank Power Shift Africa, tells Carbon Brief it is “absurd” to see UK aid money linked to fossil fuel investments in Africa:

“Effectively the UK is saying that a clean, renewable powered energy system of the future is good for Britons but that Africans can keep the outdated, dirty and polluting energy of the past.”