Senegal’s New JETP: Four crucial next steps
At last! After several months of negotiations and political statements, an agreement to sign a potentially transformative just energy transition partnership (JETP) between Senegal and France, Germany, the U.K., Canada, and the European Union was announced yesterday at the Summit for a New Global Financing Compact. Worth EUR 2.5 billion, Senegal will use the money to accelerate the deployment of renewable energy to reach a target of 40 percent of the domestic electricity mix in terms of installed capacity by 2030.
In contrast to the JETPs already agreed with South Africa, Indonesia and Vietnam—countries that rely mainly on coal for their energy supply and are among the most polluting middle-income countries—Senegal is a new gas producer with a relatively low carbon footprint and significant unmet energy needs. Although few JETPs have been announced, this one stands out from the previous three, particularly in terms of scope, size and ambition.
Features of the new Senegalese JETP
Financing the development of renewable energies is a major challenge for countries like Senegal seeking to reconcile climate, energy access and development objectives. This JETP’s emphasis on promoting the role of renewable energies in Senegal is most welcome. While the country is poised to become a major gas producer, the government has focused on significantly increasing gas-to-power conversion to meet energy needs. This has risked neglecting the significant potential of renewable energies, to the detriment of these energy objectives. Indeed, prior to this announcement, no additional renewable energy capacity was planned beyond 2025, according to publicly available information. We therefore congratulate the government and international partners on ensuring that the benefits brought by renewables are not forgotten, but rather pursued.
However, the role of gas is an elephant in room that receives a mouse-sized reference in the political declaration (in the form of recognition as a “transition fuel,” a concession to the Senegalese government, whose initial JETP declarations a year ago were directly linked to ambitions to secure funding for gas projects). French President Emmanuel Macron himself was more definitive about the role of gas in the agreement, when he declared in an interview this morning: “… in the case of Senegal, we will allow it to develop its gas projects … because gas is a transitional energy and we know that the planet will still need it…”
The JETP negotiations are taking place not only against the backdrop of the imminent start-up of gas production in Senegal and major ambitions for gas-to-electricity generation, but also amid a wave of European interest in Senegalese gas supplies to counter energy security risks following Russia’s most recent invasion of Ukraine. Clear communication on the interaction between JETP’s push for renewable energy and the question of Senegalese gas, including whether it is used domestically or exported, is therefore necessary.
Ultimately, the success of the JETP should be measured at least in part based on Senegal’s overall energy ambitions, not just the percentage of installed capacity that comes from renewables. For the average Senegalese, the size and price of the overall energy “pie” matters more than the size of the renewables slice alone.
Four steps to getting the JETP implementation off to a good start:
1. Remembering that this political declaration is only a first step, paving the way for a series of complex negotiations. If the South African JETP announced in 2021 is any indication, there are still many negotiations and uncertainties before the funds start flowing. (None have flowed to date in South Africa.). This applies in particular to the pace and composition of the EUR 2.5 billion of support mentioned in the recent announcement (for example, the proportion of grants and concessional loans, and their levels of concessionality). Also, while not all this amount will be in the form of borrowing, it will be important to ensure debt sustainability.
2. Allocating funds sooner rather than later. Given the international uncertainty and changing geopolitical dynamics of the energy transition, it is preferable to have the funds to be released by this JETP as quickly as possible, within the limits of absorption capacity. For South Africa, partners have not yet disbursed any of the USD 8.5 billion announced; the investment plan has only just been finalized.
3. Aligning the investment plan with national energy sector reforms that maximize the effect of public spending and induce private capital flows. In addition to helping reduce the high cost of capital for financing renewable energy projects, investments should support national reforms that facilitate the rapid growth of renewable energies and unprofitable projects in which profit-seeking investors will not invest, and support measures that mitigate the real and perceived risks of investing in renewable energy.
4. Achieving greater transparency and a more inclusive consultation process. As Senegal’s JETP process progresses (including around the investment plan and the associated process around the long-term low-carbon development strategy), it is essential that there is transparency and an inclusive consultation process that involves Senegalese civil society, the private sector and all key stakeholders. A participatory, people-centered approach to discussions on energy transition and the JETP has been lacking in Senegal to date, and it is worrying that the political declaration makes no real reference to the role of the Senegalese people in the next stages of the JETP process. We encourage the Senegalese government to prioritize consultation and inclusion to ensure the successful implementation of the JETP.
This JETP offers a unique opportunity to transform Senegal’s current energy system—improving access to cheap, clean and secure energy. Its success is important not only for Senegal, but also for the world, as it could serve as a model energy transition mechanism that could be replicated in several gas-producing countries.
