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This is an audio transcript of the FT News Briefing podcast episode: Can Africa grow without fossil fuels?

Marc Filippino
Good morning from the Financial Times. Today is Friday, June 3rd, and this is your FT News Briefing.

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Investors are returning to Chinese stock markets. Opec finally agreed to boost oil production. Plus, some African countries are asking why they have to go green when they’re barely responsible for climate change.

David Pilling
What they’re saying is you in the West did this and you in the West must lead the charge to repair the damage. And in the meantime, we need to develop.

Marc Filippino
I’m Marc Filippino. And here’s the news you need to start your day.

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Global investors are regaining confidence in Chinese stocks after a big sell-off earlier this year. Many fled because of the economic impact of Covid lockdowns in China, plus the ripples from the war in Ukraine. The country’s CSI 300 stock index is still down about 17 per cent this year. But lockdowns have been starting to loosen, and some international money managers are betting the worst is over. Over the past week, offshore investors bought about $4bn in mainland Chinese equities. One investor added Beijing’s regulatory crackdown has cooled — that was another factor in the sell-off. And he’s also banking that China’s property crisis will not engulf the broader economy.

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After months of saying no, Opec and its oil-producing allies yesterday agreed to boost production by almost 650,000 barrels a day in July and August. The US has been pressuring Saudi Arabia to boost oil in order to bring down fuel prices. The FT’s US energy editor Derek Brower says this isn’t exactly additional production.

Derek Brower
What they’ve essentially done is accelerate already scheduled supply increases that were planned over the next three months into two months instead. And so you get what amounts to a faster pace of supply increases that were already planned.

Marc Filippino
So, Derek, will businesses and consumers see the impact right away, or is it gonna take some time to see the effect of the production boost?

Derek Brower
Well, it’s a really good question because the increases, as they were planned, already pretty significant. The problem is that Opec has actually been struggling. Not Saudi Arabia and the United Arab Emirates, the two big powerhouse producers, but the rest of the Opec members have been struggling to add production such that they can’t even meet their quotas, some of them. So this is a paper increase. The important thing, though, is this: Saudi Arabia has decided that it’s time to start trying to cool the global oil price rally. That’s what’s important about this. The numbers, in a way, are actually less significant than the signal that Saudi Arabia is sending that the central bank of oil is back in the business of trying to keep damaging oil price rallies in check.

Marc Filippino
So what ultimately moved the needle? I mean, the White House has been pressuring Saudi Arabia and Opec for months to release more oil. Why did Opec finally cave?

Derek Brower
Two reasons. One: Saudi Arabia doesn’t, despite what one may think, doesn’t want super high oil prices because then it fears a demand reaction that causes longer term problems for its customers and so on. So it doesn’t necessarily want super high oil prices. More importantly is that there’s been all this shuttle diplomacy with the US and the US has been putting so much pressure on Saudi Arabia to put more oil. It doesn’t seem, or at least I’m told, that the US has actually guaranteed Saudi Arabia anything. But there is a visit from Biden coming up to the Middle East in the next couple of weeks. He’ll meet Mohammed bin Salman, the crown prince, shake his hand. That would mean a lot to the Saudis. The Saudis have also asked for immunity for Mohammed bin Salman. I’m told he, remember, was fingered by the US intelligence for his role in the assassination of Jamal Khashoggi. So the Saudis have asked for a lot. US, they say, have not actually given anything. Saudis have just come on side with their longstanding ally, it seems, about their approach to the oil market.

Marc Filippino
Derek Brower is the FT’s US energy editor.

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The war in Ukraine and the scramble to find non-Russian energy sources has derailed global efforts to decarbonise. But in Africa, many countries are so under-developed they’re asking: can we leapfrog right to renewables and still develop our economies or when we need fossil fuels to industrialise? The FT’s Africa editor David Pilling has been looking into this debate and he joins me now. Hey, David.

David Pilling
Hi, Marc. How you doing?

Marc Filippino
I’m doing well. So you visited a massive geothermal energy plant in Kenya. And this plant is part of the reason why Kenya now gets 75 per cent of its electricity from renewables, which is amazing. But does it show that renewables can power an economy?

David Pilling
Well, there are lots of people on the continent in Africa who say, no, you can’t. How do you make steel? How do you have factories? How do you get people from being poor to being middle income and then being rich without going through a fossil fuel phase? And I went to Kenya because I thought it was interesting, partly because or in a sense largely because their electricity grid, as you say, is 75 per cent powered by renewables. They could probably go entirely to renewables because their main renewable source of energy, as you said, is geothermal steam pouring out a volcanic rock which can act as a kind of a baseload. The problem with wind and solar is that sometimes the wind blows, sometimes the sun shines, and sometimes it doesn’t. And so it’s very hard to base a grid on that. But geothermal, you can. So Kenya may be an exception. And that’s in a sense why I went to Kenya, because it raises some interesting questions about whether this is even possible, even if you have some of the kind of prerequisites which Kenya appears to have in the form of geothermal power.

Marc Filippino
Which brings us to Nigeria. Huge oil producer, Opec member and Nigeria’s vice-president has said that no one in the world has been able to industrialise using renewable energies yet. Does he have a point?

David Pilling
I think he does. And Nigeria, on a per capita basis, they emit about nought point seven tonnes of carbon per year. America, 15.5 tonnes of carbon per capita per year. To expect Nigeria to now freeze or cut its carbon emissions, you could see as expecting Nigeria to stay poor forever. What the vice-president is saying is we have lots of oil, we have lots of gas. We should be able to sell that oil and gas. And more importantly, and something that Nigeria has not done to the present, to use that oil and especially now to use that gas, which many people are seeing as a transition fuel to power the country, to power factories, to power development. Of course, the big question whether they actually can do that. You know, Nigeria has not been an exemplar of using billions and billions of dollars of oil revenue for the good of its people. But what they’re saying is, you know, we see Europeans scrabbling around for gas, knocking on our doors, saying, can we have some of your gas? And yet your banks and even institutions like the World Bank are saying we will no longer finance any fossil fuel projects. So Osinbajo, the vice-president, and many others on the continent, are crying foul. They’re crying hypocrisy.

Marc Filippino
To your point about Western banks not financing oil and gas projects any more because of climate change. Those are valid concerns. So what do African nations do without this financing? How can they develop?

David Pilling
What people like Osinbajo in Nigeria are saying is you Western countries, you have to go carbon negative to give us room to develop. You can’t just call a halt to our development. There is another story. There are people that I spoke to in Kenya who think that there are some countries, including perhaps Kenya itself, which can take advantage of this energy transition, which can become pioneers in hydrogen production using solar and wind. There are many countries in Africa who are not yet committed to the carbon path. So there is talk — and I’m cautious about the use of this phrase — but there is talk of leapfrogging, of going straight to a carbon-free future for example, by going straight to electric vehicles in the way that some African countries went straight from having not very many telephone lines at all to mobile phone or going straight to digital money, as Kenya itself did.

Marc Filippino
So, David, it’s kind of interesting that African nations are being asked to transition to greener energies because they’re not really the problem here, or I guess I should say they’re a smaller problem when it comes to climate change, right?

David Pilling
Well, the calculation that is often made is that Africa has been responsible for about 3 per cent of accumulated carbon emissions. And yet Africa itself is extremely vulnerable to climate change. We’ve seen possibly a climate change-induced famine or at least severe hunger in Madagascar. We’ve seen cyclones in Mozambique. All of these are at least partly linked to climate change. So the continent of Africa is acutely aware of the damage that a man-made climate change can cause. But what they’re saying is, we did not do this. You in the West did this, and you in the West must lead the charge to repair the damage. And in the meantime, we need to develop.

Marc Filippino
David Pilling is the FT’s Africa editor. Thanks, David.

David Pilling
Thanks very much, Marc.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news. The FT News Briefing is produced by Sonja Hutson, Fiona Symon and me, Marc Filippino. Our editor is Jess Smith. We had help this week from Michael Lello, David da Silva, Peter Barber and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the global head of audio and our theme song is by Metaphor Music.

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This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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