Developed countries should deliver on their climate finance promises to support the just transition to a low carbon and climate resilient Africa. COP 27 is the African COP. African governments are at the center and should aim to dramatically increase their share of international climate finance flows from the current 3%, given the scale of their adaptation needs, the renewable energy potential of the continent, and the need for a just transition.
The amount of investment needed globally to meet the climate goals set in the Paris Agreement are enormous. On mitigation, it is estimated that an annual average investment of around $2.4 trillion in the energy sector alone between 2016 and 2035, representing about 2.5% of the world GDP, would be needed. On adaptation, the World Bank Group estimates that Low- and Middle-Income Countries (LMICs) would need between 2 and 8% of GDP per year for investments in new and climate resilient infrastructure by 2030.
For Africa, adaptation finance is a priority given its vulnerability to climate change. However, global climate finance flows have been mainly channeled to mitigation activities, even if adaptation finance has seen the largest percentage growth between 2017 and 2020 (Figure 1). The main recipients of mitigation finance include renewable energy, energy efficiency, and transport sectors. Mitigation activities are also associated with the increasing use of market instruments, such as loans at market rates, to channel climate finance to developing countries, which raises some concerns about their debt sustainability given that most of them are already in debt distress or at high risk of it.
Figure 1: Global mitigation and adaptation finance, biannual averages ($US billion)
African countries struggle to mobilize climate finance. Global climate finance has grown rapidly over the past few years, reaching record levels of $632 billion between 2019 and 2020, although it stills fall short of what is needed to achieve the Paris Agreement. In addition, the majority of climate finance originating from developed countries is spent on domestic projects. The Climate Policy Initiative (CPI) estimated that only 25% of the 2019/2020 tracked climate investments crossed the borders, while 75% were reinvested domestically. The Asia-Pacific region remains by and large the main destination of global climate finance flows, driven by massive investments in renewable energy by China, existing enabling environments in the region, and an active engagement with climate finance donors. Sub-Saharan Africa only mobilizes 3% of global climate finance flows, despite being the most vulnerable continent to the impacts of climate change.
Figure 2: Average annual climate finance breakdown by region -2015/2016 and 2019/2020 (US$ billion)
Without the support of developed countries, the just transition to a low-emissions and climate-resilient economy would remain a distant dream for Africa. A growing number of African countries have submitted their revised Nationally Determined Contributions (NDCs) to the United Nations Framework Convention on Climate Change (UNFCCC) with more ambitious adaptation and mitigation targets. Although African countries need to unlock domestic resources, including fiscal and private resources, they also need support of developed countries. It is understandable that the majority of the NDC targets are made conditional, meaning that achievement of the targets is conditional on support from developed countries in terms of finance, technical assistance, and technology transfer. Since 2009, developed countries have committed to mobilize $ 100 billion per year for adaptation and mitigations projects in developing countries. Yet this promise has never been fully delivered, despite the historical responsibility of developed countries in global warming and the marginal contribution to global greenhouse gas emissions, estimated at around 4%, of the African continent.
Failure to deliver climate finance for Africa would compromise its climate ambitions and increase the risk of a global U-turn to the Paris Agreement. Many African countries depend on fossil fuels for their energy needs. Without access to climate finance, they would not be able to implement their revised NDCs and transition to a low-carbon and climate resilient economy. Instead, they would likely deepen their fossil fuel dependence to meet their growing energy needs. In addition, the energy crisis caused by the war in Ukraine and the lingering impacts of the COVID-19 pandemic are also pushing governments around the world, including in Africa, to increase their oil and coal production. For instance, while the pandemic has caused a drop in emissions, the drop was temporary and emissions have climbed back to about where they were before the pandemic. The conjugation of these factors could lead to a global U-turn to the Paris Agreement.
To avoid such a global U-turn, it is key that COP 27 ensure that political will and financial power are delivered to support the just transition to a low-carbon and climate resilient Africa.
Acknowledgements: The authors are grateful to Trudi Makhaya, Hannah Katharina Niemeyer, Mpho Mataboge, and Constantine Msisiri Mathias Manda for their valuable comments on the earlier versions of this blog.