THE pace of climate change is far outstripping the world’s response to the crisis, as business, finance and policy leaders tiptoe around some of the biggest issues confronting our world today.
Recently, I was going through the United Nations’ Global Stocktake Report, which tracks progress towards achieving the Paris Agreement goals.
My take is the report is unequivocal, the world is not on target to curb global warming, and more action is needed on all fronts.
The report will form the basis of COP28 talks in Dubai in the coming week, putting pressure on world political and business leaders in a year marked by devastating and frequent climate disasters, and soaring temperatures across the globe.
From fires to floods, devastating global disasters prove the climate emergency is now and it is the biggest threat to business longevity and economic development.
Yet climate action will only be significantly effective if business, finance, and government align. United we stand, divided we fall. Business, finance and government must work together to mitigate the far-reaching geopolitical and economic implications of climate change.
Africa solutions for energy transition
We have seen geopolitical developments unfolding globally and these have placed Africa at the core of the global energy transition discussion.
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Africa’s central role in the global energy transition is at a key turning point with the potential to leapfrog ahead in green energy given the right funding and support.
This position is rooted in the continent’s mineral resources needed for the green energy transition, which is a significant competitive advantage for Africa.
Africa wields a powerful position in the green transition conversation, disrupting the existing power structure. Globally we can see a shift in power balance. Recently the oil surge drove new talk with old foes. Global leaders sought relief from sanctioned oil exporters.
We saw Iran’s oil exports surging when Saudi Arabia began cutting its production, leading to Tehran and Washington having back-channel talks to keep crude flowing to make up for supply reductions elsewhere.
Venezuela, another exporter under sanctions, reportedly turned to Beijing to help to revive production. These recent power shifts present the opportunity for Africa, other countries and governments to come to the negotiating table as equals.
It is time for a new conversation on climate for the first time. Africa is not going to a COP with an ask, Africa is going to a COP with an offer.
Financing a green transition
As facilitators of the economy, financial institutions have a central role in the transformation to low carbon and climate-resilient development. Their responsibility is two-fold, greening their portfolios towards Paris compatible financing and investments, and reflecting and integrating climate-related risks into their risk management processes.
The financial sector has an important role in deciding where capital flows and by implication where it does not flow to.
Development banks and philanthropists need to be more creative in the way they finance projects to limit climate change and protect nature.
The need for more concessional lending to emerging markets was flagged again at the Africa Climate Summit. Calls for changes to the international financial architecture have increased in recent months and should be central to talks at the COP28.
Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development will require a significant increase in funding, with new instruments and approaches required to mobilise a broad range of investors and to achieve scalability in financing climate action.
A dirty road to a clean future
Last year, governments and business came together in Montreal to agree on a global framework to halt and reverse accelerating nature loss.
The landmark Global Biodiversity Framework agreed in Montreal commits governments to preserving 30% of the world’s land and oceans by 2030. Yet the drive to achieve net zero will still require a multiple-fold increase in mineral extraction, as well as, a host of other emission intensive activities, putting increasing pressure on the very land, sea and air that is meant to be protected.
There is no dispute that it is a much-needed development in the fight to preserve the planet’s precious biodiversity. But how does this new framework align with pre-existing climate and net-zero targets?
As renewable energy and other clean technologies become increasingly prioritised, the demand for critical minerals could rise six-fold, predicts the International Energy Agency, putting added strain on the very natural resources that the biodiversity framework is meant to protect.
COP28 should present a platform for Africa to understand how these often contradictory goals can be mutually met.
The Loss and Damage Fund
African countries and governments attending COP28 should reaffirm their commitments to limit global average temperature increases to 1,5°C and to accelerate action toward this goal.
However, attempts to increase investments at the required pace may be constrained by fiscal challenges related to debt repayments and rising fuel costs.
One of the most anticipated outcomes of COP27 was the Loss and Damage Fund, a disaster financing fund meant to provide non-debt finance to African countries for the loss and damage suffered from climate disasters.
The continent may be rich in transition minerals needed for the energy transition, but many governments are also burdened with cripplingly high debts.
At the moment, we have got developing countries paying way more in debt repayments back to richer countries than they ever hope to receive in climate finance or support.
Given the fiscal constraints experienced by some African governments, COP28 must address the several contestations of the Loss and Damage Fund, one of which is who will be responsible for contributions towards the Fund?
Addressing the elephant in the room
And lastly, to the elephant in the room, the coal debate. Africa must take a firm position on the banishing of fossil fuels. The development of fossil fuel projects remains firmly on the agenda for many African countries.
African governments have said they are committed to industrialising and growing their economies to create jobs and wealth. The choices the continent makes now about its future development trajectory, especially in the manufacturing sector, will be critical in ensuring that it can industrialise in a sustainable manner.
Recently, a pan-African multilateral development institution firmly pronounced that it will not run away from doing fossil fuel-based investing because the development needs of the continent are so huge citing that the world still needs energy security.
The world still needs energy source diversity and that no energy mix in the world in the next 50 years says no oil and gas. So why would Africa not develop its resources and fund its own fiscal budgets, whilst embarking on renewables as well.
This is no ordinary COP, COP28 must be action-oriented and should advance from pledging support for climate initiatives to deploying them.
- Tapera is a certified environmental, social and corporate government expert. — [email protected]