Tap market to fund green economy: Africa

The first Africa Climate Summit which began in Nairobi had started off on a positive note. Kenyan President William Ruto struck a new note when he said, “For a very long time we have looked at this (climate crisis) as a problem. It is time we flipped and looked at it from the other side. We must see in green growth not just a climate imperative but also a fountain of multi-billion dollar economic opportunities that Africa and the world is primed to capitalise.”

This is indeed turning the page around as it were, and looking at the challenges and hurdles as opportunities. Africa has also decided not to depend on climate finance in the form of promised aid from developed countries, but to look at the market to raise the funds.

One of them was to trade in carob-credits from the more polluting countries. Africa has still the lowest carbon footprint compared to other continents. In an important deal, the United Arab Emirates (UAE) has committed to buy $450 million of carbon credits through the African Carbon Markets Initiative (ACMI). The ACMI has come into existence after the COP27 held in Egypt last year. Many more developed countries showed interest and pledged to buy carbon credits.

There have been protests against the idea of carbon credits market because it is felt that the developed polluting countries would not be cutting down their carbon footprint and will continue to pollute. The argument is that the developed countries should be paying a price for the pollution and pledge finance to countries which did not pollute but which are paying the price of climate change through no fault of their own.

But it looks quite impossible to make the polluters pay. And even the aid of $100 billion annually that the developed countries had promised in 2009 to help the developing countries to transit to cleaner energy systems has been a dead letter. It is estimated that only 12 per cent of the funds that Africa needs to comply with the climate change rules has been given.

“There hasn’t been any success for an African country in attracting climate finance,” says Bogolo Kenewendo, United Nations climate adviser and former trade minister of Botswana. Africa is still seen as a risky place for investment. Kevin Kariuki, vice president of the African Development Bank, while welcoming the deals made under ACMI on the carbon credit front, said that at COP28 to be held in Dubai in November, the African states would push the International Monetary Fund (IMF) to expand the special drawing rights which would free up $500 billion for climate change projects.

Patricia Scotland, secretary-general of the Commonwealth comprising 56 countries, feels that the climate finance fund flow into Africa has been “shockingly low”. But she feels that there is much the private sector can do as it remains an untapped source. She told news agency Reuters, “The private sector remains an untapped opportunity that now must be seized. If you look at what we’ve got on thermal energy, on solar, on wind, on hydro, this is a powerhouse just waiting to be unleashed.”

It is heartening that the African leaders and policymakers are looking to the market path of raising funds to deal with green projects in the continent which is the least polluter. The CO2 emissions of Africa stand at a low 1.45 billion tonnes compared to 21.68 billion tonnes by Asia, 6.13 billion tonnes by North America and 5.30 billion tonnes by Europe. South America is the only continent whose CO2 emission are less than that of Africa, 1.077 billion tonnes. Africa’s new thinking of facing up to the climate change challenge and seeing the green economy as an incentive for growth is what the world needs.