This article was co-authored with Bea Byrne-Hill
Over the last twelve months, we have witnessed a marked increase in climate-related extreme weather events causing damage to communities worldwide, with flash flooding in India, typhoons in China and wildfires across Europe resulting from one of the hottest summers on record.
Africa is considered to be disproportionately affected by global temperature rise and is projected to experience escalating physical climate risks – it accounts for approximately 4% of global greenhouse gas emissions but is meanwhile among the worst affected by the devastation of climate change. At the end of 2022, Carbon Brief estimated that extreme weather events in Africa had killed at least 4,000 people (with a predicted many more deaths unrecorded) and affected a further 19 million since the start of 2022.
A key challenge for African governments is a limited ability to respond to the climate-related crises due to economic shocks and debt-distress, which arise from being obliged to pay borrowing costs that are five to eight times higher than wealthy countries. African leaders have called for debt relief across the continent to enable countries to properly respond to the climate crisis, as they published the Nairobi Declaration on Climate Change (the Nairobi Declaration) at the end of the inaugural and timely African Climate Summit (the Summit).
The three-day Summit ran from 4 to 6 September 2023 in Nairobi with the purpose of strategizing for green growth and climate finance solutions. Among the thousands of delegates in attendance were African leaders from across the continent, including Chairperson of the African Union Commission, the Prime Minister of Egypt, and President Ruto of Kenya, as well as international figures such the Secretary-General of the United Nations, the US climate envoy and President of European Commission.
At the Summit, African leaders were called upon to make ambitious pledges and commitments with a comprehensive "Pledging and Commitment Framework" developed to guide these actions. The Nairobi Declaration, signed on the final day of the Summit, urged world leaders "to rally behind the proposal for a global carbon taxation regime including a carbon tax on fossil fuel trade, maritime transport and aviation, that may also be augmented by a global financial transaction tax" and to set a target to increase Africa's renewable energy generation capacity to 300 GW by 2030 – up from just 56 GW in 2022.
With regards to investment, the Nairobi Declaration points out that Africa has the potential to provide 40% of the world's renewable energy resources. However, the continent has received only 2% of the USD 3 trillion invested in green energy globally over the past decade. Additional pledges were made during the Summit, with international investors and governments announcing around USD 23 billion worth of investment.
This included a new public-private partnership, Weza Power, between the Burundi government and Virunga Power, that will aim to bring grid electricity, supplied by run-of-the-river hydropower, to 70% of Burundi's population by 2030. Kenya also revealed its Green Hydrogen Strategy and Roadmap, with a promise of USD 12.9 million in funding from the European Union, and HDF Energy announced that development studies were underway to construct Kenya's first green hydrogen power plant at a cost of USD 500 million. The facility will initially combine a 180 MW solar farm with 500 MWh of hydrogen-based storage.1
The availability of funding to support the development of renewables in Africa is not the issue, the issue is the deployment of that funding and a pipeline of advanced renewable projects that are considered sufficiently financeable to release this funding. Commitment and pragmatism from all sides will therefore be required to put these pledges into action and to unlock the funding that remains much needed on African renewables.
African carbon markets
An important pledge came from a consortium of investors based in the UAE, who made a non-binding pledge to purchase USD 450 million in carbon credits via the African Carbon Markets Initiative (ACMI) by 2030. The Consortium stated that this decision will "not only help to unlock Africa's carbon credit generation potential, but also supports sustainable investment opportunities and long-term climate impact". The ACMI was launched at COP27 with the aim of scaling the voluntary carbon market on the continent.2
Another important proposal backed by African leaders in the Nairobi Declaration, and encouraged by the President of European Commission, is the implementation of a global carbon price and a targeted global carbon tax regime, on fossil fuel trade, maritime transport and aviation. Carbon taxes are designed to reduce emissions by increasing prices of the fossil fuels that emit them when burned. The Summit proposed that the global tax regime be rolled out alongside a global financial transaction tax, in essence, a levy on specific types of financial transactions, as well as a cut in fossil fuel subsidies.
The funds raised by global taxation can be pooled in a single global fund and allocated to aid the rollout of green energy projects and support technological innovation.
Carbon pricing and taxation is a powerful tool for putting a price on carbon and defining a tax rate on carbon emissions or – more commonly – on the carbon content of fossil fuels, thereby accelerating decarbonisation. The International Monetary Fund has previously said that a global carbon price could be among the fastest and most effective ways to cut carbon emissions across the world. However, the idea of a universal carbon tax has struggled to gain traction globally. A key next step will be whether this proposal is formalised at November's upcoming COP28 in Dubai, as this is would likely have a strong impact on both the renewables and carbon markets in Africa.
The Nairobi Declaration is non-binding, intending to "serve as a basis for Africa's common position in the global climate change process" and to be used by African leaders as a negotiating document which African countries will take to a UN climate conference later in September as well as COP28. As the head of the European Climate Foundation remarked, the Nairobi Declaration "sends a strong signal to the international community" with regards to climate change commitments. No doubt competing visions of the world's energy future will play out at the upcoming global climate summits as the rhetoric continues to build.
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