Speaking at a global infrastructure webinar, Claire Barclay of Pinsent Masons said climate resilience interventions on the continent would require high levels of capital investment that governments could only partly provide. Her comments came after South African president Cyril Ramaphosa formally tabled the country’s ‘just energy transition’ investment plan at COP27 in Sharm El Sheikh, Egypt, last month. The plan details how South Africa will transition towards a low-emissions and climate-resilient economy and outlines the R1.5 trillion (c. £700 billion) of investment required to do so.
While South Africa’s electricity sector will receive 90% of the allocated funding to transition away from coal, electromobility and green hydrogen projects will also be granted significant financial support. Around R128bn of the funding is set to come from an international partner group (IPG) made up of the US, UK, EU, Germany and France. Barclay said the IPG funding was meant to be “the catalytic first risk capital” needed to attract a further R500bn from private sector funding over the next five years. “For Africa to foster a culture of climate resilience through adaptation projects, and to transition to clean energy, it needs finance”, she added.
Roberto Vidal Ferreira of infrastructure engineering firm Mota-Engil Africa said that, alongside funding, tenor – the duration of the financing available – was the biggest challenge facing major climate related infrastructure projects on the continent. “For you to have longer tenors you have to have three things: policy continuity, transparency, and above all, conscience of risk allocations,” Vidal Ferreira said. “Without policy continuity, you will not see significantly longer tenors.”
“A key aspect of what hampers private investment for large flagship projects is that governments need to understand that there must be policy continuity beyond a political term and have a high degree of transparency and understanding of risk allocation. If not, capital will go to other sources,” he added.
Barclay said the issue of adaptation and resilience was closely tied to the debate around climate justice. She told the panel: “The transition to clean energy and weaning people off fossil fuels is particularly complex in the context of Africa. African countries, as we know, sit on some of the world’s largest reserves of fossil fuels, and the reality is that the power generated from fossil fuels remains the cheapest and most accessible form of electricity for most of Africa. Over and above this, fossil fuels support livelihoods on the continent. They create jobs for people and a revenue stream through taxes for governments.”
Barclay said the Group of 77, a coalition of 134 developing countries at COP27, had argued that in the interests of restoring good faith between the developed and the developing world, there needs to be “a differentiated responsibility” for reducing carbon emissions around the world because of the “history of creating” climate change. “The argument that we are seeing being made is that African countries should be allowed to transition at their own pace and to their own agenda. Part of this involved securing a mechanism for loss and damage under which wealthy countries, which are historically responsible for most global emissions would support poor nationals facing the ravages of climate change and in which they had little or no hand in creating,” she added.
The panel also discussed the issue of climate resilience and the work of the UN’s taskforce on climate-related financial disclosures (TCFD) more widely. Simon Harrison of engineering consultancy Mott MacDonald said that the taskforce’s early work already meant companies and organisations across the world were beginning to apply rigour when considering their long-term exposures to climate change. “Almost everything we take as inputs to business comes to us via complex and usually global supply chains. The blockage of the Suez Canal by the container ship Evergiven in 2021 demonstrated their inherent fragility,” Harrison said.
He added: “The long-term solution here is greater partnership between public and private sectors and improving systemic resilience, identifying those parts of the system at highest risk and with greatest impact, and finding solutions to increase their resilience.”
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