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Vol 62 No 25

Published 16th December 2021

Adding up the real costs of the energy transition

To achieve net zero emissions by 2050 will mean clean energy investments of $1-2 trillion a year in developing economies

Copyright © Africa Confidential 2021

After a frustrating lack of progress on finance and mapping out a 'just transition' to renewable energy at the COP26 climate summit last month, African officials are preparing for the next round of negotiations in Egypt in November 2022 (AC Dispatches 11/11/21, African delegations frustrated by summit's weakness on climate finance and Europe's levies on fossil-fuel exports).

Just how difficult these will be for the region was made clear again in a debate in the UN Security Council on 13 December when non-permanent members Niger and Ireland proposed that the threat posed by climate change be added to the council's routine agenda. But they met with stern opposition from Russia and India and an abstention from China (AC Dispatches 21/09/21, Climate, pandemic and conflicts to dominate meetings in New York).

They had also asked UN Secretary-General António Guterres to prepare a global study of climate security risks and to encourage UN peace operations to pay more attention to climate threats. Although the Council has acknowledged that droughts and degradation of farming have helped fuel conflicts in regions such as the Sahel and the Horn of Africa, it has not agreed a systematic response to the issue.

Guterres strongly endorsed the resolution, arguing that conflict prevention initiatives should factor in climate risks. About 80% of UN peacekeepers are deployed to countries that are most exposed to climate change.

The resolution to put climate change on the Council's agenda won support from 113 UN member states and all of Africa's non-permanent members on the Council. Ireland and Niger were backed by Kenya and Norway. They had all been encouraged when the United States dropped its opposition to the move after President Joe Biden's administration rejoined the UN Climate treaty, making fresh commitments on finance.

But the geopolitics remain complex and opaque. Russia led the opposition to the resolution, arguing that climate was an economic and development issue and had no place on the agenda of body which was already over-stretched by proliferating conflicts.  Vassily Nebenzya, Russia's ambassador to the UN, argued the idea of 'climate change as a threat to international peace and security introduces a completely unnecessary political component to an already complicated and sensitive discussion.'

India supported Russia's opposition to the resolution while China abstained. Their hostility goes far beyond crowded agendas and semantics to the issue of the hard power of the Security Council. With its Chapter VII provisions, the Council, alone of all UN bodies, has the power to deploy military force and impose swingeing economic sanctions.

Copyright © Africa Confidential 2021

Russia and its supporters may also be watching the progress of a campaign to make ecocide – meaning 'wanton acts meaning there is a substantial likelihood of severe and widespread or long-term damage to the environment being caused by those acts' – a fifth international crime after genocide, crimes against humanity, war crimes and crimes of aggression.

French and Belgian officials have already offered support for the initiative which was explained at length at a side-meeting at the International Criminal Court in the Hague this month. Getting climate and the environment on the agenda of the Security Council would give a further fillip to the ecocide campaign.

China, India and Russia, whose economies are so strongly linked to the use of fossil fuels and will be for the next three decades, have no interest in moving the already politically difficult debates over responsibility for climate change to the UN's most powerful body. The fact that move had majority African support proved irrelevant.

It is also a foretaste of the next round of climate summit negotiations and how skilfully African negotiators will have to play their hands. For most governments, the key point is that locating the COP27 climate summit anywhere in Africa will help make the case for the continent's demographic weight: its development from a continent of 1.4 billion people, over half of whom have no access to reliable energy, to one of 2.5bn people by 2050, with the biggest workforce in the world, should be critical to any international strategy to keep global warming to well under two degrees Celsius by the end of the century.

None of those statistics have given Africa much weight in the cumbersome negotiating process so far, which has focused on how individual countries are cutting carbon emissions.  A substantial number of officials in Africa argue that regional governments should stand outside that pledging process until they can secure commitments on finance and use of the continent's fossil fuel reserves.

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Agenda for Egypt
Such assurances in either area look improbable. But the failures at the COP26 summit have created an agenda of unfinished business for COP27. It includes climate finance, the structure of a 'just transition' to green economies, and independent climate initiatives.

Climate finance encompasses mitigation, meaning measures to reduce or absorb carbon emissions, which takes the bulk of the UN Climate fund each year, and adaptation, or the measures that countries have to take, such as changing crops or even moving settlements in response to climate change. The final statement at COP26 recognised the inadequacy of the 'current provision of climate finance for adaptation' but did not stipulate a clear new annual target.  But the UN Environment Programme's report this year argues for a tenfold increase in current spending levels (AC Dispatches 27/10/21, Equity for developing nations will be key target of conference).

A loss and damage facility was floated at COP26 to compensate those countries hardest hit by consequences of climate change such as rising sea levels, extreme weather such as floods, drought and desertification. But this was quickly kicked into touch by the G7 countries, who proposed that further research would be required on the structure, eligibility and relevant data to inform the operations of such a facility. Africa, which has contributed just 4% of cumulative carbon emissions globally, but has suffered the worst impacts of climate change, would be in the front row if such a facility is agreed at the next summit.

The structure of a 'just transition' to renewable energy was pushed by both Nigeria and South Africa, the continent's two biggest economies, albeit with very different energy mixes. As a major oil and gas producer, Nigeria pushed back hard to defend the position of developing economies consuming and exporting fossil fuels.

Mohammad Barkindo, a former director of Nigeria's state oil company and now Secretary General of the Organisation of Petroleum Exporting Countries (OPEC) said that oil and gas were targeted at COP26 as having no place in a future energy transition, adding that 'oil producers had a lot of work to do' (AC Vol 62 No 16, The oil economy breaks up).

Earlier Nigeria's Deputy President Yemi Osinbajo had set out the country's position against the injustice of G7 countries demanding international financial institutions stop financing gas production and distribution projects. That position was shared by Akinwumi Adesina, President of the African Development Bank – despite the new rules adopted by his counterparts in other development institutions.

South Africa's model of a $8.5bn coal-for-climate swap was enthusiastically taken up at COP26 as a template for the future but there are still plenty of hurdles. The deal may fall apart unless more of the financing is made available on concessional terms. And there is also in South Africa an insistence that gas be recognised as a transitional source of energy.

Independent green energy initiatives, such as monetisation of rain forests as carbon sinks to counter logging and deforestation, are at an early phase. Gabon has pioneered such a scheme, and Congo-Kinshasa and Rwanda are experimenting with similar ones.

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According to Mark Carney, the UN's Climate Finance Envoy, over 400 of the world's biggest companies, representing about $130 trillion in assets, have signed a pledge to make their operations carbon net zero by 2050. This implies massive transfers of capital to green economic projects over the next three decades.

But under the workings of the current global financial system, there is no obvious way to allocate funding on sustainable terms to areas in Africa and South Asia where there is the greatest need to build reliable systems of renewable energy.

Jason Bordof, climate advisor to US President Barack Obama, calculates there will have to be $1-2trn a year in clean energy investments in developing economies to achieve net zero emissions by 2050. Could levies on the 28bn tonnes of carbon dioxide emitted each year by rich and middle-income countries be used to help the costs of this investment? That issue is likely to be near the top of the list at the next summit in Egypt.

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