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Africa Confidential, October 2023

Radical climate finance strategies go mainstream
Leaders of the IMF and World Bank back carbon taxes and a plan to end fossil fuel subsidies | By Tim Concannon

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One of the most significant moments of the finance meetings in Marrakech on 9-15 October was the call by World Bank President Ajay Banga to open discussions on ending the US$1.25 trillion a year spent on subsidies for fuel, fisheries and agriculture which cost a further $5-6trn a year due to their collateral environmental damage. It is about as sharp a turnaround as could be imagined from Banga's predecessor at the Bank, David Malpass, who declined to confirm publicly whether he thought climate change was a man-made phenomenon.

Global subsidies for coal and oil make up the biggest percentage of the direct costs and cause most of the environmental damage. Acknowledging the issue was politically explosive, Banga added: 'I'm not saying get rid of all of them. I consider some of those subsidies mission-critical to the social contract with the government and its citizens, but I don't believe that $1.25trn qualifies.'

Banga's other climate bombshell at the IMF and World Bank meetings was to endorse the use of the IMF's reserve currency, the Special Drawing Rights (SDRs), to boost the lending firepower of multilateral development banks to fight climate change and other issues. This follows his meeting with IMF Managing Director Kristalina Georgieva in which they promised much closer cooperation between the two institutions on climate finance and developing country debt.

Both the IMF and the World Bank are reviewing their financing rules: the IMF is reviewing its quota system, which determines member countries' voting rights and shareholdings; and the World Bank is lobbying its shareholders for a general capital increase, likely to be the biggest in its history, in 2025. This week, Banga set out a roadmap to add another $106 billion to the Bank's lending power over the next ten years.

Those advances have to be set against the political reality that neither Banga nor Georgieva will make the final decisions on their institutions' lending capacity. That's up to the governments of the 190 member states in the IMF and World Bank.

The other case of plain speaking in Marrakech was the IMF's calculation that about 80% of the estimated $2trn a year in climate investments needed in developing countries by 2030 would have to come from the private sector.

The IMF's Fiscal Monitor and Global Financial Stability Report (GFSR) estimates that $5trn a year will be needed in climate investments globally to meet the net-zero emissions goals, of which 40% would have to come from developing economies and emerging markets. 'We project that growth in public investment will be limited and that the private sector will need to make a major contribution.'

The report added its endorsement of carbon taxation in some form: 'While no single measure can fully deliver the climate goals, carbon pricing should be an integral part of any policy package.'

These messages on climate finance at the Marrakech meeting didn't amount to breakthrough but could get political and business leaders to focus on new strategies and policies in the run up to the UN COP28 Climate summit in Dubai starting on 30 November.

Countries which participate in the COPs (Conference of the Parties) sign up to an array of commitments within the UN Framework Convention on Climate Change (UNFCCC) mechanism to produce multiple reports and plans.

These include a National Adaptation Plan (NAP) and a Just Energy Transition Plan (JETP) for the conversion from carbon-dependent power generation to clean energy. Various risk models of climate impacts are at work. The African Union's Risk Capacity Unit assists governments in planning for natural disasters and extreme weather. The African Development Bank also has its own Strategy of Climate Risk Management and Adaptation.

African governments can draw on multiple pools of funding for adaptation (the shift needed from dirty to clean power to slow global warming).

There are three core funds to monitor:

  • The World Bank-administered Adaptation Fund has existed for 15 years and shares the proceeds from the clean development mechanism.
  • The Green Climate Fund, is based in South Korea. Established at Cancun in 2011, it is often a subject of reportage around COP meetings because its coffers consistently fall short of the $100bn rich countries call for.
  • The Glasgow Financial Alliance for Net Zero, was set up at COP26 in 2021 and harnesses trillions of dollars of private sector investment for adaptation and renewable energy. It was the only substantive discussion on the floor at a subdued Glasgow COP under firm Covid-19 restrictions. In that setting, it came across at times like a development investment 'deepfake'. The initiative was sold to the attendees in evangelical tones.

Several other smaller funds are running, mostly under the UN banner. The most politically contentious is the demand by developing countries – and its reluctant acceptance by western countries at the UN COP27 Summit last year – for a Loss and Damage fund to compensate those hit hardest by extreme weather and effects of climate change. 

A consistent message from African governments, scientists and campaigners in the months leading up to COP28, is that these overlapping plans, risk models, and funds aren't being coordinated internationally (as in this year's recent response to Cyclone Freddy in Malawi).

Few African governments have both NAPs and JETPs ready for Dubai. Two years after it was mooted, South Africa insists it will finalise its JETP with its mix of commercial and public funding at the COP28 (AC Vol 64 No 20, At last, the $8.5bn energy transition plan is ready). Africa produces 2 to 3% of greenhouse gases but stands to bear the greatest impact of any increase in climatic temperature over 1.5°C. Four African countries are ranked among the 10 most likely to be the most affected: Mozambique (1), Malawi (3), Ghana and Madagascar (8=).

Buried in these reports, plans and mission statements are promises with profound implications that aren't being debated. Ghana's National Energy Transition Framework: 2022-2070 aims to achieve universal electrical access by 2030 and then to meet the future electricity demand of 380,000GWh annually. Based on its current population, this would be about 0.011GWh of annual power consumption per Ghanaian by 2070 compared with 0.013GWh per American. While this would put the average Ghanaian on near-parity with the average American in terms of usage, there's also scale to consider. America's population is 10 times that of Ghana.


To meet its commitments made to the UN Framework Convention on Climate Change (UNFCCC), Ghana will use gas to meet most of its power needs until 2050. After 2050, 20% of its power will come from solar and wind, according to President Nana Akufo-Addo's government, and an astonishing 80% from nuclear power plants – one is being developed in Accra.

Some in Ghana are sceptical, arguing the plan may reflect an attempt by civil servants to juggle Ghana's multiple obligations, domestically and internationally, just before an election year.

Opposition MPs in Ghana have drafted a climate bill for debate but it doesn't mention the nuclear option. The government's energy plan from 2020-2070 has been costed at $562 billion with some outside agencies such as Bloomberg Philanthropies committing some indicative funding.

In the 1970s nuclear power was mooted as the best solution to Africa's energy demand. Only South Africa has a commercial plant, at the Pelindaba nuclear research centre in Gauteng, linked to its dismantled nuclear arms programme. South Africa built six nuclear bombs, officially, in collaboration with Israel and Taiwan but says it destroyed them in 1989. Armed intruders attempted to break into the Pelindaba plant in 2007 and got through electric fences but were repelled by a lone fireman, according to reports. Authorities dismissed the incident as a botched burglary (AC Vol 53 No 15, No bang (this time)).

The 2011 Fukushima Daiichi nuclear accident in Japan and ongoing risks of nuclear terrorism in Africa mean nuclear remains contentious (AAC Vol 4 No 6, Aftershocks). Akufo-Addo says he doesn't know whether Al Qaida has members in Ghana but its militants are on the border with Burkina Faso. Some fear they could drawn into a fierce land rights and ethnic conflict in the small northern town of Bawku.

Africa's nuclear plans can be traced back to 1953 and United States President Dwight Eisenhower's 'Atoms for Peace' speech at the UN. The subsequent US programme of providing nuclear technology to key allies, including in Africa (and covertly providing some with weapons-grade nuclear material) had some dramatic consequences.

In 1971, General Atomics of San Diego sold Mobutu Sese Seko's government in Zaïre (now Congo-Kinshasa) eight kilograms of enriched uranium 235 and 238 as part of the 'Atoms for Peace' programme. Some feared that the experimental reactor in Kinshasa might be used as a cover for nuclear weapons development on the side. The uranium went missing when Mobutu's regime collapsed in 1997.

Seven bars turned up later in the year in a shoot-out in Paris with a crime syndicate comprising Italian mafia clans from Sicily, Calabria, and the Roman gang, the Magliana. The fear was that the material could have been used as a tool of nuclear blackmail, threatening to detonate a dirty bomb in Rome, or that it would be sold to terrorists.

The Kinshasa affair also provided plot ideas for the 1978 Israeli-German-Italian film, The Uranium Conspiracy, made by the schlock-producer Menahem Golan. The film provides, in certain respects, better policy analysis of the global risks of nuclear proliferation in Africa than that in some UN agencies lending billions of dollars to governments in 2023.

This article was developed with the support of Journalismfund Europe
Journalismfund Europe