One of the more concrete outcomes of the COP26 climate change summit in November last year is South Africa’s Just Energy Transition Partnership (JETP). Under this plan, South Africa is to receive US$8.5 billion in grants and loans from the EU, France, Germany, the UK and the US to support its transition from coal-fired power plants to cleaner energy sources.
Details of the JETP’s implementation are still scant, but the agreement already promises to be a template for how wealthy countries, the world’s largest historical emitters of greenhouse gases, can support the climate agenda of the lowest emitters, most of which are in Africa and are bearing the brunt of the climate emergency.
That makes the JETP worthy of close attention as June’s G7 leaders’ summit in Germany approaches.
There are two main reasons why the JETP can provide a road map for negotiating other mutually beneficial climate finance partnerships for Africa.
First, South Africa designed the deal to reflect its own needs and priorities — especially concerning the political economy of a green transition that is likely to affect more than 90,000 coal miners, as well as mining communities and influential trade unions.
South African politicians and policymakers were therefore careful to negotiate a package that can respond to those realities, framed around an equitable and inclusive “just transition.” Local ownership is crucial.
Second, the JETP adopts a whole-economy approach, connecting the industries that South Africa seeks to develop to those it already has or is building up.
For example, as part of the agreement, the country aims to develop an electric vehicle industry that builds on its thriving automotive sector. South Africa also wants to produce green hydrogen, for which it already has a plan and a feasibility study.
That the JETP is connected to existing plans and ambitions makes it much more likely to succeed.
Other African countries can adapt this agreement to devise their own concrete aims when negotiating with rich countries, but governments and their partners must consider several factors.
For starters, African climate financing deals must specify an issue or area of focus. The JETP concentrates on a just energy transition, with a particular emphasis on South Africa’s power utility Eskom, technology development and socioeconomic issues.
Some African nations could instead choose to address agricultural resilience and food security. Those with excess power-generation capacity could focus on building regional transmission and distribution infrastructure to export the surplus to neighboring countries.
Furthermore, just-transition deals must build on African countries’ resource endowments, in the same way that the JETP builds in part on the presence of hydrogen in South Africa. Countries that possess or can access natural gas are incorporating it into their transition plans for power generation, industrialization and clean cooking — just as Europe and North America regard it as a vital component of their own energy transitions.
African governments must codesign the terms of such climate finance agreements — and link them to existing priorities and initiatives. Countries’ nationally determined contributions under the 2015 Paris climate agreement, as well as the African Union’s recently announced 10-year climate action plan, should help shape any feasible international climate finance deal.
Whether the focus is climate-smart agriculture in Kenya or battery manufacturing in the mineral-rich Democratic Republic of the Congo, it must advance other national priorities such as industrialization and job creation. A just transition deal with the G7 could also support existing regional initiatives, such as the African Development Bank’s Desert to Power solar-energy project in the Sahel.
African climate finance deals must also address the huge scale of the challenge facing the continent, which needs US$30 billion to US$50 billion per year until 2030 for climate adaptation. Partnership agreements must be comprehensive in supporting structural transformations of African economies that boost resilience, sustainability and prosperity, while addressing the damage already caused by global warming.
The structure of the financing package matters, too. To avoid aggravating the fiscal pressures on African governments already overburdened by COVID-19 economic shocks, any climate finance deal must lead with grants and be accompanied where necessary by concessional loans.
Such a structure would help rebalance the composition of international climate finance.
Finally, a feasible climate finance deal must be clear about its goals, how long it would take to achieve them, the relevant milestones to reach and the funds to be committed within a specified period.
The JETP regards US$8.5 billion as an initial amount to be disbursed within five years, with the potential to unlock more funding. Other African countries can adapt this template and ensure their goals include clear milestones to be achieved within the timeframe.
The JETP identifies concrete areas to support during South Africa’s energy transition. More crucially still, the agreement addresses vital questions about how African countries can best use international climate finance. In doing so, it provides a framework for negotiating support for African and other developing countries through flexible fora like the G7.
Olumide Abimbola is executive director of the Africa Policy Research Institute in Berlin. Zainab Usman is director of the Africa Program at the Carnegie Endowment for International Peace.
Copyright: Project Syndicate
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