COP28 will be best remembered for world leaders finally acknowledging that tackling climate change will require “transitioning away” from the most significant activity that causes climate change, namely the burning of fossil fuels.
Only time will tell whether the landmark declaration makes much difference in practice. But for Africa, COP28 produced a range of outcomes that may help to scale up efforts to invest in clean energy, mitigate the damage of climate change and accelerate the development of carbon markets.
Heading into the summit, a key priority for the continent was to bring the Loss and Damage Fund into operation. This fund was agreed in principle at last year’s COP as a vehicle to help low-income countries that are most exposed to climate change impacts. But there was some doubt in the run-up to Dubai whether governments could agree on the technical details around how the fund will operate.
These fears proved to be unfounded. Delegates agreed on the very first day of the summit to accept recommendations delivered by a transitional committee on bringing the fund into operation. Several countries immediately announced financial commitments, with pledges totalling over $700m by the end of the conference.
Climate finance disappointment
The first round of pledges will clearly be insufficient to support countries in Africa and around the world on the front line of the climate crisis. “The success of this fund will depend on the speed and scale at which funds start flowing to people in need,” said Ani Dasgupta, president of the non-profit World Resources Institute. “People in vulnerable countries will face up to $580bn in climate-related damages in 2030 and this number will only continue to grow.”
Beyond the Loss and Damage Fund, progress on climate finance at COP28 was limited. New financial commitments to various climate financing mechanisms were in short supply. The infamous pledge, made in 2009 in Copenhagen, to direct $100bn a year in climate finance towards developing economies, remains conspicuously unfulfilled.
Oxfam International’s climate change policy lead Nafkote Dabi said in a statement that “rich countries again reneged on their obligations to help people being hit by the worst impacts of climate breakdown, like those in the Horn of Africa who have recently lost everything from flooding, after an historic five-season drought and years of hunger.”
“COP28 was doubly disappointing because it put no money on the table to help developing countries transition to renewable energies,” Dabi added.
“Developing countries, and the poorest communities, are left facing more debt, worsening inequality, with less help, and more danger and hunger and deprivation. COP28 was miles away from the historic and ambitious outcome that was promised.”
Clean energy investment
While NGOs were never likely to be fully satisfied with COP’s outcomes, it is clear that Africa is increasingly in the spotlight for its role in combatting climate change. Large swathes of Africa possess excellent conditions for generating energy from renewable sources, while the continent also has a key role to play in removing carbon from the atmosphere through its forests, mangroves and other ecosystems.
“Today, everyone is focusing on Africa,” says Hassanein Hiridjee, CEO of the Axian Group, a Madagascar-based conglomerate that focuses mainly on telecoms, energy and financial services.
Indeed, many new clean energy projects were unveiled at COP. Nigerian energy company Oando announced a memorandum of understanding with the government of Cross River State for a 100 MW solar project – which would be one of the first utility-scale renewables schemes in the country. Kenya received several investment pledges in its rapidly-growing geothermal sector, while several companies including Total signed an MoU for Mauritania’s first green hydrogen pilot.
UAE-based companies including Masdar and AMEA Power were particularly active in staking their claims to African renewables projects. The two companies unveiled multiple schemes in countries including Ethiopia, Mozambique and Angola.
Hiridjee emphasises that concessional finance mechanisms are needed if renewable energy project developers are to fast-track their work in Africa. “This energy transition will not happen if there is no financial support,” he says. Development finance institutions and other actors need the resources to be able to offer concessional loans, says Hiridjee, particularly for smaller-scale projects that target mainly lower income areas where electricity is currently unavailable.
The Axian Group co-owns a renewable energy platform called WeLight, which deploys solar-powered mini-grids in Madagascar and Mali. Hiridjee says the company, and others in the group, would be in a position to scale-up further if there was greater coordination between the private sector, governments and development partners. “We could do much more, but we need support to accelerate,” says Hiridjee. “We will grow, and we will accelerate the transition to renewable energy and we’ll accelerate the electrification of the continent via private-public partnerships. This is key.”
Although the climate finance commitments that are needed to help African renewable energy companies expand their operations were relatively modest at COP28, one bright spot is that the universe of funding sources is expanding. As well as traditional players like DFIs and multilateral development banks, Hiridjee emphasises that sovereign wealth funds (notably from the Middle East) and large asset managers are increasingly eager to invest in the energy transition in Africa.
Carbon markets
Another area to receive much attention in the run-up to COP28 was Africa’s contribution to the voluntary carbon market. This market provides a route for Africa to monetise its ‘natural capital’ assets that remove carbon from the atmosphere and provide other environmental services to the planet.
Paul Walton is the executive-director of the Africa-Europe Foundation, which produced a report during on the conference emphasising Africa’s potential as a supplier of carbon credits. He says that COP28 achieved “good progress” towards realising the “win-win opportunities” from the carbon markets.
Governments did not, however, reach agreement at Dubai on finalising several issues around Article 6 of the 2015 Paris Agreement, which introduced arrangements for governing global carbon markets. EU negotiators blocked a deal in Dubai over greenwashing concerns – and the failure to reach agreement deprives Africa of a potential opportunity to expand the international sale of carbon credits.
Nevertheless, Walton believes that Africa is poised to benefit from a maturation of the carbon market over the next 18 months and access opportunities flowing from the EU Carbon Border Adjustment Mechanism. A key factor, he says, will be ensuring that Africa can deliver “high integrity” credits.
“It’s great that there’s momentum building and political will, but it’s going depend on those governance frameworks and the quality in in place,” he says. Carbon prices have significantly contracted this year, partly due to a plethora of allegations around low quality schemes that have undermined the market’s credibility.
Despite recent turmoil, many powerful actors are determined that the carbon markets will play a key role on the path to net zero. The next year will be crucial in determining whether the whole concept of carbon offsetting can mend its reputation and allow the carbon markets to recover.
The key issues that have dominated discussion in Dubai are sure to still be on the table in Baku, Azerbaijan, when COP29 kicks off next year. In the meantime, the challenge for Africa is to ensure that the projects and promises announced at this year’s COP start to make an impact on the ground.
