The Developed World’s Broken Promises: How Can Africa Finance the Energy Transition? by NJ Ayuk
By NJ Ayuk, Executive Chairman, African Energy Chamber
From an African perspective, one of the most important things to come out of COP15, the 2009 United Nations Climate Change Conference in Copenhagen, was the formal recognition of the fact that lower-income countries were not in a position to bear as much of the cost of the energy transition as their higher-income counterparts.
That recognition was spelled out in the section of the Copenhagen Accord that included a pledge from the world’s highly developed states to provide the developing world with at least USD30 billion a year in financing for energy transition and climate change mitigation projects. Under the accord, funding was supposed to remain at that level for three years and then start rising, reaching USD100 billion per year by 2020.
This sounds wonderful, right? Sure, the Copenhagen Accord wasn’t a binding promise, but it did set up a durable framework for future talks. If nothing else, it served to establish USD100 billion per year as the long-term target the UN would keep trying to hit after 2009 with respect to mobilizing climate financing for lower-income countries.
Nevertheless, the developed world missed that target.
Too Little, Too Late
And the UN — quite rightly — criticized it for that. I’ll quote the organization’s own webpage, using words that appear to have been published in mid-2023: “So far, the $100 billion goal has not been reached … and the distribution of funds has not been equitable. In 2020, based on the latest OECD (Organization for Economic Co-operation and Development) data, developed countries provided $83.3 billion. Only 8% of the total went to low-income countries and about a quarter to Africa.”
Since then, the OECD has published more up-to-date data. And while it shows encouraging signs, it also shows total financing has continued to miss the mark after the deadline. It said: “In 2021, total climate finance provided and mobilized by developed countries for developing countries amounted to USD 89.6 billion, showing a significant 7.6% increase over the previous year.”
The OECD also stated that it expected the USD100 billion annual target to be met in 2022. At this point, though, the organization hasn’t been able to confirm whether its forecast was correct.
In the meantime, the figures I’ve listed here should at least raise questions about the ability (and perhaps about the willingness) of the world’s most highly developed countries to keep their promises to their less-developed counterparts. These questions are worth considering as we approach the opening date of COP28, the 2023 UN Climate Change Conference in Dubai.
The UN’s Answer: More of the Same
They are also worth considering given that the UN’s response to the failure of this approach is to double down — that is, to assert that even more money must be made available, above and beyond the original commitments.
According to the organization’s webpage, Secretary-General Antonio Guterres is now calling for developed countries to provide double the amount of funding for climate adaptation programs. More is needed, he says, because the cost of mitigation work is rising and because the number of people living in high-risk areas is rising.
“Countries may need to spend up to $300 billion a year by 2030 and $500 billion by 2050, according to the United Nations Environment Programme (UNEP),” the UN’s webpage explains. “Yet these estimated costs are five to 10 times greater than current funding flows. The Climate Policy Initiative found that the world today spends under $50 billion on adaptation a year, less than 10% of climate investments overall. This disparity is less acute but still evident in the $100 billion commitment.”
That’s true, as far as it goes. Costs are rising. Populations are growing.
But given what has happened so far, does anyone believe this approach is actually going to work?
