business Africa refines its demands for the climate: financing, debt and taxes


Africa refines its demands for the climate: financing, debt and taxes

Financing of renewable energies, reform of the international financial system and carbon taxes, the first African summit on the climate drew up this week in Nairobi the list of the demands of Africa to lighten the financial burden of the fight against global warming.

In the “Nairobi Declaration”, this continent, which contributes only 2% to 3% of global greenhouse gas emissions, tried to find a common position in the global process on climate change, which will culminate with the UN climate conference (COP28) in Dubai at the end of November.

Here are the main points:

Clean energy

Besides a natural potential to directly generate clean energy (solar, wind, geothermal, etc.), Africa is home to 40% of the world’s reserves of cobalt, manganese and platinum, essential for batteries and hydrogen fuel cells.

Paradox: this continent has only attracted 2% of global energy transition investments over the past decade.

The Nairobi Summit called for an investment of $600 billion to increase Africa’s renewable energy generation capacity from 56 gigawatts in 2022 to at least 300 gigawatts by 2030.

An imperative for a continent of 1.4 billion inhabitants, 600 million of whom do not have access to electricity.

Carbon taxes

To help raise the funds needed for these investments, the Nairobi Declaration calls on world leaders to “stand behind the proposal for a carbon tax regime including a tax on fossil fuel trade and shipping and aerial”.

These sources of financing, adds the Declaration, could be supplemented by a global tax on financial transactions.

During a summit in Paris in June, French President Emmanuel Macron spoke in favor of a tax on maritime trade while emphasizing the necessary membership of China, the United States and other European countries. for it to become a reality.

In Nairobi, the American envoy on climate John Kerry limited himself to explaining that these different proposals were being studied in Washington.

Financial system reform

Participants at the Nairobi Summit added their voices to calls to reform the architecture of the international financial system, which UN Secretary-General Antonio Guterres described as “outdated, unfair and dysfunctional”.

The leaders also called for restructuring and debt relief for their countries. The region’s debt burden has soared with the Covid-19 pandemic, Russia’s invasion of Ukraine and climate impacts, according to the United Nations Economic Commission for Africa.

However, access to IMF and World Bank financing is considered difficult by developing countries, faced with the challenge of lifting a large part of their population out of poverty while freeing themselves from fossil fuels.

The reform of the two institutions should be at the heart of their annual meeting in October in Marrakech.

Carbon-free economy

African countries have pleaded for economic growth less dependent on fossil fuels, beyond the “traditional” model of industrial development.

At the heart of this strategy: to ensure that the raw materials that the continent abounds in, including the minerals used for green technologies, are processed locally and not simply exported.

Another option would be to better monetize the continent’s vast ecosystems – forests, mangroves, wetlands – which absorb CO2 on the carbon credit market.

But this market, which is poorly regulated, is the subject of criticism, with certain projects – notably forestry – having, according to their detractors, little impact on the preservation of the environment or the protection of local communities.

“Carbon credits are really a license to pollute,” assures Mohamed Adow, director of the Power Shift Africa think tank.

Climate impacts

African states have reminded rich polluting countries to honour their commitment, made in 2009, to provide $100 billion per year in climate financing by 2020.

As well as helping the most vulnerable countries to cope with the immediate impacts of climate change through a fund adopted at COP27 in Egypt, aimed at rich nations to compensate for the “loss and damage” of those in the South.

One voice

The heads of state of Nigeria and South Africa, two heavyweights on the continent whose economies rely on fossil fuels, were notably absent from the summit.

However, the African Union assured that the Nairobi Declaration had been adopted unanimously. For Laurence Tubiana, president of the European Climate Foundation, the Nairobi Summit “sends a strong message to the international community”.