Back to COP – Investment Urgently Needed, and Carbon Credit Markets for Africa

Ahead of the 28th United Nations Conference on Climate Change (COP 28), the African Development Bank Group (AfDB) has launched country-by-country economic reports to guide African policymakers in their discussions at the global event. The new Country Focus Reports (CFRs) provide analysis and policy recommendations to strengthen countries’ active participation at COP 28, which takes place in Dubai, United Arab Emirates, from 30 Nov to 12 Dec. The theme of the reports is “Mobilising private sector finance for climate and green growth in Africa”. The reports foster policy dialogue on macroeconomic performance and outlook and provide insights on mobilising private sector and natural capital finance to drive the continent’s climate resilience and green growth policies.

Ministers from the world’s 46 least developed countries (LDC) have issued a joint Dakar Declaration on Climate Change 2023 outlining their expectation and priorities for COP 28. The Dakar Declaration calls for urgent global emissions reductions, increased climate finance, a strong outcome operationalising the new Loss and Damage Fund and an ambitious Global Stocktake to close the gaps in global climate action.

African countries collectively need to raise around $2.8tn by 2030 to meet climate action goals, according to the Climate Policy Initiative research body. Many African governments cannot afford to pay for green initiatives and the ability of private investors to secure funding has been restricted by perceived risks associated with the continent and green projects more generally. Some see a solution in blended finance, an approach through which public sources of money such as grants from development finance institutions or philanthropic organizations, are used to reduce the risk for private investors. The AfDB is partnering with African banks to fund projects aimed at addressing the impact of climate change through its African Green Bank Initiative. The scheme, which has access to a $1.5bn fund and technical support from European asset management firm Amundi, was launched in May.

One aspect of environmental sustainability is ‘Carbon credit markets’ which enable industrialised nations and businesses to offset their carbon emissions by investing in eco-friendly projects elsewhere. One carbon credit or offset represents one metric ton of carbon dioxide removed from the earth’s atmosphere. There is movement in Africa to address the carbon credit market. During COP27 in Sharm el-Sheikh in Egypt last November, Kenya, Malawi, Gabon, Nigeria, and Togo pledged to work with the new Africa Carbon Markets Initiative (ACMI). ACMI aims to produce 300m carbon credits annually, aspires to unlock some $6bn in revenue and create 30m jobs by 2030. ACMI points out that Africa, with its wealth of renewable energy sources, can benefit considerably through judicious and informed use of these markets. Different countries, including  SA, Morocco, Kenya, Malawi, Gabon, Nigeria, and Togo have been pursuing this concept through different initiatives. Efforts including forest regeneration, and harnessing sustainable energy sources like solar, wind, and hydroelectric power which have been growing and contributing to the overall global carbon offset cause.