On Monday the UK, Germany and Canada announced a Climate Finance Delivery Plan to lay out how the developed world will make good on its 2009 commitment to mobilise $100bn per year in climate finance to the developing world by 2020. The timing is critical as the failure to meet climate finance commitments has justifiably eroded the confidence of developing countries to engage in new concessional finance agreements when existing obligations are not being met.
In a recent survey by the Organisation for Economic Co-operation & Development only multilateral institutions were found to be increasing their support, while bilateral public climate finance as well as private finance sources have decreased. This highlights a pressing issue that will be front of mind for the SA delegation as it enters the negotiations: how to position SA so as to maximise investment appeal.
On some issues, such as transformation of the national electricity grid, the answer is simple. Remove protectionism for the fossil fuel and nuclear industries and let the market take over. Despite every effort to derail the programme between 2015 and 2019, the Renewable Energy Independent Power Producer Procurement Programme (REI4P) has procured 6,422MW of power, of which 4,201MW has been brought online so far and attracted $13bn in investment.
On other issues the answer is far less simple. Even if the world’s new, global and improved nationally determined contributions succeed in keeping the global temperature increase to 1.5°C, SA can still expect a 3°C increase in the interior. Mitigating the effects of this drastic increase through implementation of adaptation activities for 2021-2030 is estimated to cost up to $267bn. That’s a lot of money we don’t have.
Enter article 6 of the Paris Agreement, under which 190 countries agreed to establish a voluntary global carbon market back in 2015. Mostly thanks to the collapse of the first global carbon market, the Clean Development Mechanism (CDM), finalising the details of a new carbon market mechanism remains elusive. Much of this relates to the mixed feelings on the issue of carbon offsetting held even by those within the environmental sector.
On the one side are critics that claim that it allows polluters in developed countries to buy the right to pollute from the sellers of carbon offsets in developing economies. On the other side are those who see carbon offsets as a market mechanism to maximise the efficient deployment of capital to achieve net emissions reductions, while facilitating the transfer of finance from developed world emitters to developing economies around the world.
This schism is in part thanks to legitimate problems that were experienced under the CDM, as well as uncertainty about what to do with the credits generated by existing projects that had qualified under the CDM. While many of these projects made a questionable contribution to net carbon emission reductions, Germany’s NewClimate Institute released a report last week that found that projects mitigating about 366-million tonnes of carbon to 2030 will no longer be financially viable without CDM carbon finance. It is for this reason that the recently established SA carbon market industry association sent through an official request to the SA COP26 delegation to advance a position for the continuation of the CDM until a replacement system is in effect.
Importantly for our context, we also need to ensure stability in SA’s nascent carbon offset market. Offsets not only mitigate carbon at the global level but allow for transfers of finance to a variety of adaptation projects, all the way down to the most marginalised of the rural poor, who participate in land-use programmes that not only remove carbon from the atmosphere but improve their climate resilience as well.
The offset environment is a complex one, but the process of defining key metrics and monitoring and evaluation methodologies to quantify environmental, social and biodiversity outcomes is one of the most important developments of our time.
• Maguire holds a master’s degree in global change studies from Wits and has been developing green economy solutions for the private sector, NGOs and the state for more than a decade.
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