The amount of carbon dioxide in the atmosphere has risen from about 280 parts per million before the Industrial Revolution to about 420 today. As a result, the world’s average temperature has risen about 1°C, causing severe risks and major disasters such as floods and droughts, causing most damage in poorer countries and to poorer communities.
Recent data suggests human-caused climate change is accelerating and the resulting human and economic damage is getting more frequent and more serious.
The global community must set ambitious goals and take urgent action to reduce the build-up of carbon dioxide in the atmosphere and also offset the effects of that build-up. Africa must play its part. And, as Africans, we have a right and an urgent duty to use all our resources to develop resilient agriculture, build effective stormwater drainage systems, implement decent town planning so that communities do not build homes on flood plains, and improve the lives of Africans generally.
The Standard Bank Group understands and supports these urgent needs for mitigation and adaptation. We are guided by the science and the law as they evolve. The science is summarised by the UN’s International Panel on Climate Change and by the Network for Greening the Financial System set up by the world’s leading central banks, including the South African Reserve Bank. The law emerges from the Paris Agreement, with its principle of common but differentiated responsibilities and its requirement that countries develop their own plans — the Nationally Determined Contributions.
We need to make sure that people in the Mpumalanga coal towns have a realistic chance of a steady job and a better future for their children
In light of the science and the law, we have committed to being a net-zero business by 2050. In other words, by then, we will not be contributing any additional CO2 to the atmosphere. Between now and then, we will steadily reduce the emissions we finance and rapidly increase our financing of renewable energy, resilient agriculture, reforestation and high-quality carbon offset programmes, which enable Africans to benefit from the fact that our forests and oceans absorb a lot of carbon.
Projects and companies we fund are also developing their own net-zero plans, and we support them in executing these plans.
Among these and many other commitments, we will not finance new or expansion of coal-fired power stations, except when refurbishing an old power station to reduce its carbon output by increasing its efficiency and installing technology that removes carbon emissions.
We see climate change as creating opportunities as well as risks and costs. We fund almost R5 of renewable energy for every R1 we lend to non-renewable energy projects. Our sustainable finance portfolio is one of the fastest-growing parts of our business. We are well on track to achieve our target of more than R250bn in sustainable finance by 2026, having mobilised R83bn by June 2023. Standard Bank has funded nearly 4,000MWh of renewable energy in South Africa — equivalent to four stages of load-shedding once it comes online. Our contribution is large, but it’s also important to remember that the financial sector can’t do this on its own. The pace and scale of the projects we can support are determined by our clients’ needs, by the overall state of the economy, by regulation and by our overriding duty to keep our depositors’ funds safe.
We think a just and feasible path to a net-zero economy must include a substantial role for transition fuels — like natural gas — in middle- and higher-income economies. We believe a just transition must also include the extraction and use of coal and oil in low- and medium-income countries.
Uganda is a low-income country with a predominantly poor population with an annual per capita income of $884 (about R17,000), which means that yearly income per person in Uganda is about the same as the price of lunch for two at a top-rated restaurant in London. Uganda’s yearly output of CO2 is less than half the amount generated in California by gamers alone.
That’s just the electricity Californians use playing computer games. Most Ugandans use wood, paraffin and diesel as their main sources of energy — all of which are worse for the environment and for human health than electricity generated by gas, oil or coal.
Asking Ugandans to make large sacrifices for the global climate is unrealistic at best. To argue that the poorest African countries should be prevented by externally imposed rules from using their non-renewable resources raises questions about where people who think like this stand on human rights and human development. To the contrary, the poorest countries should be able to borrow for, and invest in, almost all forms of energy generation and industrialisation.
The most important and urgent work to slow down climate change needs to be done in middle-income countries. South Africa, regrettably, still produces the dirtiest electricity in the world. Nigeria’s vast city of Lagos relies on thousands of small, and very dirty diesel generators. Replacing them with a modern gas-fuelled power plant would reduce world carbon output far more than, for example, building one more solar plant in Western Europe. This is because European electricity is already quite green, but current Nigerian and South African electricity production releases a great deal of carbon.
Similarly, in countries like South Africa, we should be paying attention to helping people who are vulnerable to the energy transition. We need to make sure people in the Mpumalanga coal towns have a realistic chance of a steady job and a better future for their children. But people currently depend on coal throughout the economy.
We also need to encourage financial and technical innovation. For example, on the financial side, and as the governor of the Reserve Bank has argued, Africa should be paid — in hard cash — to accelerate our transition and for the carbon sequestration that takes place in our forests and wetlands.
On the technical side, we have seen astounding advances in renewable energy generation. Universities — and African universities in particular — should be funded and incentivised to develop new methods of sequestration and to experiment with geothermal engineering.
There is no one-size-fits-all answer. All of us in the climate debate need to keep thinking carefully about what choices are most likely to ensure better lives for Africans now and for generations to come.
* Tshabalala is group CEO, Standard Bank
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