COP 29 and Africa: Some progress amid unfulfilled promises

Analysis

COP29 was a landmark opportunity for African nations to reiterate their calls for developed countries to provide more climate aid and finance. This year’s event was significant given its focus on setting a new collective quantified goal on climate finance (NCQG) to replace the existing target of USD 100 billion, agreed at the Paris Agreement in 2015. Although global climate financing reached a record USD 125 billion in 2023, Africa requires USD 2.8 trillion annually to achieve its mitigation and adaptation targets. Current flows amount to less than 5% of the continent’s needs. While African leaders are taking increasingly proactive steps to raise climate finance, failure to mobilise sufficient financing represents a strategic – and potentially existential – threat.

QUICK INSIGHTS

African stakeholders are developing new initiatives to address the climate finance gap, setting up green funds, carbon credit mechanisms, and banks specialised in financing decarbonisation.
While rich nations have agreed to channel at least USD 300 billion a year to developing countries by 2035, these promises are insufficient to address the pressing needs of African economies.
COP30 in Brazil will focus on reviewing national climate plans and agreeing on a UN-led framework for global carbon trade.

African negotiators were unable to fully attain conference goals

A newly agreed climate finance goal of USD 300 billion was reached on the last day of negotiations – representing a tripling of the previous target – falling well short of developing countries’ demands. Ahead of COP29, the African Group of Negotiators (AGN) had set an annual climate finance target of USD 1.3 trillion. Funding will include USD 120 billion annually for low and middle-income countries from a World Bank-led consortium of multilateral financial institutions. The lender said an additional USD 65 billion would be mobilised from the private sector, while Norway also committed USD 740 million towards renewable projects and reducing fossil fuel subsidies in developing countries. Meanwhile, Senegal announced it will allocate USD 2.6 billion towards its green energy transition plan, through funding provided by the French Development Agency. AGN President Ali Mohamed criticised the way negotiations unfolded, singling out a lack of commitment and leadership on the part of developed countries. “Africa leaves Baku with realism and resignation as COP29 progress falls well short of hopes. When Africa loses, the world loses,” he summarised after the final draft was published. He also criticised a reliance on concessional loans for climate finance, which increases the national debt of recipient countries.

African countries are becoming more proactive in mobilising climate finance.

At the regional and country level, institutions, governments, and the private sector seek new alternatives to address the climate financing gap. In 2022, the African Development Bank (AfDB) launched the African Green Banks Initiative, which aims to create a USD 1.5 billion ecosystem of green investment facilities by 2030. This platform will notably support Côte d’Ivoire’s recently announced USD 500 million green finance fund to promote sustainable growth initiatives. This mirrors the Climate Finance Facility established by the Development Bank of Southern Africa in 2019. Meanwhile, Rwanda’s IREME Invest and South Africa’s Nedbank have expanded their focus on financing climate-related projects. On the sidelines of COP29, Benin announced the National Climate Finance Platform, under which it will launch its carbon monetisation strategy. It aims to sell 2.5 million carbon credits and raise USD 10 billion to meet its climate finance needs. To optimally benefit from carbon credit sales, African leaders have called for GDP calculations to include the value of environmental resources. Rwandan President Paul Kagame has argued that this would not only unlock funding for transformative climate-oriented projects but also improve credit ratings. Although Africa only accounts for 4% of global historical carbon emissions, the continent continues to experience the extremes of climate change. Lake Chad Basin countries in Central and West Africa experienced floods in July-October that killed hundreds, displaced over two million people, and exacerbated food insecurity and poverty. Droughts in Southern Africa have led to recurring power cuts, which have hampered economic activity, notably in Zambia. The African Union estimates that Africa will experience an annual 5% annual GDP loss until 2040 if climate-related issues are not sufficiently addressed.

African countries support the climate agenda but will not give up hydrocarbon exploitation

Despite being encouraged to fully embrace the decarbonisation agenda, Africa only received 3% of global clean energy financing in 2023, according to the International Energy Agency, with less than a fifth of this mobilised from the private sector. While political instability, foreign exchange challenges and a lack of bankable projects have been blamed for this situation, the continent benefits from an abundance of natural capital. Contrary to widely held perceptions, the continent’s default for infrastructure projects stands at just 5.5% – below the average for Western Europe and Asia. In parallel to mobilising financing for low-carbon energy and development, African countries are banking on their hydrocarbon resources to plug revenue gaps and accelerate development. The African Energy Chamber – an oil and gas lobby – argues that oil and natural gas extraction could help provide electricity to the estimated 600 million Africans not yet connected to the grid. The chamber also suggests that natural gas could be a viable solution for approximately a billion Africans who lack access to clean cooking mechanisms. Nascent oil and gas producers, including Namibia and Senegal, are set to experience medium-term double-digit growth driven by hydrocarbon activity. Meanwhile, Côte d’Ivoire, Mozambique, Namibia, Niger, Tanzania, and Uganda, equally hope that the windfall derived from fossil fuels will accelerate economic transformation. Africa is central to the global climate agenda, home to an estimated 30% of the critical minerals required for the Just Energy Transition. Though climate finance may be harder to mobilise from a climate-sceptic Donald Trump presidency, the US is set to deepen its geostrategic focus on critical minerals. While this year’s COP represents a setback for African countries, next year’s COP30 in Belém, Brazil will be an opportunity to review national climate plans, agree on the details of a global UN-led carbon trade system, and chart a pathway to mobilising USD 1.3 trillion for developing countries by 2035.