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African Policymakers Gather to Secure Climate Finance Following COP Meeting

At COP29, close to 200 nations gathered with a primary focus: tackling the significant climate finance shortfall.

The United Nations Framework Convention on Climate Change (UNFCCC) projects that by 2030, developing countries will require over $1 trillion annually to adapt to and counteract the mounting effects of climate change. However, as this year’s summit wrapped up in Baku, developed nations set their sights on a more conservative objective: to triple their yearly financial support for poorer nations by 2035, increasing it from $100 billion to $300 billion.

Even more transformative is the aim to mobilise $1.3 trillion every year from a combination of public and private sources by 2035. This ambitious goal is anticipated to spur investment in renewable energy, adaptation initiatives, and infrastructure that enhances climate resilience throughout the Global South.

These resources could be pivotal in facilitating a just energy transition for African countries while addressing the intensifying challenges of climate change. However, in order for Africa to draw in private sector involvement and boost investment activity, strong political commitment is crucial.

Perception – a major hindrance to investment

In Africa, there is no lack of political determination regarding climate action. Out of the 32 signatories assembled by the Climate Parliament for the recent Green Energy Zones and Corridors Pledge, 20 were African nations.

This is hardly surprising, as the continent is among those most adversely affected by global warming. Yet, it faces a critical dilemma: balancing a swiftly growing population, rising energy demands, and inadequate climate financing. Despite accounting for 18% of the world’s population and shouldering a considerable share of climate-related risks, Africa receives less than 4% of global climate finance, as reported by the African Development Bank. The continent needs investments in the trillions to develop resilient, low-carbon infrastructure and sustainably fulfill its energy requirements.

The stakes are exceptionally high for African countries: rising temperatures and unpredictable weather patterns jeopardize food security, livelihoods, and economic stability. Nevertheless, Africa possesses unparalleled potential to spearhead the global green energy shift, and with sufficient backing, this transformation is attainable. A significant barrier to investment lies in the perception of financial, political, and currency risks. African leaders must tackle these issues by improving the regulatory and legislative framework to attract capital and reshape Africa’s image as a reliable long-term partner for climate finance.

African parliamentarians as climate finance advocates

Political commitment is central to achieving climate goals. The investment deficit required to attain net-zero emissions by 2050 is enormous, and bridging it necessitates both public funding and substantial private sector participation. Members of Parliament (MPs) are vital in cultivating an environment that facilitates these investments. They possess the authority to prioritise infrastructure projects, such as transmission systems and interconnections, which are essential for the success of the clean energy movement.

By leveraging their legislative authority, MPs can:

  • Enact laws that set ambitious renewable energy targets and mobilise additional funding for climate initiatives through budget allocations.
  • Stimulate private investment by alleviating perceived risks associated with renewable energy projects, promoting transparency, and supporting multi-year plans that offer long-term stability for investors.
  • Utilise various financial instruments, such as tax incentives, subsidies, public-private partnerships, carbon markets, blended finance models, and financial guarantees, to unlock new funding avenues.
  • Ensure that climate legislation is not only enacted but also enforced, urging governments to uphold their international commitments, including those established at COP.

By incorporating these mechanisms into national strategies, MPs can send clear signals to the private sector that sustainable projects in Africa are both achievable and supported by robust legislative frameworks.

Furthermore, elected officials can ensure that the green transition emphasizes social and economic inclusion. They play a pivotal role in ensuring that renewable energy initiatives benefit local communities, particularly women and youth.

A cross-party coalition of legislators is essential for fostering lasting environmental policies that transcend political divides, thereby ensuring consistency in climate action. This unified strategy helps mitigate the impact of short-term political cycles, guaranteeing that climate policies remain stable and effective. MPs are uniquely positioned to drive climate change solutions, bridging the gap between lofty commitments and practical, actionable policies.

The promise of green zones

The Istanbul Green Investment Dialogue, hosted by Climate Parliament and UNIDO, initiated a vibrant process under the Parliamentarians for Climate Finance project, aimed at enhancing the capabilities of national legislators in 15 Sub-Saharan African nations. Its objective is to significantly amplify the flow of green investments at the national level. This event brought together MPs from 35 countries, alongside academics and financial specialists, to discuss green zones as a vital investment avenue. Following this dialogue, a closed-door session at COP29 in Baku served as a platform for MPs from the project’s participating countries and key GCF representatives to delve deeper into the economic potential of green zones, strengthening the connection between policy, finance, and green investment.

Green zones refer to designated areas where limited public investment guarantees can be focused to attract substantial investments in renewable energy, green hydrogen, and industries that utilize these resources to produce green steel, aluminium, cement, fertiliser, aviation fuel, and additional products.

These green zones present an opportunity for developing nations to compete for green investment on a global scale and establish low-carbon infrastructure for the future, without the necessity of overhauling a broad range of national laws and regulations. Nevertheless, many concepts applicable to green zones could also be implemented nationally in any country that chooses to do so. The design and specifics of green zones will differ from one country to another, necessitating much work at the national level. Simultaneously, we hope to create a model that can be replicated worldwide.

The premise is straightforward yet powerful. Green zones can act as competitive centers for green investment without requiring sweeping changes to national policies. They are flexible models that countries can adopt or scale at the national level, expediting their transition to low-carbon economies.

The Green Investment Dialogue seeks to identify solutions to make green zones as appealing as possible for investors. The discussions will lead to a toolkit for MPs, outlining the critical factors that render these zones profitable and bankable. These factors include:

  • Location. Access to renewable energy resources, industrial materials, and community involvement in ownership are essential to ensure local engagement.
  • Connection. Robust transmission lines must link green zones to urban areas and cross-border regional grids, alongside transport infrastructure for exporting green industry products.
  • Risk Reduction. This entails a simplified approval process, transparent investment frameworks, and government or multilateral guarantees to reduce risks, thereby ensuring competitive pricing and attracting private investments to these zones.

The Climate Parliament and UNIDO will develop a Green Zones Toolkit to assist legislators in establishing green zones within their countries. This toolkit will comprise model legislation, successful cases and best practices, and policies that have succeeded internationally. One outcome of the dialogue will be draft concept notes for countries to present to the GCF or other agencies to seek funding for the development of green zones.

It is evident that African MPs are actively challenging perceptions, fostering discussions, and catalysing investments to ensure that finance reaches those most affected by climate change. Despite the final COP agreement receiving a lukewarm response, with these pioneering parliamentarians and policymakers, a greener, safer, and fairer Africa is well within reach.

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