Follow the money to clean SA's green slate

Developed countries have committed to providing $100-billion a year to developing countries to address climate change. (AFP)

Developed countries have committed to providing $100-billion a year to developing countries to address climate change. (AFP)

Developed countries have committed to providing $100-billion a year to developing countries to address climate change.

However, most countries have no centralised system for tracking and counting the funds, and South Africa is no exception.

At the 15th Conference of the Parties (COP 15) to the United Nations Framework Convention on Climate Change in 2009, developed countries pledged in the Copenhagen Accord to provide "fast-start finance" to developing countries, which translates into new and additional resources approaching $30-billion for the 2010-2012 period, as well as mobilising $100-billion annually by 2020 for climate responses in developing countries.

Though South Africa's 2011 National Climate Change Response white paper outlined various instruments for climate finance and tracking, the country lacks a clear, structured and practical strategy on, and institutional arrangements for, ­climate finance tracking.

This absence of a centralised tracking system, for both public and private climate finance, is hindering South Africa's ability to implement an integrated response.

This is preventing South Africa from dealing with key problems, such as co-operation between funders and receiving entities to ensure that funding meets the country's requirements and priorities.

This has, for example, resulted in insufficient support by donors of municipalities, the principal agents for climate change mitigation and adaptation.

In addition, establishing effective domestic mechanisms aimed at strategically mobilising, co-ordinating and monitoring climate finance flows at the country level represents a key prerequisite for South Africa and other developing countries to engage knowledgeably at the international level.

It is only by understanding the domestic state of play that developing countries can have substantial leverage in both the political and technical discussions on determining how to count the $100-billion commitment from developed countries.

Despite these early shortcomings, South Africa is working towards implementing a system that can provide an overall picture of funding.

Although the National Climate Change Fund and the Climate Finance Tracking Facility proposed in the white paper are, as yet, nonexistent, the treasury and the department of environmental affairs are jointly designing and implementing a climate finance co-ordination mechanism. They have commissioned Camco Clean Energy to investigate further and build on extensive background research work undertaken by the Development Bank of Southern Africa (DBSA).

The DBSA has proposed a flexible climate co-ordination mechanism that includes a tracking facility to support mobilisation of resources by integrating climate finance, bridging funding gaps, and strengthening technical support and technology transfer.

A multi-stakeholder working group is to be appointed by October 2014 to oversee the process of mobilising and channelling climate finance and technology.

Although there is no systemic tracking of domestic public finance in South Africa, different preliminary estimates put national budget climate change and environmental programme funding between R14.7-billion and R18.7-billion in 2012-2013. In treasury documents, "environmental protection" is coupled with "economic services", making it difficult to analyse, although the treasury is setting up a database to track such funding for internal use.

Funding from South African development finance institutions is dominated by the Industrial Development Corporation (IDC), which has committed to spending R25-billion on green industries in 2014-2015, and the DBSA, which has pledged to unlock about R20-billion to R30-billion for green energy projects over the 2011-2015 period.

Similarly, the exact amount of foreign public funds directed at South Africa remains unknown as there is no central repository to track donor finance in the country.

The DBSA conducted a one-off donor finance study from 2003 to 2010 that, although deficient in data such as co-financing, identified 95 projects and programmes in this time frame worth R20.1-billion, a substantial share of which were concessional loans. The largest funders were France, Germany, Australia and multi­lateral funds.

Private climate finance is also not systematically tracked, although it is known that commercial banks provided at least $4.12-billion for large-scale renewable energy projects in South Africa in 2012-2013.

In addition, a R5-billion, 14-year green bond was issued by the IDC in 2012, and Nedbank announced a green savings bond programme in the same year, and aimed to raise R4-billion in the first tranche.

Though it is not easy to collate data on climate change-related activities because the subject is by nature scattered, and the details are time-consuming to obtain, some of the responsibility lies with the private sector.

In a new database of climate change-related projects in South Africa being built by the department of environmental affairs, the private sector has demonstrated a certain reluctance to share or divulge relevant information.

This database should contribute towards a better understanding of the impact of climate finance, but further work is required to grasp its complexity fully.

Despite the absence of adequate tracking, substantial public and private financial flows are already supporting climate change-related projects and programmes in the country. South Africa's framework for developing and financing renewable energy is a perfect example.

Gaylor Montmasson-Clair is Trade and Industrial Policy Strategies' sustainable growth assistant programme manager. This article was commissioned by the Organisation for Economic Co-operation and Development. The document is available at tips.org.za

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