Clean energy offers a viable solution that can drive economic growth, improve quality of life and protect the environment. Photo: Dwayne Senior/Getty Images
Climate finance in South Africa needs to increase three to fivefold from where it is now with an average of R131 billion, according to a new report by the Presidential Climate Commission (PCC).
“Estimates suggest that South Africa requires on average R334 billion per year to meet its net zero goal by 2050, and R535 billion per year to meet its nationally determined contribution [NDC] target by 2030”, the report stated.
The NDC is a climate action plan to cut emissions and adapt to climate impacts.
The report was launched on Wednesday by the PCC on the eve of COP28, which starts on Thursday in Dubai, the United Arab Emirates. The South African delegation is planning to ask for more money in the form of grants rather than concessional loans for its energy transition.
Climate finance is expected to be a big talking point at COP28, as developing countries ask developed nations to pay for climate-related damages because they have been the biggest greenhouse gas emitters.
The report found that grant financing went down from an annual average of R3.5 billion (5%) in 2017-18 to an annual average of R993 million (1%) a year in 2019-21.
One of the authors of the report, Jack-Vincent Radmore, said that with many countries moving towards cleaner energy, renewable energy has become an attractive sector for investment.
He said that in South Africa, continued load-shedding, falling technology costs and increasing grid electricity prices have resulted in clean energy receiving more than 63% of the total tracked climate finance flows.
He added that private actors, especially commercial banks and institutional investors, contribute significantly to these investments.
“ These have increased threefold, from an annual average of R35 billion reported in 2017-18 to an annual average of R113 billion in 2019-21.”
He said that the South African market is slowly responding with emerging opportunities and incentives for climate-related financial instruments internationally such as green bonds and carbon credits, as well as a number of funds and facilities for these types of initiatives.
Despite the overall increase in climate finance, Radmore said adaptation projects have continued to receive less attention, constituting 12% of total finance in 2019-21 and 7% in 2017-18.
This is a big concern for African countries who, over the years, have called on developed countries to meet their commitment to climate finance.
According to a study by the Organisation for Economic Cooperation and Development, developed nations consistently fell short of their climate finance pledges of $100 billion a year promised at COP in Copenhagen in 2009. The closest they came to meeting the commitment was in 2020, reaching $83.3 billion.
This is despite UN figures showing that only 3% of global climate change financing goes to Africa.
Addressing national stakeholder consultations on COP28 last month, Minister of Forestry, Fisheries and the Environment Barbara Creecy expressed concern over the ongoing appeal from developing nations for increased assistance in financing the battle against climate change.
“At the 28th session of the Conference of the Parties (COP28), there will be a renewed call for a scaled-up and predictable goal for climate finance. The deadline for agreeing upon this goal is 2024, and the success of this COP, and perhaps future climate talks, will depend on the outcome,” she said.
Faced with extreme temperatures and the resulting disastrous weather events, developing countries need climate financing more than ever.
These devastating events have not only claimed lives but also decimated livelihoods, leaving affected populations without adequate compensation and governments without the means to address the aftermath.
The report added that with no improvements to vulnerability or adaptation in the form of climate finance, high emissions could see sub-Saharan Africa lose 12% of GDP by 2050 and 80% by 2100.
It recommended that the government implement policies that can improve the energy sector.
“The success of these policies, regulations, and frameworks relies on the capacity to implement them at various levels — institutional and systemic,” it said.
The report found that it was important to identify capacity gaps and address them through activities such as awareness raising, knowledge and information sharing, and training sessions. “This approach is essential to mobilise finance for the country’s climate objectives,” it said.