Alliance calls for increased investment in green growth

An alliance of philanthropy, governments in emerging and developed economies, technology, policy and financing partners has called for increased investment in green growth and climate financing solutions.

The Global Energy Alliance for People and Planet (GEAPP) supported President William Ruto’s call for the same to address pressing climate challenges in Africa and end energy poverty with green energy.

The GEAPP is an alliance of 20 partners founded at COP26 by the IKEA Foundation, The Rockefeller Foundation and the Bezos Earth Fund and is an official sponsor of the ACS.

According to GEAPP, once Africa gets the required financing, it can venture into energy, food, health-related infrastructure projects to alleviate the continent from the vagaries of climate change.

The summit promises to spotlight the opportunity for Africa to play a pivotal role in bringing innovative technologies and solutions to the global climate and green energy imperative.

Sub-Saharan Africa possesses some of the world’s most valuable natural assets including minerals like cobalt, which is useful in making lithium-ion batteries, and demographic advantage including solar potential and untapped, hydro, wind and geothermal generation.

Despite this, it has the lowest energy access and only receives 12 per cent of the USD250 billion (Sh36 billion) in climate investments it needs per year with 600 million people without power connection.

‘‘If we have to connect those 600 million people to electricity using the traditional means of fossil fuels, it will create another climate crisis and exacerbate what is happening today and we have to find an alternative solution and that is investment in renewable sources, which need money,’’ said William Asiko, Vice President the Rockefeller Foundation, Africa Regional Office.

He added: ‘‘However, our governments have no money since the continent is facing a debt crisis of unimaginable proportions, where some countries are paying up to 60 per cent of their national revenue on paying debts, leaving only 40 per cent for development.’’

Since its launch 22 months ago, the GEAPP has invested more than USD150 million in Sub-Saharan Africa to accelerate a green energy transition that is just for society.

Asiko, who however said Africa should not drop demands for loss and damage compensation from the highest polluters, an exercise which he said it has been pushing for the past 10 years at the Conference of Parties(COP), challenged Africa to think of an alternative source of funding from the private sector.

During COP 15 in 2009, developed or rich countries committed to a collective goal of mobilising USD 100 billion (Sh141 trillion) per year by 2020 to support climate action in developing countries.

However, according to Oxfam’s ‘Climate Finance Shadow Report 2023’ published in June this year,  while donors claim to have mobilised USD83.3 billion(Sh12 trillion) in 2020, the real value of their spending was at most USD24.5 billion(Sh3 trillion).

‘‘What we need now to ask ourselves is how we take advantage of the things that we control especially in the areas of finance. The carbon market is within our control and can be an alternative source of financing even if it’s a long-term goal and also not a ticket out of effects of greenhouse gas emissions,’’ he said.

Asiko said Africa has an opportunity to develop carbon markets at scale since they have demand from high emitting countries, to equalise their emissions and bring them to net zero and if we can be a supplier for the world of carbon credits the better.

It’s estimated that between now and 20230, Africa could develop enough carbon credits to raise USD 30 billion (Sh4.3 trillion) in revenue.

He however said there is a need to make investor investor-friendly environment to attract private sector investors to come to the continent and set up such projects.

‘‘We need to have a good regulatory framework to encourage investors to put up projects to develop carbon credit at scale. A market is only as good as its integrity. One of the biggest challenges with carbon credits globally have been around integrity, let’s face it. So we in Africa, as we develop these carbon markets, we have to make sure that they are developed with transparency and mostly integrity,’’ he said.

Kenya has been hailed as a continent leader in issues of carbon credit markets and on Friday 1 signed into law the amended Climate Change Bill, 2023, which will give guidelines to allow trade in carbon credits.

Africa, he said unfortunately has not been involved in the development of carbon credits and therefore lacks sufficient capacity for verification of those global institutions.

To solve this, he said The Rockefeller Foundation and GEAPP are working together through Africa Carbon Markets Initiative(ACMI), to develop capacity to allow these known verification agencies to come and develop capacity in Africa.

‘‘ACMI is working with African countries to develop carbon market activation plans. Already Kenya has developed its own and today 19 counties have signed up to be part of ACMI since last year during its launch at the COP27 in Egypt with only six countries. We hope more countries will have signed up during the summit and our goal is to have every African country to be part of it,’’ said Asiko.

According to Naomi Wagura, director, of Solution Led Countries at GEAPP, domestic capital from pension funds, sacco and chamas can also be a good source of financing transition to green energy and building green manufacturing.

 ‘‘Already we are tapping into doing pension fund scheme in Nigeria by providing first loss guarantee and pension funds bring local currency into the market,’’ said Ms Wagura.

She asked African countries to come together and develop a policy on pension fund investment into climate change-related projects.

Kenya’s pension sector controlled Sh1.57 trillion in assets under management as of December 2022 and the Retirement Benefits Authority(RBA) allows only 30 per cent for investment into real estate for now through Real Estate Investment Trusts (REITS) and 10 per cent to be invested in infrastructure.