When this year’s UN climate talks open in Egypt on 6 November, it will be the first time since 2016 they have taken place on African soil. COP27 is being dubbed “The African COP”.
Under the theme “together for implementation”, the Egypt presidency is set to emphasise the climate issues most pertinent to African and other developing nations. Central to this will be the climate finance owed by the developed to the developing world, and the mobilisation of finance for adapting to climate impacts and compensating for the loss and damage they cause.
The urgency of adaptation
Climate change impacts have been increasingly apparent across the world this year, from deadly heatwaves in Asia and Europe to devastating floods in Pakistan and the multi-season drought in the Horn of Africa. Climate impacts are increasingly being shown to have destabilising ripple effects through society and the economy.
Africa is the least climate-resilient region of the world. Climate shocks are contributing to direct loss of economic assets and livelihoods. This increases the risk of famine, providing impetus for destabilising migration and threatening economic growth. The Global Centre on Adaptation (GCA) estimates that by 2040, the impacts of climate change could cost Africa between 2 and 4% of its GDP.
Adaptation – societies and economies adapting to existing and expected climate change impacts – will be central to this year’s COP in Sharm el-Sheikh.
At last year’s COP26 in Glasgow, developed nations agreed to double international finance for adaptation by 2025. Translating such pledges into mobilised finance in the real world has so far proven problematic. Patrick Verkooijen, chief executive officer for the GCA, argues that progress and transparency on this pledge will be key to the success of COP27.
Together with the African Development Bank (AfDB), the GCA is involved in the largest adaptation scheme in the world. The Africa Adaptation Acceleration Program (AAAP) consists of a main fund, managed by the AfDB, that aims to mobilise US$25 billion for adaptation projects in Africa over the next five years and an “upstream financing facility”, managed by the GCA, involved in research and design for the projects. It has broad buy-in from African governments. Its main fund has so far raised US$12.5 billion, coming from the AfDB itself, and the upstream financing facility received funds totalling US$55 million in September this year. The AAAP expects further pledges to be made in Sharm el-Sheikh.
“Ensuring the full capitalisation of… the AAAP and the $250 million AAAP upstream facility at COP27 would serve as a landmark contribution towards the summit’s success,” Verkooijen tells China Dialogue.
In their 2021 report on adaptation in Africa, the GCA estimated that the costs of adaptation on the continent will total US$50 billion per year by 2050, even if global warming is kept beneath 2C. While adaptation is expensive, studies show that the sums involved would be far smaller than the losses if nations do nothing. Jean-Paul Adam, director of the Technology, Climate Change and Natural Resource Management Division at the UN Economic Commission for Africa (UNECA), notes that investment in adaptation brings significant return on investment, and dividends in terms of reducing future risk.
“There are also opportunities to link adaptation more directly to the creation of value in African economies and the evolution of the implementation of the African Continental Free Trade Area will also help define this,” Adam says.
He says the missing ingredient is the capacity among African countries to invest upfront in adaptation and resilience, suggesting that the most immediate and obvious solution is to make grant-based financing available.
The COP27 outcomes on adaptation will be relevant far beyond Africa. Across the developing world, vulnerable communities and economies are facing climate change impacts.
In 2009, developed countries pledged to mobilise US$100 billion in climate finance to developing countries every year by 2020. According to the OECD, however, finance provided and mobilised in 2020 reached only US$83.3 billion.
Moreover, as outlined in the AfDB’s 2022 Economic Outlook last month, in spite of its extreme climate vulnerability and general under development, Africa has some of the lowest per capita climate finance inflows in the world. “This is at odds with the tenets of true climate justice,” the bank concluded. Climate finance will be a second major focus of COP27.
“When we consider the vast sums mobilised to respond to the Covid-19 pandemic, it is astounding that we are not yet able to mobilise similar emergency responses to the climate crisis,” UNECA’s Jean-Paul Adam tells China Dialogue.
He proposes urgent action, including the immediate mobilisation of additional capital through multilateral development banks, such as AfDB, and a review of mechanisms for debt sustainability to give fiscal space for climate-related projects domestically. For example, he argues that debt repayments could include “climate clauses” allowing for the suspension of payments in the event of climatic shocks, and that opportunities for debt refinancing which could free up fiscal space for investment in climate action should be expanded.
Adam also notes that Africa has the lowest share of private sector investment in climate action in the world. More effective deployment of blended finance could help reduce the costs and risks for private investors, he suggests, unlocking new sources of capital.
In an article published in 2019, Aliou Dia, head of the Climate Change, Disaster Risk and Energy Management team at the UN Development Programme regional centre for Africa, observes that multilateral and national level actors on climate finance must also learn to work more effectively with each other in order to mobilise the necessary financing. Key to this is capacity building. “There is a need for African countries to overcome the barriers to finance by achieving stronger synergies between international and national sources of finance,” he wrote.
Loss and damage
In climate negotiations, “loss and damage” refers to existing and irreparable damage caused to ecosystems and livelihoods beyond the limits of adaptation. It includes an understanding that in these situations, developed countries should assist in dealing with the negative impacts. Underlying loss and damage is the idea of climate justice. Africa has contributed just 3% to cumulative global carbon emissions and yet faces some of the starkest consequences.
Loss and damage has been a part of UN climate negotiations since at least 2003, when COP18 in Poland established the Warsaw Mechanism for Loss and Damage. Two years later, the concept was enshrined in Article 8 of the Paris Agreement, but with the proviso that it “does not involve or provide a basis for any liability or compensation.”
The issue moved forward at last year’s COP, where the G77+China bloc pushed for the establishment of a formal facility on loss and damage aimed at securing finance. In the face of pushback from developed countries, however, the final outcome failed to pin down financing. COP26 closed with the Glasgow Climate Pact, which recognised the obligation of developed countries to address loss and damage in the developing world but failed to detail how finance would be mobilised.
In Sharm el-Sheikh this November, the African Group of Negotiators will push for stronger language on the need for loss and damage financing mechanisms, along with their counterparts in the G77, Alliance of Small Island States and other developing country negotiating blocs. African negotiators have been pressing the issue at UN climate negotiations for at least a decade.
“African countries, and developing countries in general, have been united in emphasising the need for predictable resources to tackle the immediacy of loss and damage,” says Jean-Paul Adam. “Resources for loss and damage will allow vulnerable countries to respond in a timely manner – recent cycles of cyclones, droughts and flooding across the continent demonstrate this emergency.”
The damage caused by climate change is also having significant knock on effects, such as displacement and migration, an issue addressed by the African Group of Negotiators repeatedly over the last decade.
If “the African COP” is to bring parties “together for implementation”, achievements on locking in and mobilising finance are critical. UNECA’s Adam concludes that a successful COP27 must involve “a reset on mobilising the urgent financing requirements, and a reset to effectively support the most vulnerable countries… The stakes could not be higher.”