Africa and the Global Climate Deal

SUMMARY: Climate change is not a crisis of Africa’s making, yet it is Africans, especially the poorest, who will suffer the first and the worst. Not only does it add yet another challenge for those struggling to combat extreme poverty and disease by exacerbating the conditions of poverty, but it threatens to erode the gains that have been made in recent years.

ONE urges policymakers to keep the poorest in mind as they negotiate a global climate deal at Copenhagen in December 2009. These negotiations will focus on reaching consensus on how to respond to climate change worldwide and resolving that key question with ambitious emissions cut targets is of critical importance to the African continent. As part of these talks however, it is critical that policymakers take special consideration of Africa - both to address its disproportionate need to adapt to impending climate change but also to work with the continent as a mitigation partner going forward.

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Adaptation: As climate change has become a harsh reality for many of the poorest, the need for “adaptation” financing has become evident. Affected developing countries need support to increase their resilience to climate change for example by boosting their agriculture and improving access to water even under climate shock scenarios. The adaptation needs in developing countries will require equitable and predictable finance, which is genuinely additional to both existing and promised levels of development assistance. At the same time it is essential that the funds raised are used in a way that ensures the ownership of affected countries and communities. One way to achieve this is to organize the programmes around National Adaptation Programmes of Action (NAPAs) that are integrated with national Poverty Reduction Strategies. The amount needed for adaptation in developing countries is estimated by the World Bank to be between $75-100bn annually from 2010 to 2050. ONE urges policymakers to:

• Agree to significant adaptation financing of between $75-100bn annually, from both public and private sources. Sub-Saharan Africa will require about 20% of this figure.
• Ensure that public finance will be additional to ODA pledges of 0.7% of GNI from developed countries.
• Implement innovative financing mechanisms to close the funding gap, including:
  • A contribution from national domestic emission auctioning schemes
  • Exploring an aviation and maritime carbon levy.

Mitigation: At the same time, ambitious mitigation measures are needed to cap global average temperature increase to 2°C above pre-industrial levels. Such a goal will require the world to commit to cuts of between 25-40% by 2020 (compared to 1990 levels) and by at least 80% by 2050. To this end the world cannot afford to ignore Africa’s potential for clean energy or its carbon sinks. Therefore, apart from ensuring a technology transfer to Africa, ONE advocates for:

• Ambitious emissions cuts at least in line with the EU 20% proposal by 2020
• Transferability of carbon offsets generated internationally as specified in Kyoto
• Reform of the “Clean Development Mechanism” (CDM) to make it easier for developed countries to tap into Africa’s carbon offset potential
• An operational plan for the “Reduced Emissions by Deforestation and Forest Degradation” programme and the provision of start-up finance.

AFRICA AND THE GLOBAL CLIMATE DEAL

Figure 1. per capita and total emissions for different countries and world regions

Africa has contributed least to the current climate challenges. Only 3.6% of global C02-emissions come from the African continent (figure 1). In stark contrast, the continent is already feeling the ramifications harder than any other continent. There have been severe floods in Zambia and Mozambique, shifts in rainfall patterns in Uganda and huge areas of land are experiencing longer and more intensive periods of drought. These are arguably only the first signs of what may be to come: In Africa, by 2020, some regions could see crop yields from rain-fed agriculture fall by up to 50% and an additional 75 - 250 million people could be affected by lack of water (1).

It therefore comes as no surprise that a global climate deal that provides significant new resources for adaptation and includes ambitious mitigation measures is of overriding importance for African countries and societies. In line with the broad scientific evidence, a climate deal should avoid an increase in global average temperature above pre-industrial levels of more than 2°C. The Intergovernmental Panel on Climate Change (IPCC) estimate that such a goal would require developed countries to cut emissions by 25-40% by 2020 (compared to 1990 levels) and by at least 80% by 2050. The more advanced developing countries will be required to contribute consistent with the principle of common but differentiated responsibilities.

Adaptation:

African societies will need significant resources to adapt to the impacts of climate change. Adaptation means more than minimizing the number of individuals who are worse off as a result of climate change. The gains made in the fight against extreme poverty and disease over recent years must be preserved and built upon. Under the polluter-pays principle, the majority of these funds would have to be generated in those countries that have the highest cumulative historic greenhouse gas emissions, as well as the capacity to pay.

The estimates of annual costs for adaptation measures in developing countries are steadily increasing. The most recent estimates from the World Bank are between $75 billion to $100 billion a year (2).  Investments in adaptation have two key features: First, they are public investments. Second, their costs will increase steadily between 2010 and 2050.

Table 1. Estimates of annual funding requirements for adaptation needs in developing countries 

Agriculture, health, natural resource management (including forestry), water and infrastructure are the sectors where the need to adapt is the greatest. The obvious overlap with traditional development efforts shows that these new challenges can and should be integrated into existing development cooperation mechanisms (3).  Africa is facing some of the worst ramifications, while at the same time having the least resources to deal with the consequences, so a significant part of adaptation financing will need to go to this region.  The most recent estimates from the World Bank indicate Africa will need between 20-22% of the total annual amount (4).

A number of proposals have been submitted to the UNFCCC by national governments and other bodies regarding the funding of adaptation (and mitigation) in developing countries.  ONE urges that, in line with the principles of effective aid laid out in the Paris Declaration and again in the Accra Agenda for Action, any international funding mechanisms for adaptation should be:

a)    Sufficient - funds generated are equal to the scale of the task
b)    Predictable - funds are provided in as stable and predictable a way as possible
c)    Equitable - contributions reflect both historical responsibility and capacity to pay
d)    Additional - funds are ‘new and additional’ to existing aid requirements
e)    Verifiable - funds are collected and disbursed in a transparent and verifiable manner
f)    Implemented easily and transparently - mechanisms that can be readily implemented should be favoured, with transparent governance structures that give all countries a voice and ensure that the poorest benefit.

At the same time it is essential that the funds raised are used in a way that ensures the ownership of affected countries and communities. One way to achieve this is to organize the programmes around National Adaptation Programmes of Action (NAPAs) integrated with national Poverty Reduction Strategies.

Whereas it will be incumbent on the main emitters to mobilize the majority of these resources, the delays in scaling up ODA suggests that the necessary resources are more likely to be reached if innovative revenue streams are used in addition to national budgeting. No single financing mechanism will raise the level of funding needed on its own, necessitating that several finance mechanisms be established as part of a global deal. One such combination would include the following elements (5):

1.    Auctioning Emission Allowances - The European Emission Trading Scheme (EU-ETS) is already generating new revenue streams. These revenues are set to increase to about $35 - 50 billion per year (6).  If 50% is dedicated to developing countries, it would generate between $17.5 - 25 billion annually. In this context, it is important to note that other countries and regions have introduced cap-and-trade systems (Australia, Tokyo, some US states) or are prioritizing their introduction (US, Japan). These countries should consider allocating a significant portion of the new revenues for adaptation measures in developing countries.

2.    Aviation carbon levy - This proposal, which is similar to the use of aviation levies to fund UNITAID, could apply a levy of around $6 for all international economy flights, and around $62 for business class flights. The levy would be charged by the airlines at the point of sale. With the exemplary tariffs above, it would raise $13 billion per year.

3.    Maritime carbon levy - An emission charge applying to shipping to all Annex I countries could raise $15 billion per year.

Together these mechanisms would raise between $45.5 - 53 billion annually, not taking into account revenues from auctioning under cap & trade systems other than the EU ETS. Gradually introducing these carbon finance mechanisms would allow for a linear scale-up of funding, while cushioning the impact on the budgets in the main emitter nations.

Mitigation:

Africa has very low carbon emissions (see Figure 1 above) and is therefore often not included when mitigation is discussed. Africans themselves have also issued a call for ambitious emissions reductions asking for at least a 40% reduction by 2020. At the very least, the EU proposal for a 20% reduction by 2020 must be adopted with hopes of an even more ambitious outcome from negotiations. In addition, there is a great opportunity for Africa to contribute to ambitious global mitigation targets. Africa offers an essential global public good in the form of carbon sinks. The rainforest in the Congo Basin, for example, is the second largest carbon sink in the world.
In addition, mitigation strategies should cash in on the “clean slate” advantage. Africa has both limited energy infrastructure and production as well as  rapidly growing energy demands. It will strive to fill the gap at the lowest possible cost: largely traditional thermal power plants. A “green energy deal” with Africa will enable African economies to be a global showcase for a low-emissions growth path. This entails three components:

1.    Ensuring and financing technology transfer - Africa’s enormous potential to generate solarthermal, biomass and hydropower must be harnessed. Applying these low-key technologies on a decentralized small scale has the potential to sharply increase electrification rates and power availability in rural Africa. They can also be used on a large scale as can geothermal and wind power.

2.    Admitting African carbon offsets to meet emission reduction targets in main emitter countries - Under the Kyoto Protocol, carbon offsets generated anywhere in the world can be used to comply with reduction targets. It is imperative that all cap-and-trade schemes set up by developed countries incorporate this key feature in order to not limit full eligibility of internationally generated offsets.  In addition, social safeguards in carbon offset projects need to be put in place so that local communities benefit in an equitable way.

3.    Reform CDM and operationalize REDD - African and other countries that generate few emissions, or where baseline data is inadequate, currently have a very limited number of CDM projects. Some alterations to the CDM can help industrialized countries tap more fully into the vast carbon offset potential on the continent. The country specific baselines and the project-by-project discretionary decisions of the CDM Executive Board need to be substituted by pre-agreed quantitative benchmarks and standard emission baselines that lead to an automatic admission of a project under CDM.

African efforts to avoid deforestation have to be rewarded and strengthened. Currently, many African countries are developing a baseline scenario which will allow them to measure avoided deforestation. The “Reducing Emissions by Deforestation and forest degradation” (REDD) programme would help by rewarding avoided deforestation. This can contribute effectively to reach global mitigation goals. In addition, by investing in re-forestation and agro-forestry programmes this asset can be maintained and expanded while at the same time providing sustainable livelihoods.

In order to kick-start CDM and REDD projects in Africa, capacity-building programmes (e.g. for certification agencies) as well as start-up financing is of vital importance.

These three measures can set the right cost-incentive to set Africa on a low-emissions carbon growth path from the onset. This will be a smart investment as it will be both cheaper and climate-friendlier than reacting to this problem once Africa’s emissions have reached problematic levels.

Notes:

1. IPCC, “Climate Change Impacts, Adaptation and Vulnerability. Summary for policymakers”. Geneva 2007, p.13 http://www.ipcc.ch/pdf/assessment-report/ar4/wg2/ar4-wg2-spm.pdf

2. The financing needs for adaptation will increase over time, starting at the lower range of the span and then gradually increase to the upper range.  The World Bank, “The Cost to Developing Countries of Adapting to Climate Change, New Methods and Estimates The Global Report of the Economics of Adaptation to Climate Change Study”, Table 25, p

3. Such as GFATM for health, a World Bank - AfDB - EC consortium facilitated by ICA for infrastructure, CAADP complemented by the Global Environmental Facility for agriculture, and REDD for forestry.

4. The Cost to Developing Countries of Adapting to Climate Change New Methods and Estimates The Global Report of the Economics of Adaptation to Climate Change Study, World Bank. http://siteresources.worldbank.org/INTCC/Resources/Executivesummary.pdf

5. New Economics Foundation, “Assessing the alternatives. Financing climate change mitigation and adaptation in developing countries”, London, May 2009, http://www.stampoutpoverty.org/?lid=10939

6. There are major imponderables like the currency exchange rate and the price of a ton of C02. This estimate takes the Co2 price and exchange rates of 2008.