Climate Change financing needs urgent reform – as does the ways in which we think about climate adaptation, resilience and investments. One of those shifts is in embracing Africa as a significant driver of global climate solutions, increasing resilience and action not only on the continent but around the world. Africa is only responsible for 4% of the world’s carbon emissions, yet is the most climate-vulnerable region. African countries don’t solely control their climate destinies. Rich countries must do more to mitigate their climate impacts and to support African countries’ efforts to prepare for a changed climate.
With the right support, investments and policies, Africa has the potential to revolutionize the global green economy by leveraging reserves of critical minerals to produce renewable energy, significant solar generation potential and ecosystems capable of sequestering large amounts of carbon. And Canada? Well leaving aside the ways in which Canada can engage from a technical standpoint on the above mentioned initiatives, Canada also has the ability to pave the way in transforming climate finance and setting the standard on using Special Drawing Rights (SRDs) as part of a new approach to climate finance.
A recap on what exactly SDRs are: SDRs are a financial asset that was created by the IMF to boost countries’ international reserves during global economic crises. During the pandemic, US$650 billion (yep, you read that right BILLION) in SDRs were agreed upon by the IMF to support countries in the face of aftershocks. But these were distributed on size of a countries economy – meaning that 54 African countries received only 5% of the total, about US$33 billion, while Canada alone received US$15 Billion. But Canada did not need these additional SDRs, because our international reserves are already well-stocked.
The opportunity exists to now use these SDRs sitting idle in Canada’s reserves and ‘re-channel’ them, allowing low and middle income countries – including those on the African continent – to leverage the funds for climate resilience and adaptation. As ONE reported in it’s data dive recently, most African countries’ grid systems need updating, at an annual cost of US$40 billion. Achieving Africa’s energy and climate goals will require over US$190 billion per year from 2026 to 2030, with two-thirds going to clean energy. Current levels of investment pale in comparison to what is needed. Just 2.4% (US$55 billion) of global investment in renewable energy between 2010 and 2020 was in Africa. Africa has 60% of the world’s best solar potential, but just over 1% of installed capacity; 9 million additional jobs could be created in the energy sector by 2030 through an African transition to renewable energy, which creates up to 5 times more jobs than fossil fuels.
This week, at the Paris Summit, aka the Summit for a New Global Financing Pact, ONE is calling on leaders of advanced economies to take climate finance reform seriously – and leverage these simple, low-cost innovative methods to unlock billions for climate adaptation. Advanced economies should commit to a rapid channeling of at least 40% of their SDRs to countries in Africa, Latin America and Asia reach the global US$100 billion ambition. With its massive SDR reserves sitting idle – Canada has the potential to lead on this approach. Let’s unlock the money today that we need to save our future tomorrow.