COP27 is being hosted in Sharm El-Sheikh, Egypt.
- Developing nations have not received enough financial support to face the climate crisis, says President Cyril Ramaphosa.
- Ramaphosa, who is at COP27, has said that more funding is required, but not in the form of debt.
- Ramaphosa shared that it is possible to raise the required finance, if there is political will.
- For more financial news, go to the News24 Business front page.
President Cyril Ramaphosa has told world leaders at the UN climate talks that developing economies need more climate finance, but not in the form of debt.
The president was speaking at a high-level roundtable on the just energy transition at COP27, which is being hosted in Sharm El-Sheikh, Egypt this year.
Last year South Africa was offered $8.5 billion (R153 billion) from developed nations – the US, UK, Germany, France and EU – to decarbonise the economy in a way that is just and does not disadvantage communities and workers who rely on the fossil fuel industry for their livelihoods.
The $8.5 billion pledged by developed nations is but a drop in the ocean of what is needed. The Presidency on Friday made public the investment plan for a just energy transition ahead of COP27. The plan is estimated to cost R1.5 trillion – over five years. Beyond 2027, even more funding will be required.
The Presidential Climate Finance Task Team is at #COP27. The R1.5 trillion investment plan for a just transition has now been formally handed over to the International Partners Group, says Daniel Mminele. The Presidency made the plan public a few days ago. @News24_Business pic.twitter.com/qT5M6Ypz9G
— lameez omarjee (@LameezOmarjee) November 7, 2022
The investment plan was formally handed over to heads of state of the International Partners Group, including Rishi Sunak of the UK, Emmanuel Macron of France, and Ursula von der Leyen, who heads the European Commission. Ramaphosa said that for the transition to succeed, more financial support is needed – especially larger grant funding.
READ | Here’s SA’s R1.5trn investment plan for a just energy transition
Other developing nations hoping to follow a similar path will also face financing challenges. As it is, they have not received enough funding to face the climate crisis. “The reality is that developing economy countries have not received the required multilateral support to face the climate challenge, including for loss and damage,” Ramaphosa said during the roundtable discussion, which he co-chaired.
The president said that multilateral development banks – such as the World Bank and African Development Bank – would “need to be reformed” in order to meet the climate financing needs of developing economies.
“Their business models must be modernised so that they can efficiently mobilise financing at scale and deploy a full suite of instruments from grants to guarantees, across the entire range of countries they work with.”
– Cyril Ramaphosa
Ramaphosa called for the use of non-debt instruments, like grants, to support developing economies. This would ensure that climate finance does not worsen their debt burdens.
The president also reiterated calls for more private sector involvement to finance just transition projects and other ways to respond to the climate crisis. Particularly, commercial banks should not take a generic approach to finance but should tailor offerings that meet the needs and suit the contexts of different nations. “A one-size-fits-all approach to financing the transition that disregards African realities is neither just nor equitable and will not work.”
Ramaphosa also put forward the idea of a just transition financing framework – where finance could be pooled from different sources and funds. He referred to how the global community raised funding worth $17 trillion to respond to the Covid-19 pandemic to show it is possible if there is “political will.”
“It is our task at this COP27 to harness the political will and mobilise the resources for the just transition,” he added.
Ramaphosa will deliver the national address at the conference on Tuesday.
Discussion about this post