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Africa Finance Corporation to raise $2 billion for climate adaptation projects

15 September 2021 Keiron Greenhalgh

Africa Finance Corporation (AFC) plans to raise $2 billion over the coming three years for direct investment in infrastructure projects across the continent that the multilateral agency sees slowing the impact of climate change, it said 14 September.

As part of efforts to address Africa's vulnerability to climate risk, an initial $500 million will be raised over the next 12 months by a new AFC asset management arm, AFC Capital Partners, through a debut Infrastructure Climate Resilient Fund (ICRF).

The ICRF will directly invest in ports, roads, bridges, rail, telecommunications, and logistics in Africa to tackle the impact of rising temperatures and sea levels due to climate change, the agency said.

Climate adaptation projects counteract the current and future effects of climate change and is distinct from climate mitigation, in which the impacts of global warming are reduced by GHG emissions cuts.

Ayaan Zeinab Adams, a former head of the private sector arm of the Green Climate Fund (GCF), will head up the asset management unit.

Adaptation cash key at COP26

Pa Ousman Jarju, the current country programming director at the GCF, told attendees of a Center on Global Energy Policy (CGEP) webinar 14 September, that enhancing direct climate adaptation project funding would be one of the central tasks for African delegates at November's UN Climate Change Conference (COP26) meeting in Glasgow, Scotland. There is a need for more impact being felt at the ground level, he added.

The UN Conference on Trade and Development estimates a total of $2.3 trillion worth of infrastructure is needed across Africa.

African countries should also work on the development of metrics for climate adaptation spending at COP26, said Jarju. The GCF was established under the UN Framework Convention on Climate Change (UNFCCC) to assist developing countries in adaptation and mitigation practices to counter climate change.

Previously chair of the UNFCCC Least Developed Countries Group, Jarju told the webinar attendees he is hopeful more funds will be directed to the GCF in the future.

The GCF has yet to receive all the funds promised by developed nations. Jarju said he was hopeful the current US administration would provide more backing for the fund. The Obama administration provided funding, but the Trump administration did not, even walking back $2 billion of a promised $3 billion. In 2019, developed nations pledged at total of $9.8 billion to replenish the GCF.

The White House's $1.5 trillion fiscal year 2022 request includes $1.2 billion in backing for the GCF.

Over 170 projects are being implemented at the present by the GCF, said Jarju, also a former environment, climate change and natural resources minister of The Gambia. The GCF expects a 50-50 split between adaptation and mitigation spending. Of the adaptation funding, 50% is allocated for the least developed countries. Africa will receive 38% of the $9.8 billion total, Jarju said.

Climate shocks threaten Africans more than most inhabitants of the world, Kamissa Camara, the ex-foreign affairs minister of Mali, told the webinar attendees. Five out of the top 10 nations affected by climate change are in Africa, she added. Citing African Development Bank figures, Camara noted that the impact of climate change on Africa will be $60 billion a year by 2040, and as a result, African economies will only achieve 40% of their potential for the period.

Climate change is a key threat to stability in Africa, especially in the Sahel, a semiarid region of western and north-central Africa that includes some of the continent's poorest nations and sees fierce struggles between authorities and jihadists, she said.

Camara said three factors needed bearing in mind when addressing Africa's needs and climate change: high income countries must bear the cost of emissions reductions; and there can be no reduction in aid, while bearing in mind that GHG reduction must be balanced out by the need for greater industrialization in the region.

Large-scale planning is key to tackling the enormous challenges, said Jarju, because the resources are never enough. The GCF is helping with this, he said. It is paramount all the stakeholders are brought together, otherwise different constituencies would be working in silos and competing for resources, he said. "If people don't meet … then nothing works," he added.

Protecting forests

That planning is also needed to protect something Africa can already contribute to the fight against global warming, protecting the continent's forests as carbon sinks.

"It is high time to act in a concerted manner at the international level: at the next COPs in Kunming and Glasgow, the preservation of tropical forests must be placed at the center of political attention," Gerd Müller, Germany's minister for economic cooperation and development, said 8 September

"Forests are important carbon sinks and should receive a fair share of climate and biodiversity funds. We must find an equitable agreement between tropical forest countries and the international community," Muller added.

Muller spoke as Germany committed an extra €125 million ($148 million) to the Central African Forest Initiative (CAFI). The forest is the world's second largest rainforest after the Amazon. Previously, Germany promised $93 million in CAFI funding.

The forest—the same size roughly as Western Europe—sucks nearly 1.5 billion mt of CO2 out of the atmosphere each year, equivalent to 4% of global emissions, according to CAFI. Some 6 million hectares of primary tropical forest have been lost since 2001, and that pace is accelerating, it added.

Parts of Cameroon, the Central African Republic, the Democratic Republic of the Congo, Equatorial Guinea, Gabon, and the Republic of the Congo are covered by the forest.

In June, Gabon became the first country in Africa to receive results-based payments for reduced emissions from deforestation and forest degradation via CAFI. Gabon received $17 million from Norway for 2016 and 2017 reductions.

More needs to be done to protect the forest though, according to local political leaders, including a substantial increase in the price of carbon offsets. A 20-fold increase in the price of forest carbon offsets is needed to keep the forest safe from farmers and loggers, according to DRC President Felix Tshisekedi.

Speaking on Earth Day at the Leaders Summit on Climate convened by US President Joe Biden, DRC's Tshisekedi said protection of the forested lands of the Congo Basin will require a $100/mt price for offsets, not the approximately $5/mt price he said was available currently to preserve trees there.

Forest carbon offsets allow landowners to be compensated for making long-term commitments to storing carbon on their lands. Deforestation and forest degradation account for approximately 11% of carbon emissions, according to the UN.

There are three major types of forest carbon projects: afforestation—the creation or reestablishment of forests; avoided conversion—for forests that are likely to be lost through agriculture or development; and improved forest management, whereby storage is increased through a rise in age or productivity.

The current price is "neither fair nor realistic," Tshisekedi said, adding that achieving carbon neutrality would not be possible without the conservation and regeneration of forests given how much CO2 they remove from the atmosphere and store.

Tshisekedi isn't the only leader to seek help from Western nations to protect forests. At the same climate summit, Brazilian President Jair Bolsonaro on 22 April announced the country would achieve climate neutrality by 2050, a decade ahead of its previous commitment, but he said such efforts would need substantial international funding to succeed.

Brazil is home to 60% of the Amazon rainforest. Bolsonaro, who took power 1 January 2019, has been the subject of pointed criticism from environmentalists for encouraging deforestation. He's accused of favoring business interests, including cattle farmers and soy producers, instead of protecting rainforests.

Repurposing subsidies

Agriculture is one of the main contributors to climate change through GHG emissions from different sources, including manure on pastureland, synthetic fertilizers, rice cultivation, burning crop residue, and land-use change, the UN Environment Programme (UNEP) said 14 September in a report.

At the same time, agricultural producers are particularly vulnerable to impacts of the climate crisis, such as extreme heat, rising sea levels, drought, floods, and locust attacks, it added.

Global support to producers in the agricultural sector amounts to $540 billion/year, making up 15% of total agricultural production value, UNEP said. Some 87% of this support, approximately $470 billion, is price distorting and environmentally and socially harmful, it said.

What governments can do to fight climate change therefore is repurpose these subsidies, UNEP and the UN Food and Agriculture Organisation said in a statement released alongside the report.

They should be sure to measure the support provided, understand its positive and negative impacts, identify repurposing options, forecast their impacts, refine the proposed strategy and detailing its implementation plan, and then, monitor the implemented strategy.

Posted 15 September 2021 by Keiron Greenhalgh, Editor, Climate & Sustainability Group, IHS Markit

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