The pledge by some developed countries to provide $8.5 billion to help South Africa transition from coal is a far cry from the trillions needed to stave off the worst effects of climate change. That’s not even the full amount the struggling national utility Eskom needs to shut down its polluting factories, estimated at around $10 billion.
For climate diplomacy experts, however, this represents a major step forward. The deal is already being touted as a model to help other developing countries end their dependence on the dirtiest fossil fuels. John Morton, a private equity investor and US Treasury climate adviser, told the Washington Post that South Africa’s coal-intensive energy system ironically makes it a sort of reward for donor countries.
But a rush to announce more such deals with coal-rich countries could overshadow something equally important: getting money to the smallest, poorest countries most exposed to the effects of climate change. climatic. It might lack the excitement of “seeing the end of coal in real time,” as one expert described South Africa’s pledge, but it’s no less crucial.
That’s not to say the exuberance over South African money for the coal transition is unfounded – although the details have yet to be finalized. The arrangement could help remake its coal-dependent economy. Although the government did not unanimously endorse it, it has the support of President Cyril Ramaphosa, as well as major trade unions and civil society groups and Eskom itself.
Other coal-rich developing countries have already expressed interest in similar agreements. Indonesia, a new host country of the Group of 20, is another middle-income country heavily dependent on coal. The government has said it could raise its emissions reduction targets if it receives more foreign climate finance to shut down its large fleet of coal-fired power plants. Indian Prime Minister Narendra Modi has said rich countries should provide $1 trillion a year to developing countries to meet ambitious climate goals. A new Multilateral Climate Investment Fund “Accelerating Coal Transition” program has earmarked $2.5 billion to help India, Indonesia, South Africa and the Philippines transition from coal.
Germany, chair of the Group of Seven this year, is contributing to South Africa’s $8.5 billion pledge, and a senior official, Jochen Flasbarth, said Pakistan, India, the Indonesia, Rwanda and Serbia were possible candidates for a similar package. Germany plans to shut down its coal-fired power sector, and thermal coal is increasingly polluted at home, not only among environmentalists, but also among investors and citizens. Supporting overseas coal shutdowns could win political support in a way that the provision of other international aid has not in the past.
But what about the dozens of poor, small countries that are highly vulnerable to the effects of climate change, but lack the bargaining power of a coal fleet that puts the planet at risk?
Many countries in sub-Saharan Africa lack robust energy systems and face barriers to financing them. There’s an even tougher hurdle to funding protection against the ravages of warmer, more volatile weather. Many are already spending up to 9% of their gross domestic product on adaptation measures. But there is less political appeal for German or American officials to claim they are helping climate-proof foreign countries; the diffuse nature of adaptation makes this unrealistic anyway.
An even tougher battle is to get rich countries to provide money for so-called “loss and damage” – funds to help countries recover from climate-induced events that cannot be avoided. Many of these nations, often small island states, can only dream of the financing flexibility available to South Africa, Indonesia or India, which can raise international capital by issuing government bonds in their own currency.
Meanwhile, South Africa’s middle-income status has not necessarily benefited those in the coal-mining province of Mpumalanga, and the country has one of the largest inequality gaps in the world.
Between the coal workers in South Africa and the people of the low islands, who should get help? The answer, of course, is both. Rich countries must provide much more support to poorer nations not only to reduce their emissions, but also to adapt to climate change. In practice, this means more grant-based finance and a fairer financial architecture that does not penalize developing countries with more limited, onerous or costly finance than their wealthier peers can access.
The experience of the pandemic – with countries jostling for access to vaccines – suggests that solidarity between rich and poor nations can be difficult. But emerging market financing is such a fundamental sticking point at annual UN climate meetings that it often sets back everything else, including attempts to reach net-zero emissions before the Earth is too warm to live. Smart Western governments should be able to see that giving enough money to developing countries – including those with no coal to phase out – will benefit everyone.
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