Private sector funds critical to combating climate change

Kenya will next month host The Africa Cli­mate Week (ACW 2023), one of four Region­al Cli­mate Weeks held this year to build momen­tum ahead of the Unit­ed Nations (UN) Cli­mate Change Con­fer­ence COP 28 in Dubai.

The ACW 2023 to be co-host­ed by the Kenya gov­ern­ment and African Union Com­mis­sion will be organ­ised in par­al­lel with the African Cli­mate Action Sum­mit, also host­ed by Kenya.

The three-day sum­mit to be held on Sep­tem­ber 4–6 will bring togeth­er lead­ers and investors from Africa and beyond to share expe­ri­ences and solu­tions for a sus­tain­able, resilient Africa.

Finan­cial Stan­dard sat down with sus­tain­able devel­op­ment advo­cate Isaac Kalua, who also chairs the Green Africa Foun­da­tion, on pri­vate sec­tor involve­ment in com­bat­ing cli­mate change. Excerpts of the interview:

Devel­oped nations have in the past pledged $100 bil­lion (Sh14.3 tril­lion) in annu­al fund­ing to help devel­op­ing coun­tries such as Kenya reduce emis­sions and man­age the impacts of cli­mate change. Is the goal being met?

There was $79.6 bil­lion in cli­mate finance in 2018, but the actu­al allo­ca­tion to devel­op­ing nations and its impact on the ground vary. It is essen­tial to assess whether the com­mit­ted fund­ing is being effec­tive­ly utilised and whether addi­tion­al finan­cial sup­port is need­ed to meet the intend­ed goals.

Let us remem­ber that small island states and low-lying coastal areas are already los­ing land to ris­ing seas. Con­ceiv­ably, this may hap­pen to Mom­basa or Lamu. Flood­ing from extreme storms con­tin­ues to wipe out people’s liveli­hoods in Africa and Asia.

Fur­ther­more, heat waves are killing crops, affect­ing marine lives that our coastal com­mu­ni­ties rely on. Accord­ing to the Unit­ed Nations, the cost for low-income coun­tries to adapt to these and oth­er cli­mate impacts far exceeds the promised $100 bil­lion a year. This is why urgent action must be tak­en to meet and exceed the $100 bil­lion target.

In July this year, we saw a land­mark agree­ment moot­ed on the need to mas­sive­ly increase pri­vate sec­tor finance to devel­op­ing and mid­dle-income coun­tries to allow them to tran­si­tion to clean ener­gy. Has the pri­vate sec­tor tak­en up this challenge?

Pri­vate sec­tor involve­ment in financ­ing the tran­si­tion to clean ener­gy in devel­op­ing and mid­dle-income coun­tries has been grow­ing, and there is increased recog­ni­tion of the need for their engage­ment. How­ev­er, the chal­lenge lies in scal­ing up invest­ment to the lev­els required to make a sub­stan­tial impact.

While there has been progress in attract­ing pri­vate cap­i­tal toward renew­able ener­gy projects, more efforts are need­ed to address bar­ri­ers such as per­ceived risks and lim­it­ed access to financ­ing. Close col­lab­o­ra­tion between gov­ern­ments, inter­na­tion­al finan­cial insti­tu­tions, and the pri­vate sec­tor is cru­cial to mobilise the required resources.

In order to secure pri­vate sec­tor financ­ing, there is need of de-risk­ing of invest­ments in coun­tries with low­er finan­cial rat­ings. That is eas­i­er said than done. So it falls on African gov­ern­ments to cre­ate a con­ducive gov­er­nance envi­ron­ment for such de-risking.

The gov­ern­ment has said it plans to plant 15 bil­lion trees by 2032, stop and reverse defor­esta­tion, and restore 5.1 mil­lion hectares of defor­est­ed and degrad­ed land­scapes as part of efforts to fight cli­mate change. What do you make of the imple­men­ta­tion plan?

The government’s plan demon­strates a com­pre­hen­sive approach to com­bat­ing cli­mate change. How­ev­er, the imple­men­ta­tion of such an ambi­tious plan requires detailed strate­gies, suf­fi­cient resources, and effec­tive mon­i­tor­ing mech­a­nisms. It is vital to ensure that the plan accounts for com­mu­ni­ty involve­ment, sus­tain­able land man­age­ment prac­tices, and con­sid­er­a­tions for bio­di­ver­si­ty preser­va­tion. Reg­u­lar eval­u­a­tion and adap­tive man­age­ment will be essen­tial to make the imple­men­ta­tion plan successful.

In addi­tion, we can only meet this tar­get if we plant four mil­lion trees every sin­gle day.

Elec­tric vehi­cles (EVs) have been billed as a pow­er­ful weapon in the world’s bat­tle to beat glob­al warm­ing. What inter­ven­tions are nec­es­sary to help Kenya pro­mote their use?

To pro­mote the adop­tion of EVs, address­ing key bot­tle­necks such as charg­ing infra­struc­ture and high costs is imper­a­tive. The gov­ern­ment can con­sid­er imple­ment­ing incen­tives such as tax cred­its, sub­si­dies, and reduced import tar­iffs for EV-relat­ed technologies.

Pub­lic-pri­vate part­ner­ships can be estab­lished to devel­op a robust charg­ing infra­struc­ture net­work, par­tic­u­lar­ly in urban areas and major highways.

Pro­mot­ing local man­u­fac­tur­ing of EV com­po­nents and bat­ter­ies can help low­er costs over time. Addi­tion­al­ly, aware­ness cam­paigns and edu­ca­tion on the ben­e­fits of EVs can encour­age their adop­tion among con­sumers and businesses.

Banks and oth­er finan­cial insti­tu­tions par­tic­u­lar­ly have a key role in fund­ing projects which sup­port tran­si­tion to a low-car­bon econ­o­my. Do you feel they are tak­ing prac­ti­cal steps in facil­i­tat­ing this and what more can they do?

Many banks have start­ed inte­grat­ing envi­ron­men­tal and social risk cri­te­ria into their lend­ing deci­sions, and some have com­mit­ted to align their port­fo­lios with cli­mate goals. How­ev­er, more can be done.

Banks can enhance their green financ­ing offer­ings, pro­vide cus­tomised finan­cial prod­ucts for sus­tain­able projects, and col­lab­o­rate with indus­try stake­hold­ers to devel­op inno­v­a­tive financ­ing mod­els. They should also increase trans­paren­cy in report­ing their cli­mate-relat­ed expo­sures and invest­ments to facil­i­tate informed decision-making.

The Cen­tral Bank of Kenya review recent­ly revealed that the low­est loan rate was at nine per cent and the high­est at 17.6 per cent. Cheap­er loans for green invest­ments are crit­i­cal to spur growth in this sector.

William Ruto has been ques­tioned on his com­mit­ment to mit­i­gat­ing cli­mate change risks after he lift­ed a ban on log­ging as well as soft­en­ing on sham­ba sys­tem. What do you think of these policies?

The pol­i­cy deci­sions could indeed raise con­cerns about Kenya’s com­mit­ment to cli­mate change mit­i­ga­tion efforts. They have the poten­tial to con­tribute to defor­esta­tion and increased green­house gas emissions.

It is impor­tant for the gov­ern­ment to con­sid­er the long-term envi­ron­men­tal impacts of such pol­i­cy changes and ensure they are bal­anced with com­pre­hen­sive mea­sures to pre­serve ecosys­tems, pro­mote sus­tain­able land man­age­ment, and engage local com­mu­ni­ties in con­ser­va­tion efforts.

About Dr. Kalua Green

He is the Chief Stew­ard of Green Africa Group, a con­glom­er­ate that was envi­sioned in 1991 to con­nect, pro­duce and impact var­i­ous aspi­ra­tions of human­i­ty through Sus­tain­able Mobil­i­ty & Safe­ty Solu­tions, Eco­pre­neur­ship & Agribusi­ness, Ship­ping & Logis­tics, Envi­ron­men­tal Pro­tec­tion Ini­tia­tives, as well as Hos­pi­tal­i­ty & fur­nish­ings sectors

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