backThe historic 21 st annual meeting ( COP21 ) of the United Nations Framework Convention on Climate Change ( UNFCCC ) in Paris in December 2015 resulted in the Paris Agreement ( Agreement ) which goes further than any previous climate accord in respect of its ambition. This is particularly true in respect of the Agreements recognition of the specific needs and special circumstances of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change. Africa is not named explicitly in this context but it is clear that the Agreement has particular significance for the continent. This article will briefly summarise the impact of climate change on Africa. It will then examine the implications of the Paris Agreement for Africa across a range of different topics, including African countries plans to contribute to meeting the new ambitious climate target; adaptation, mitigation and loss and damage; climate finance; deforestation; agriculture; non-national government responses; transparency; technology transfer and capacity building; and most pertinently, the implications for the energy sector.
The impact of climate change on Africa
Despite it being a continent consisting of numerous heterogeneous nations, peoples and landscapes, the impact of climate change has been ubiquitous in Africa. The Intergovernmental Panel on Climate Change ( IPCC ) stated in its 2014 report that the risks of climate change are unevenly distributed and by 2050, Africa will be the most badly affected continent. Seven of the ten countries most at risk from climate change are in Africa (Sierra Leone, South Sudan, Nigeria, Chad, Ethiopia, Central African Republic and Eritrea). [1] Yet, Africa contributes only four percent of global greenhouse gas emissions. [2]
Climate change already has a significant detrimental effect on Africa with the continent suffering from increased climate-related shocks such as droughts, storms, flooding and temperature extremes. In addition to obvious and severe environmental consequences, the rise in the global temperature has also impacted agriculture and food security, human health and political stability. Nearly all African countries mentioned the impact of climate change in their mitigation plans submitted to UNFCCC ahead of COP21.
Economies such as Botswana, South Africa and Nigeria have had to set aside billions to invest in climate-resilient infrastructure leading many experts to worry that gains made in economic development could reverse where there is a lack of preparation for climate change. The Nigerian Minister of Environment, Mrs. Amina Mohammed, stated that Nigeria is one of the most climate-vulnerable countries in the world, and that by 2050, [climate change] could cost between 6 per cent and 30 per cent of its GDP (USD 100 billion to USD 460 billion).
Given what it is at stake, African nations united as a negotiating bloc at the COP21 to make their demands heard for a strong climate agreement. For that reason, it is crucial to analyse the Paris Agreement and determine whether it addresses the acute issues facing the African continent.
African countries plans to contribute to meeting a new ambitious climate target
The Paris Agreement sets an ambitious target by agreeing to hold the increase in the global average temperature to well below 2 C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 C above pre-industrial levels. [3] Further, the Agreement has an objective to achieve a global peaking of greenhouse gas emissions, as soon as possible, after 2050, countries are to have net-zero emissions, using carbon sinks, such as forests, to offset any emissions they produce. [4] The key to achieving this target is the submission by parties to the Paris Agreement of nationally determined contributions ( NDCs ) explaining the individually unique plan each country intends to follow to reduce emissions. All African countries commendably submitted NDCs except Libya before the COP21 meeting.
During negotiations, some African nations collectively lobbied for this target. The concession by industrialised nations to cut their carbon emissions could superficially be seen as a success to prevent further damage to countries already on the frontline. However, many African countries insisted that this was not nearly determined enough in restricting developed countries emissions. In her opening statement on behalf of the Least Developed Countries group ( LDC group ), Angolas Giza Gaspar Martins claimed that the two degree target is inadequate and should be strengthened to below one and a half degrees. Ms. Martins said aiming for a 2 degree target is not a safe option for the majority of our countries, whose survival is at stake.
Many commentators, especially in Africa, have criticised the NDC bottom-up approach. The Paris Agreement does not mandate how much each country must reduce its greenhouse gas emissions. Therefore, a potential and real circumstance is that countries could simply choose not to enforce domestic policy to adhere to their emissions pledges. The Agreement states that Parties are bound to ratchet up their NDCs to enhance their level of ambition [5] within regular revision periods of every five years but may do so at any time. However, there exist no compliance mechanisms as such if targets are not met. African nations, given the continents unique vulnerability, will be most worried by this lack of punitive enforceability and that high-emitting countries will backtrack on their targets.
Adaptation, mitigation and loss and damage
The difference in emphasis between adaptation and mitigation is essential for grasping the impact of the Paris Agreement on climate change in Africa. The region is the most vulnerable to climate change given its low capacity to adapt and respond economically, politically and geographically. Considering that Africa as a whole emits comparatively a lot less carbon, adaptation was prioritised within the continents NDCs.
Article 7 of the Agreement establishes the global goal on adaptation to protect people, livelihoods and ecosystems with a unique focus on developing countries. The Paris Agreement specifically mentions adaptive capacity and how individual countries intend to carry out measures such as resilience mechanisms, disaster risk management and innovation of relevant technologies. Each country will be obliged to submit and update on their adaptation efforts in a five-yearly stocktake. Parties are motivated to collaborate by strengthening institutional arrangements, strengthening scientific knowledge on climate and assisting developing countries to identify and improve effective adaptation practices.
For African nations, the language of the Agreements fulfils their desire that finance should be directed towards adaptation since they are already suffering from the symptoms of climate change. Shiferaw Teklemariam, the Ethiopian Minister of Federal Affairs, notes that, for a country like his, adaptation funds could be spent on irrigation and drought management, diversification of agricultural practices, a more resilient livestock sector, better saving and lending mechanisms for farmers, and better forest-conversation practices.
The Agreement avows that adaptation action should follow a country-driven, gender-responsive, participatory and fully transparent approach, taking into consideration vulnerable groups, communities and ecosystems. Under the Agreement, this ought to be established and guided by the the best available science and, as appropriate, traditional, indigenous and local knowledge systems, with a view to integrate adaptation into relevant socio-economic and environmental policies and actions, where appropriate. This implicitly recognises Indigenous Knowledge Systems ( IKS ), which many in Africa rely on as a resilience mechanism to enable communities to adapt to climate challenges.
All developing countries who are parties to the Agreement are eligible to receive financial support from the Green Climate Fund ( GCF or the Fund ), a financial mechanism created by the UNFCCC to contribute to domestic programs for mitigation and adaptation. One of the first beneficiaries of the Funds first investments is a project in Senegal to increase the climate resilience of ecosystems, developmentally improve communities by restoring salinised lands and invest in suitable technologies. However, many observers say that the total amount in the GCF is insufficient for its purpose in Africa. The most recent estimates in the UNEP Adaptation Gap Report state that adaptation could increase to 100 to 200 billion dollars per year in 2050 even if the target is upheld. Furthermore, accessing money from the fund is proving difficult for African countries as a result of the stringent conditions imposed by developed countries.
Many African countries have signaled in their NDCs a strong commitment to adhere to the mitigation target. Article 6 creates a voluntary cooperation to promote and to incentivize participation in the mitigation of carbon emissions. This permits nations to autonomously or collaboratively develop their own domestic procedures to lower their greenhouse carbon emissions. This will affect Africa positively as the flexibility within the Agreement enables relevant countries to receive support in their mitigation ambitions.
The Paris Agreement recognises the importance of averting, minimizing and addressing loss and damages and recommends the facilitation of the Warsaw International Mechanism associated with climate change impacts ( WIM ) to achieve this goal [6]. Article 8(2) of the Agreement only provides that WIM for losses and damage "may be enhanced and strengthened, as determined by the Conference of the Parties."
In spite of its inclusion as a stand-alone article, the decisions accompanying the Paris Agreement note that such loss and damage provision does not involve or provide a basis for any liability or compensation. The fear by industrialised nations of being left open to unlimited claims has ensured that any potential legal liability or rights to compensation was expressly excluded from the Agreement. This disappointed African countries, which were not specifically mentioned, since they will not benefit from any additional financing for loss and damage incurred due to climate change. This is especially true for small island states that do not have the population or financial muscle in order to engage in risk transfer schemes.
Climate finance
During COP21, African nations sought firmer guarantees from developed countries regarding additional climate finance. This proved to be a contentious issue. Eventually, consensus was reached and Article 9 was agreed, providing that: developed country Parties shall provide financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention. This will involve a progression beyond previous efforts consisting of USD 100 billion to be mobilised annually by 2020 and to be improved upon by 2025. This was a key and vital demand from all African countries.
Article 9 of the Agreement refers to a wide variety of sources, instruments and channels, noting the significant role of public funds. New funding efforts were launched before and during the COP21 from bilateral and multilateral and private and public funds. In November 2015, the World Bank revealed its USD 16 billion Africa Climate Business Plan to improve adaptation measures across Africa. Overall, these financial initiatives will offer a greater source of capital to benefit the African continent
Financial commitments are essential for Africa. Most of the plans for adaptation and mitigation in the African NDCs are overwhelmingly contingent on climate finance. The President of the African Development Bank, Akinwumi Adesina, said in Paris: the continent has been short-changed by climate change. But we must ensure that it is not short-changed by climate finance. There is a real fear among African leaders that their economies will have to compromise their development plans and shift funding from priority areas to invest in climate change.
Article 9 provides that the provision of financial resources towards developing country Parties is on a voluntary basis, is non-binding and is contingent on the needs of recipient parties and their specific national strategies. Many have lamented that the article is a weak promise on funding for developing countries. The LDC groups chair, Angolas Giza Gaspar Martins, proclaimed, donors always think they give and recipients always think they have not received.
The Paris Agreement contains mechanisms in place to intensify climate finance pledges, but the Agreement itself does not include any new or precise figures, targets, or a roadmap. This lack of clarity, consistency and transparency leads many to believe that the issue of how climate finance towards Africa can be increased post-2020 is still not resolved. Accordingly, there remains a tension between developed and developing countries over bearing greater responsibility over climate change financing.
Deforestation
Deforestation accounts for nearly 20% of global greenhouse gas emissions, which is second only to the energy sector. [7] It is recognised in the Paris Agreement that it is essential to promote sustainable management of forests and enhancement of forest carbon stocks in developing countries. [8] Article 5(2) refers to the UN Reducing Emissions from Deforestation and forest Degradation ( REDD ) programme, which encourages activities relating to reducing emissions from deforestation and forest degradation in thirteen African countries including Niger, Sierra Leone and Toga. This programme is significant because the continent contains substantial carbon sinks, such as the Congo Basin, which act as a major means of offsetting carbon emissions.
Ancillary to the Paris Agreement, several initiatives were announced at the COP21 to promote forest preservation. African governments announced the launch of the African Restoration Initiative ( AFR100 ) at the Global Landscapes Forum. This is a multinational effort to restore 100 million hectares of degraded and deforested land in Africa by 2030 involving ten African countries - Democratic Republic of Congo, Ethiopia, Kenya, Liberia, Madagascar, Malawi, Niger, Rwanda, Togo and Uganda. Additionally, the initiative will mobilise technical and financial resources in order to create and implement country-specific forest restoration plans. AFR 100 will also support the African Resilient Landscapes Initiative, which aims to promote integrated landscape management in order to adapt to and mitigate climate change. Over USD 1 billion in investment from the development sector such as the NEPAD Agency and over USD 500 million from private finance including the World Resources Institute will be used to fund the initiative.
Both AFR 100 and the African Resilient Landscapes Initiative are significant for Africa in improving food security, the quantity and quality of water resources, economic growth and greater resilience to climate change. In addition, the Great Green Wall for the Sahara and Sahel Initiative will benefit from USD 4 billion over the next five years to implement restoration of 50 million hectares of land, which will help to preserve 250 million tonnes of carbon. This will impact countries from Mauritania to Djibouti which suffer from vast climatic variability and mass desertification. Senegals President, Macky Sall, has confirmed that his country had already planted 12 million trees and restored 25 000 hectares of degraded land, which has helped to boost the long-term food, energy, water and economic security of the country.
Agriculture
According to the African Union, agriculture constitutes one-third of the continents GDP and more than two-thirds of its population rely on the sector for their livelihood. In large parts of Sub-Saharan Africa, agriculture is simultaneously the main activity sector for emitting the most carbon emissions and the most impacted by climate change. The IPCC says it has high confidence that rising temperatures and unpredictable rains will make it harder for farmers to grow certain key crops like wheat, rice and maize (corn). According to the World Bank, agriculture employs two in three people in Sub-Saharan Africa and accounts for a third of GDP. In a fragile country like the Democratic Republic of Congo where 90 percent of its population rely on agriculture for their income, disruptions to food security and water supplies due to climate change could prove catastrophic.
Accordingly, most African countries have strategised to reduce the vulnerability of farming to climate change. For example, Burundis NDC aims to increase productivity and sustainable production systems to achieve food self-sufficiency, introduce intelligent and resilient agriculture and strengthen the management of the agriculture sector. Nevertheless, African climate change experts have noted that, save for a single reference to food security, agriculture is not explicitly mentioned in the Paris Agreement in spite of negotiation efforts for it to feature. The lack of attention given to agriculture worries many in Africa considering its important role as an engine for socio-economic development.
Non-National Government Responses
The Paris Agreement acknowledges and encourages the role of non-party stakeholders to meet the urgent needs of developing counties, a significant development since six years ago at COP15 in Copenhagen the main focus of international efforts to combat climate change was at the level of national governments. Further, the Agreement does not impede, but encourages, any existing activity which is already occurring at a sub-national level and is already mentioned in countries NDCs. The chair of the LDC group, represented by Angolas Minister of Environment, Maria de Fatima Jardin, also recognised that there can be no adaptation to climate change without involving subnational level of government in planning and implementation.
Both at the sidelines of COP 21 and otherwise, there are a plethora of international efforts by entities, whether sub-national administrative entities such as cities, states and local government or private sector entities such as financial institutions, non-governmental organisations or prominent individuals. This is relevant for Africa as historically its borders are an accident of history. Sub-national efforts may gain more traction on the continent, than top-down efforts by national governments, due to increasing urban living and the more feasible politics of local engagement.
COP21 highlighted the development of sub-national action regarding climate change. The Compact of Mayors, a global coalition of city leaders addressing climate change by pledging to adopt mitigation measures, has expanded since its 2014 launch to 445 cities, including megacities such as Accra, Lagos and Nairobi. During COP21, over 1000 mayors gathered at the Climate Summit for Local Leaders to support long-term climate goals such as a vast urban greenhouse gas reduction or a transition to 100% renewable energy. The C40 Initiative, which aims to empower megacities to connect and share technical expertise, resources and incentives to combat climate change, also participated at COP21. The C40 represents more than eighty cities of which eight are in Africa including Cairo, Cape Town and Dar es Salaam.
Transparency
Due to the large number of stakeholders in the Paris Agreement, i.e. governments, private business and individuals, it is essential that the Agreement promotes mutual trust and confidence, especially with regards to commitments made in the NDCs. To enable effective implementation, Article 13 introduces an enhanced transparency framework for action and support, with built-in flexibility which takes into account Parties different capacities and builds upon collective experience. Such a framework shall involve each Party creating a national report accounting for their emissions using the necessary internationally-accepted methodology to monitor progress on NDCs and doing a global stocktake every five years. This will be subject to an expert review and will hopefully enable accuracy, comparability and consistency among the Parties in measuring their targets. For a continent that has so much to gain from the Paris Agreement, Africa deems it crucial that parties are held accountable for their commitments.
Technology transfer and capacity building
Both technology transfer and capacity building are essential to the success of the Agreement as it relies heavily on the proficiency of countries to implement their NDCs. Article 10 is devoted to the requirement of technology transfer from developed country to developing country Parties and innovation on existing technologies in order to facilitate adaptation. To enable technology transfer, the Agreement establishes a mechanism to expedite research and development and the export of technology to developing countries. [9] The Government of Rwanda has stated that greater investment in technology transfer, by way of the Agreements climate finance commitments, is a necessity to ensure that development gains can be sustained for generations to come.
Capacity-building, under Article 11, seeks to enhance the ability of developing countries to take effective climate change action by facilitating technology development, dissemination and deployment, access to climate finance, relevant aspects of education, training and public awareness, and the transparent, timely and accurate communication of information. This is an explicit aim to respond to the particular needs of developing countries such as in Africa.
Implications for the Energy Sector in Africa
The Paris Agreement and associated initiatives have wide-reaching implications for the energy sector in Africa, either directly and indirectly by broadly supporting existing trends.
Access to energy a different path
The IEA has identified Africa as resting at the epicentre of the global challenge to overcome energy poverty and estimates that the continent has more than 620 million people who lack access to electricity. A recent report by McKinsey notes that Africa has 13% of the worlds population, but 48% of the share of the global population without access to electricity. [10] Only seven countries Cameroon, Cte dIvoire, Gabon, Ghana, Namibia, Senegal and South Africa have electricity access rates exceeding 50%. [11]
The Paris Agreement identifies sustainable energy as the means of meeting Africas acute access to energy challenge by acknowledging the need to promote universal access to sustainable energy in developing countries, in particular in Africa, through the enhanced deployment of renewable energy, an acknowledgement that is the only explicit reference to Africa in the Agreement. The level of ambition of the Paris Agreement, and its mechanisms to ratchet up national commitments to meet that ambition, make it more likely that Africa will choose a different path of development in powering its growth than developed countries. Instead of relying on centralised generation and largely fossil fuel based generation to provide access to electricity, as developed countries have done, the Paris Agreement and various initiatives launched at COP21 provide impetus for Africa to choose another path to development, one in which decentralised generation and renewable energy will each play a central role.
Renewable energy growing quickly
The Paris Agreements reference to enhanced deployment of renewable energy in the context of promoting universal access to sustainable energy in developing countries constitutes the only explicit mention of renewable energy in the Agreement. However, it is clear that the Agreement will hasten the trend in Africa towards a significant increase in the utilisation of renewable energy. Indeed, it is not possible without renewable energy to achieve the Agreements objectives of global peaking of greenhouse gas emissions as soon as possible and a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century, on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty. Most of the NDCs submitted by African countries identify renewable energy as a primary means of mitigation against climate change and make specific pledges to increase the share of renewable energy in each respective countrys energy mix. While not legally enforceable per se, African countries will be held accountable for those commitments and obliged over time to increase their levels of ambition in the deployment of renewable energy.
In addition to the specific climate finance measures mandated by the Paris Agreement itself, a number of initiatives launched before or during COP21 will result in increased funding for, deployment of, and research and development in, renewable energy in Africa. These include:*The African Development Bank announced in October 2015 that it will triple its financial contribution to prevent climate change to reach five billion US Dollars by 2020. Half of this sum will go towards investment in renewable energy, particularly solar energy, and the other half will be used to fund sustainable infrastructure to help African countries adapt to climate change.
*The African Renewable Energy Initiative was launched at COP21, with the backing of all African heads of state, to boost renewable energy on the continent to at least ten gigawatts of capacity by 2020 and at least 300 GW by 2030. It aims to allow the continent to catapult over other regions by the development of virtual power stations, which will distribute electricity via mini-grids and has been billed as by Africa, for Africa. Funding towards the USD 500 billion scheme will come from the African Development Bank and the World Bank as well as individual countries and it will be led by the African Unions commission, the New Partnership for Africas Development (NEPAD)s Agency, the African Group of Negotiators, the African Development Bank, the UN Environment Program (UNEP), and the International Renewable Energy Agency (IRENA).
*
*The Climate Challenge and African Solutions summit on the sidelines of COP21 convened several African Heads of States and representatives of several international institutions such as the African Development Bank. France promised two billion euros by 2020 for renewable energy in Africa, which ought to be increased to five billion euros per year by 2020. The French President, recognised the ecological debt that the world needs to pay back to Africa.
*The International Solar Alliance was founded by India and France to encourage the development of solar energy. The initiative represents a grouping of countries who are keen make solar energy an integral part of [their] life and reach it to the most unconnected villages and communities. This will be achieved by the drive to attract investment, formulate programmes to promote solar applications, lower the cost of solar technology and build a common knowledge e-Portal. 48 African countries have become members of the International Solar Alliance, four of which will serve on the International Steering Committee of the new body (Ethiopia, Mauritius, Seychelles and Uganda).
*During COP21, the Kenyan Environment Ministry signed multi-billion deals on robust sustainable energy organisation with both the World Bank and the International Renewable Energy Agency (IRENA). Kenya has a specific goal to produce up to 18 000 megawatts of clean, off the grid energy by 2020 by increasing its solar and wind energy production to help achieve 100 % electricity coverage for its population. An obvious, but still important point to underline is the geography of Africa. Africa is well-endowed to produce renewable energy at scale due to its abundance of natural resources, including geothermal energy in the Rift Valley, plentiful sunlight in the Sahara, wind at Kenyas Lake Turkana, and last but not least, rainfall and rivers that remain significantly underexploited by hydropower in comparison to other continents. Measures to improve transparency and build capacity will also assist Africa to build institutions that will allow it to fully utilise the finance on offer to exploit its abundant renewable energy potential.
The Paris Agreement and associated commitments will build on the considerable success that many African countries have already had in developing renewable energy. South Africas Renewable Energy Independent Power Producer Procurement Programme has attracted significant international investment across a number of rounds and represents an important alternative approach for a country heavily dependent on coal-fired power generation. Morocco has constructed the worlds biggest concentrated solar power plant in Ouarzazate, which will supply electricity to 1 million homes, and has started reforming its legal and institutional framework to offer an attractive investment environment for renewables, particularly large-scale photovoltaic solar projects and concentrated solar power projects. Kenya has turned heads with its sizeable geothermal power development projects and financial close and construction of Africas largest wind farm, the 310 MW Lake Turkana wind project, which is also Kenyas largest ever private investment.
Even hydrocarbon-rich countries have increased their efforts to develop renewable energy and the Paris Agreement will encourage that trend. For example, Algeria has asked for the help and cooperation of the European Union in several areas relating to renewable energy such as reinforcement of institutional capacities, improvement and implementation of its legislative and regulatory framework, professional training, research, development and technology transfer. At COP21, Algerias Prime Minister announced an African Forum for Renewable Energy, which will meet on an annual basis and constitute a forum for dialogue and coordination between politicians, company managers and scientists. Nigerias Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu recently acknowledged the need to focus on renewable energy as the solution to Nigerias energy problems. Nevertheless, Nigerias Minister of Environment also refused to sacrifice its economic interest and well-being of its citizens on the altar of going green.
Carbon pricing
In Article 6(2), the Paris Agreement allows for cooperative approaches that involve the use of internationally transferred mitigation outcomes [ITMOs] towards nationally determined contributions. This explicitly authorises, although not prescriptively, the use of market mechanisms such as international carbon markets. Article 6(4) establishes a mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development which will be supervised by a body designated by the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement. This is reminiscent of the Kyoto Protocols Clean Development Mechanism. Under the Kyoto Protocol African countries were slow to exploit the benefits that the Clean Development Mechanism provided to fund climate mitigation projects. [12] African countries will not wish repeat the same mistake and can be expected to be better placed to engage in nascent international carbon markets following the Paris Agreement.
Gas and LNG an increased role in power generation for this bridging fuel
Natural gas, and in particular liquefied natural gas ( LNG ), has potential to play a role for Africa as a rich and reliable source of energy, which can serve as a bridging fuel on the path to the carbon-neutral goal of the Paris Agreement, as well as a source of export income to fund development. Africa has significant indigenous gas resources and has been exporting LNG for over 50 years. There is substantial potential for Africas LNG exports to increase since most conventional Sub-Saharan African gas reserves have yet to be discovered, especially in East Africa. With LNGs low prices, much lower carbon emissions than coal, and more ready availability, it is also not surprising that countries such as South Africa, Morocco, Ghana and Egypt are all actively developing LNG-to-power schemes and launching the necessary policy and regulatory frameworks, such as Moroccos National Development Plan for the use of natural gas and announcement of a new gas code.
Coal a mixed picture in Africa
Without carbon capture and storage, coal-fired power generation is incompatible with the Paris Agreements goal to reach a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century. However, a relatively large number of countries in Africa are currently constructing, or have plans to construct in the near future, coal-fired power plants, including Botswana, Egypt, Kenya, Morocco, Mozambique, Namibia, Nigeria, Senegal, South Africa, Zambia and Zimbabwe. Some of the projects plan to rely on imported coal and others on exploiting indigenous coal resources for the first time. In a strict legal sense there is nothing new in the Paris Agreement that will stop these plants going ahead. Indeed, since COP 21, it is difficult to find any evidence of any changed plans with respect to these plants. This stands in contrast to the recent post-Paris announcement of Vietnams Prime Minister that Vietnam will halt new coal-fired power generation (Vietnam had plans for an extra 41,000 MW of coal-fired generation capacity). Though the Paris Agreement was not cited as a reason by Vietnams Prime Minister for the changed plans, the Agreement most certainly gives extra momentum to existing trends that make the development and financing of coal-fired power plants more difficult.
The financing of new coal-fired power generation in developing countries will become more difficult due to both development finance institutions (such as the World Bank and the European Investment Bank) and commercial lenders increasingly restricting or phasing out their financing of coal-fired power generation and/or coal mining. Experienced international developers such as Engie and AES have also announced that they will move away from developing new coal-fired power generation, leaving the field to less experienced local players. In addition, the 34 member countries of the Organisation for Economic Co-operation and Development ( OECD ) announced in November 2015 a new policy to restrict export credits for coal-fired power generation equipment and construction to so-called ultra-supercritical coal-fired power plants, i.e. those built to the most stringent environmental standards. The Obama administration estimates that 85% of coal power plants will be ineligible for financing from OECD countries under this new policy. Further financing restrictions would apply in four years under the agreement, and countries including Japan and South Korea will for the first time restrict their funding of coal-fired power generation.
Notwithstanding the aforementioned headwinds for coal in developing countries generally, it is possible to see some future for new coal-fired power generation in Africa, partly due to the potential for non-OECD sources of funding from countries such as China and India and institutions such as the New Development Bank and African Development Bank ( AfDB ). AfDBs stance in particular is noteworthy. AfDBs 2012 energy sector policy provides that the bank will only support coal when such financing is determined to have a strong development impact and, at the same time, environmentally responsible, among other conditions. AfDB has not approved any financing for new coal-fired power generation since the USD 2.6 billion it committed in 2009 for the Medupi Power Project in South Africa, but according to Kurt Lonsway, manager of environment and climate change at AfDB, the bank is considering additional financing for the Medupi Power Project. AfDB still considers coal a priority sector in its energy portfolio, the only one to do so among the multilateral development banks.
Fossil Fuel Funding Subsidies, Divestment and Debt Finance
Despite a high profile agreement by G7 countries only months ahead of COP21 to eliminate inefficient fossil fuel subsidies, discussions at COP21 failed to reach consensus, and the Paris Agreement contains no new commitments in this respect. Nonetheless, the topic of phasing out fossil fuel subsidies will likely return to the COP agenda before too long. Fossil fuel subsidies inhibit the required transition to a low-carbon future, and constitute a heavy burden on the budgets of a number of countries in Africa. In any event, the Paris Agreement comes at a time of increased prominence for the movement to divest from and restrict debt finance for fossil fuels. In addition, mainstream lenders are likely to be increasingly concerned over the reputational impacts they may face when lending to prominent greenhouse gas emitters. Energy companies doing business in Africa will need to be mindful of these trends.
Legislation and regulation
Government responses to climate change will inevitably shift the regulatory and technological landscape for all parties involved in Africas energy sector. Energy companies are set to survey any legislative changes and adapt their internal policies. For example, the Paris Agreement does not create direct restrictions on the extraction and use of fossil fuels and leaves it to the national legislators to decide how to achieve the fundamental goals. The manner in which African countries will implement the Paris Agreements measures in their respective legislation is unpredictable. Energy companies will have to assess any potential impacts, which may be indicated by the NDCs of the countries where they are implemented. Additionally, companies will need to take relevant measures to anticipate and adapt their projects to possible changes in the relevant legal regimes.
Conclusion
Overall, the Paris Agreement is a step forward for the African continent. The importance of the acknowledgment of the need for climate financing towards vulnerable countries should not be underestimated. However, since the Agreement is non-binding, there is no guarantee that what is on paper will translate into change or at least action. The general consensus from African commentators is that the Agreement is not strong enough to protect the continent from the impact of climate change. Perhaps, the South African minister for Environment, Edna Molewa, sums up the Paris Agreement best: The deal is not perfectbut it is the best we can get at this historic moment.
[1] Maplecroft, Climate Change Vulnerability Index 2015.
[2] International Energy Agency.
[3] Article 2(1)(a), Paris Agreement.
[4] Article 4(1), Paris Agreement.
[5] Article 4(9) and Article 4(11).
[6] The Warsaw International Mechanism aims to address loss and damage connected with impacts of climate change, including extreme events and mild events, in developing countries that are particularly vulnerable.
[7] http://www.un-redd.org/AboutUN-REDDProgramme/tabid/102613/Default.aspx , web site of the UN-REDD Programme, the United Nations collaborative initiative on Reducing Emissions from Deforestation and forest Degradation (REDD), accessed on 29 January 2016.
[8] Article 5(2), Paris Agreement.
[9] Article 10(3), Paris Agreement.
[10] McKinsey & Company, Brighter Africa: The growth potential of the sub-Saharan electricity sector, February 2015.
[11] Ibid.
[12] See e.g., Alex Blomfield, Carbon Reduction Projects in Africa, Project Finance NewsWire, June 2008.