President Cyril Ramaphosa has called for bolder and innovative ways to finance Just Transition projects in developing countries, saying a “one-size-fits-all approach” will not work.
“We need to be bolder and more innovative in reducing project risk and crowd in private sector finance for climate and just transition projects.
“A one-size-fits-all approach to financing the transition that disregards African realties is neither just nor equitable and will not work,” President Ramaphosa said.
The President was speaking during the high-level roundtable on Just Transition at the COP27 climate conference in Sharm el-Sheikh, Egypt.
The President called on commercial financial institutions to do more to support these efforts by structuring project financing instruments that take into account the specific needs and circumstances of developing economy countries.
President Ramaphosa said that there is a need to promote the use of non-debt instruments to ensure that developing economy countries do not have to shoulder an even greater debt burden.
The President further called on a just transition financing framework or pooled financing mechanism to support transition pathways.
He said that this entity could play the role of facilitator between the various funding sources and separate funds to ensure there is coherence in just transition financing.
“The fact that the global community was able to mobilise fiscal measures worth an estimated US$ 17 trillion within two years in response to the COVID-19 pandemic, indicates that the resources to meet climate finance commitments exist, provided there is political will.
“It is our task at this COP27 to harness the political will and mobilise the resources for the just transition. The scale of climate finance must reflect the level of ambition.
“This is critical if we are to effectively reduce emissions, respond meaningfully to the effects of climate change on the vulnerable and ensure that no person, no community and no country is left behind,” the President said.
Inclusive low carbon transition vital for developing economy countries
The President told the roundtable that the imperative of a low-carbon transition that is just and inclusive is particularly important for developing economy countries, which are the worst affected by climate change.
Although Africa carries the least responsibility for climate change, he said that the continent experiences much of its harshest effects.
“The same is true for vulnerable countries and communities in other parts of the world, including small island states.
“Extreme weather like floods and droughts are driving food insecurity, displacing populations, causing damage to infrastructure and leading to the loss of livelihoods,” he said.
He highlighted that African economies are losing between 3% and 5% of their GDP due to the effects of climate change.
“Our common starting point is that all parties should honour their undertakings and commitments in line with the guiding principle of Common but Differentiated Responsibilities and Respective Capabilities.
“For transitions to be just, vulnerable workers and communities need to be included in designing solutions. These same constituencies must share the benefits and not just the risks of transitions,” the President said.
Because climate transitions are whole-of-society transitions, President Ramaphosa said that it is important for countries to establish institutions that enable government, business, civil society and organised labour to jointly identify vulnerable sectors and plan together for their transition.
“In our country, this has taken the form of the Presidential Climate Commission, which represents all key stakeholders.
“Equally important is a regulatory framework that harnesses the energies and resources of all aspects of government towards a common climate goal,” he said.
The President added that the reality is that developing economy countries have not received the required multilateral support to face the climate challenge, including for loss and damage.
“We need to acknowledge that the multilateral development banks and international financing institutions need to be reformed 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,” he said.
Source: South African Government News Agency