The Intergovernmental Panel on Climate Change’s new report, published on Monday February 28, has revealed that climate impacts in Africa will worsen sooner than previously predicted calling for worldwide action.
The research published by BankTrack, Milieudefensie, Oil Change International and 19 African partners, including 350Africa, Alliance for Empowering Rural Communities (AERC) from Ghana, and WEP Nigeria, revealed that the billions of dollars in finance, where the majority from European, Asian and North American financial institutions, are putting the continent in danger of becoming locked into fossil fuels, despite its massive potential for renewable energy.
“As a result, Africa runs the risk of not being able to make the necessary leap to sustainable energy in time,” the report reads.
Currently, Africa is a host to a growing number of oil, gas and coal projects.
The report reveals that between 2016, following the adoption of the Paris Climate Agreement, and June 2021, public and private financial institutions poured at least $132 billion in lending and underwriting into 964 gas, oil and coal projects in West, East, Central and Southern Africa.
It notes that the vast majority of this finance came from financial institutions based outside Africa, both commercial banks and public institutions such as development banks and Export Credit Agencies.
Of the top 15 financial institutions behind this sum, 10 are commercial banks and five are public finance institutions, where the majority of the largest fossil fuel financiers are from North America and Europe, in particular from the United States, the United Kingdom and France. JPMorgan Chase, Standard Chartered, and Barclays all in the top 5.
It notes that the largest single financier of fossil fuel projects and companies in Africa in this period is the China Development Bank.
“Those based in North America, Europe and Australia together provided $73 billion in financial support, 55% of the total. Asia-based financial institutions, mostly from China and Japan, provided $42 billion of the total amount, which equals 32%. In contrast, Africa-based financial institutions provided just $15 billion, or 11% of the finance,” it reads.
It further reveals that financial institutions providing financial support to oil, gas and coal projects is also increasingly becoming a risk, With the energy transition accelerating and the production costs of renewable energy rapidly dropping compared to fossils, where the projects are increasingly at risk of ending up as stranded assets.
“Meanwhile, climate change litigation around the world is forcing companies to reduce their emissions output. And the risk of reputational damage has been heightened in recent years by the lack of transparency, corruption, illicit financial flows and serious environmental and human rights violations that characterise this sector in Africa. Further, a failure to limit global warming will present a systemic threat to the whole global financial system,” it reads.
The African partners of this report, as well as recent publications by African networks and civil society organisations, emphasise that the injustices that have plagued the African continent for so long will persist without a Just Transition approach to renewable energy – an approach rooted in environmental, social, political, economic and gender justice. As such, the report puts forward eight Principles for a transformative Just Transition approach to renewables.
Landry Ninteretse, the 350Africa.org Regional Director while commenting on the report noted that Africans are experiencing severe climate impacts driven by high emissions from the biggest polluters in the developed world.
“Wealthy countries of Europe, North America, East Asia and Australia, historically big emitters, have not only the responsibility to fund the Just Transition and energy transition plans that African countries are committing to implement, but also to halt any new investments in the fossil fuel industry. It’s time for governments and financial institutions to starve fossil fuels and redirect funding towards this transition to sustainable, clean energy, instead of locking African nations into fossil fuel dependency.”
Henrieke Butijn, Climate campaigner, researcher at BankTrack and lead author of the report, said Commercial banks like JPMorgan Chase and Standard Chartered can make all the Net-Zero pledges they want but these pledges will not automatically lead to the much-needed short-term steps in ending fossil fuel financing and much less to a true Just Transition.
Adding, “Banks need to start thinking beyond fossil fuel divestment and renewable energy as the new business-as-usual opportunity and focus on what truly benefits African countries and communities now and in the long-term.”
Isabelle Geuskens, Senior Program Officer Just Transition at Milieudefensie and lead author of the report said Africa is the continent with the most renewable energy potential, however, it has failed to tap into it and build towards the more resilient and sustainable future it urgently needs, given the many climate challenges it is and will be facing.
Anabela Lemos, Director JA! Justiça Ambiental FoE Mozambique, said, “Mozambique and its people are in the tragic situation of being devastated by both the causes and effects of the climate change crisis. One of the major causes of the climate crisis is the extractive industry, and right now the gas rush in Mozambique is causing land grabs, destroyed livelihoods, human rights abuses, militarization and conflict.”
Aly Marie Sagne, Director and founder of Lumière Synergie pour le Développement (LSD)noted, “Africa is experiencing the severe impacts of the climate crisis while at the same time, African leaders like Senegalese President Sall are championing a false solution about “an energy transition taking into account oil and gas investments”.
In the meantime, the African Development Bank, the major Development Institution of the continent, is navigating between green and dirty energy financing options.
LSD believes that each degree of additional CO2 emission counts and a just energy transition in Africa should therefore be moving away from fossil fuels. LSD is pushing the AfDB to increase the proportion of renewable energy projects in its portfolio to 70% by 2025.”