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Boston Consulting Group (BCG), the exclusive consulting partner for COP27, has identified $600 billion worth of fundable climate projects out of which $200 billion are in Africa, a senior BCG official said.
Speaking at a media event on the side lines of the COP27 summit at Sharm El Sheik, Egypt, Adham Abouzied, the Cairo-based Managing Director and Partner at BCG said, “We worked with high level champions to identify $600 billion worth of projects that are specifically in the Global South and mostly deals with adaption and resilience (A&R)…..$200 billion out of those projects are in Africa. Some of them are existing, but today we have a model to take each project from concept to financeable stage.”
Wendy Woods, Vice Chair, Social Impact, Climate and Sustainability at BCG added that 40 percent of those projects have an A&R impact.
“They can be refined and implemented but we need to get that finance going.
Today we don’t even have a global goal on adaptation. A&R became front and centre at this COP. There was a real push on the types of projects and activities that are going to make a difference and is hoped to be decided next year in the UAE.”
She said about $300 billion is needed annually by 2030 but less than 15 percent has been received according to the latest count and only 20 percent of the countries have published a robust national adaptation plan.
Woods said there is now more clarity on the cost of inaction. “We did the adaptation and resilience planning for the city of Lagos, Nigeria. The big takeaway is that the cost of inaction is 10 times greater than the entire city’s budget which is now $3 billion. The cost of inaction to the GDP will be $30 billion by 2050, and 10-15 percent of the infrastructure critical to sustain life is massively damaged (in case of inaction) in any scenario we have today.”
Underlining the launch of the African Business Leaders Coalition (ABLC) with UN Global Compact at COP27, Adham said the coalition aims to gather 55 CEOs from private sector African companies to engage in climate action and push for climate investments over the next year.
South Africa plan
The Just Energy Transition Plan (JEPT) for South Africa announced at COP26 had pledged $8.5 billion initially to catalyse the first phase of a 20-year transition plan that will require $98 billion totally.
Hubi Meinecke, Global Climate and Sustainability Leader gave a break down on how the money is going to be raised and what will it be spent on.
“90 percent of the $8.5 billion will be used to decommission coal fired power plants in tandem with developing renewable energy generation …. so $7.6 billion for electricity infrastructure, $700 million for developing the hydrogen industry and $300 million for electric vehicles.”
Most investments will go towards infrastructure while rest will go towards capacity building, skill development, economic diversification, social investment, diversification, and inclusion, he said.
“There is ongoing discussion between South Africa and IPG (The International Partners Group, chaired by the UK and comprised of France, Germany, the UK, the US and the EU) on the source and nature of the funding. It’s mostly loans for now… concessional loans from France, Germany, European Investment Bank, and Climate Investment Fund; and commercial loans from the US and UK. [While] 24 percent of the $8.5 billion are grants…South Africa is pushing for more grants and concessional finance,” he said.
He said ESKOM, the South African utility that supplies more than 90 percent of the country’s energy, has a pipeline of projects ready to receive funding now. “Several hydrogen projects in the pre-feasibility and feasibility stage are getting real. Most critical now is that these funds flow from bilateral down to the project level as quickly as possible”.
Funding the gap
Woods said there was a real push for reform of the multilateral development banks at COP 27, which could dramatically increase public funding available for the emerging markets.
She said some of the catalytic work being done by the private sector is also ‘exciting’. For example, the membership of the First Mover Coalition (a global initiative that brings together companies to decarbonise seven hard to abate industrial sectors that currently account for 30 percent of the global emissions) launched last year at Glasgow has increased from 25 last year to 65 this year.
She said the first contract for Sustainable Aviation Fuel with 80 percent carbon reductions was signed between a US Airline and a producer this year.
“These companies could drive up demand for the greenest products and drive down the price premium. The green premium is another source of funding we see coming from the private sector to complement the public sector funding”.
(Reporting by Sowmya Sundar; Editing by Anoop Menon)
