After Paris Talks, Can Ethiopia Benefit From Increased Funds to Fight Climate Change?

The 21st Conference of the Parties (COP), which convened in Paris last December, made history as the first time in which a global consensus was reached to flight climate change. Chief among the outcomes of the meeting was increased funding from developed countries to help emerging nations implement programmes to fight and curb carbon emissions. However, these funds haven’t been of much help to African countries, which have had difficulties accessing these monies in the past. In fact, according to the Climate Policy Initiative, countries in Asia and Western Europe received USD 119 billion and USD93 billion, respectively, to pursue green initiatives. Africa, however, only garnered USD2.3 billion for their projects. As the Paris Climate Conference provides new funding opportunities, what needs to take place for countries like Ethiopia to benefit? EBR’s adjunct staff writer Meseret Mamo spoke with insiders to learn more about the challenges of accessing competitive global financing and what’s being done to improve the country’s chances.

Late last year in Paris, political leaders from nearly 200 countries made impressive commitments on national actions to tackle climate change by establishing economically efficient mechanisms to reduce greenhouse gas emissions and increasing funds for developing clean technologies.
Although these actions are not legally binding, the mere fact that leaders of developed nations agreed to make available USD100 billion until 2020 and every year after that bodes well for poor countries that need money to invest in climate change initiatives vis-à-vis their respective development goals.
The climate financing, which is sourced from developed countries, doesn’t intend to merely fund economic development projects in emerging nations. Instead, it is only concerned with addressing the climate change dimensions of development. By contrast, funds that address economic development, like the Overseas Development Assistance to address the Millennium Development Goals, have a separate global agreement than the Climate Change Convention.
Still, past experiences demonstrate that developing countries like Ethiopia should do more to reap the benefits presented by the new green climate fund. This is because African countries have had little success making use of global funds that can fuel the growth of their economies based on the principle of the green economy, which came to prominence after the Kyoto Protocol (KP) was envisioned at a 1997 conference in Japan.
The central focus of the KP required countries to limit or reduce their greenhouse gas emissions. By setting such targets, emission reductions took on economic value. To help countries meet their emissions targets – and to encourage the private sector and developing countries to contribute to emission reduction efforts – three market-based mechanisms were created: emissions trading; the Clean Development Mechanism (CDM); and the joint implementation scheme. Through these schemes, carbon became tradable like any other commodity.
But after almost two decades, African countries’ involvement in developing projects and earning emission reduction certificates to sell to industrialised countries, which is necessary to meet a part of their emission reduction targets, has been minimal.
Stakeholders stress that this is due to the fact that under the Protocol, which focused largely on emissions mitigation, African countries couldn’t participate as well as other nations. “This was because the emission contribution of African countries was minimal,” Kare Chawicha, State Minister for Environment and Climate Change told EBR. As a result, many countries didn’t have grounds to pursue mitigation activities due to relatively meagre carbon emissions.
Africa has always had comparatively low carbon emissions. According to The Guardian, the world emitted 31.8 billion tonnes of carbon dioxide in 2012. Of that amount, the four largest emitters were China, the United States, India and Russia, with 8.3 billion, 5.6 billion, 1.7 billion and 1.6 billion metric tonnes of carbon dioxide, respectively. Ethiopia, by contrast, emitted 6.7 million tonnes of carbon dioxide that year.
This is bolstered by earlier United Nations Environmental Programme (UNEP) data, which suggests Africa’s overall gas emissions are “insignificant” compared to other regions. Their data shows that Europeans emit roughly 50-100 times more gases and Americans emit roughly 100-200 times more than the sub-Saharan African average, although that’s changing, as many countries on the continent are increasing their emissions.
Because of this disparity in emissions, many African countries have had difficulties aligning their environmental efforts with the KP’s overall goal of reducing emissions. According to the UNEP, of the 7,088 CDM projects registered worldwide, only 2.7Pct of the projects were accredited in Africa under the KP, while 81.2Pct of the projects from the Asia and Pacific region were approved.
Nevertheless, participants of the 2015 Paris Climate Conference say it proved fruitful for developing countries. That’s because these nations are the most vulnerable to climate change and the consensus among countries to reduce the global temperature below 2 degrees centigrade was a step toward mitigating the adverse effects of global warming that disproportionately harm developing countries.
“Ethiopia has been advocating for decreasing the world temperature by 1.5 centigrade and this is a success because there were none before,” Kare told EBR. He was one of the members who travelled to Paris representing Ethiopia. According to him, this was the Conference’s biggest achievement.
Of course, the fact that 196 participants in Paris agreed to give emphasis for developing countries and find a way in the future to pay for the irreversible loss and damages caused by climate change is another achievement, according to Kare. Still he believes that the money can’t make any significant change.
Zewdu Eshetu (PhD), head of the Climate Change Science Centre at Addis Ababa University (AAU), agrees with the State Minister. “The money is small when it is distributed to almost all countries in the world,” he argues.
Ambachew Fekadeneh, a Climate Change and Sustainability Practitioner who is involved in creating international standards for the carbon market, argues that the Paris Climate Agreement (PCA) has two general streams: adaptation and mitigation. “But each of these have different legal frameworks and fund access mechanisms,” he explains.
Climate financing that intends to address mitigation evolves from the global understanding that the world’s climate system is changing, which has economic consequences – and that there needs to be additional resource to cope with the change. This kind of funding is therefore distributive in nature and is ideally disbursed based on a proposal by a developing countries’ specific project or programme that it believes helps address a certain concern of mitigation.
However, the Paris Conference of the Parties (COP) brought another significant change to the benefit of developing countries: it also recognised adaptation in accessing climate financing. “For years it was only mitigation activities that climate finances were used to support,” Kare told EBR.
This means that any activity that a climate change vulnerable country implements to adapt to a green economy could be considered for funding. This is especially pertinent to sub-Saharan African countries, like Ethiopia, that don’t have large carbon emissions to mitigate but that can use funding to adapt its development projects to meet environmentally friendly standards. Now programmes aimed at, for example, constructing a more environmentally friendly factory, can get financial support from the climate fund proposed in Paris.
On the other hand, mitigation climate financing intends to enable a shift in carbon intensity of technologies in a country’s economy. Ambachew recalls that in the past, under the KP, there was no “non-market-based mechanism” to avail public funds. “Rather, developed countries were required to take Green House Gas (GHG) emissions reduction targets, based on their historical emissions, and hence are required to take such mitigation action up to 2020,” he says.
The market-based mechanism under the PCA, also known as private finance, is expected to help provide flexibility for countries to purchase GHG reduction credits in addition to their own mitigation and adaptation actions. However, Ambachew says under the market-based funds for mitigation, the level of access depends on how strongly a country participates in the CDM.
In addition to this, Zewdu stresses that there are many factors that will make it difficult for African countries to benefit from the PCA. “The method of approval of CDM in Africa is too complicated and lengthy,” he says. “Ethiopia can tap the available climate finance through carbon trading and eco-services, but not until it establishes domestic firms that consult projects based on international standards.”
According to him, carbon trading is a cumbersome process partly because international consultants that counsel projects from the start to the end are expensive and may cost more than the benefit of the project: “All costs are expected to be covered by the seller and that is why we don’t see African countries benefiting from carbon trading. It is also not profitable for the private organisation to participate just like any other trading.”
Zewdu also stresses that Ethiopia doesn’t have the information to calculate the eco-service in monetary terms and those who do are international consultants. “We need to do research and prepare the information for eco-service calculations and strengthen the human resource capacity and help establish a consultancy firm,” he said.
To that end, there are strides being made to fill this research gap. The Climate Change Science Centre at AAU is an institution that was established a few years ago for the purpose of conducting research and providing training to stakeholders.
The goal is to increase the capacity of the country to receive funds to build a green economy. In 2013 East Asia and Pacific countries were the major destination area for climate funds, followed by Western Europe, according to the Climate Policy Initiative, amounting to USD119 billion and USD93 billion, respectively. These figures are in sharp contrast to the USD2.3 billion that has been approved for 453 projects and programmes in Sub-Saharan Africa since 2003.
In Asia, South Korea is one of the major beneficiaries of climate financing because they conduct rigorous, policy-based research and development as well as investing in technological innovations. Yet, it’s not just South Korea benefitting. According to a forum hosted by the United States Agency for International Development, most Asian nations were able to access climate financing through establishing appropriate policy foundations, building capacity to implement practical programmes, and improved coordination and greater commitment among government agencies.
Ambachew agrees with these findings. “Such funds require submitting concrete, measurable and verifiable mitigation measures as well as implementing the respective stages with funds received and reporting the outcomes and funding gaps,” he argues. “Additionally, the carbon market has stiff global competition. The fact that Africa is also the continent with the least GHG emissions has made it not preferable for carbon trading schemes.”
The challenges facing least developed countries are further exacerbated by the fact that the process to access climate financing is long and time-consuming. Ethiopia’s first project, which is the Humbo Assisted Natural Regeneration Project, was issued Host Country Authorisation (LOA) in 2007. Promoted by World Vision, this project was registered by the United Nations Framework Convention on Climate Change in 2009. A second project (in the cement sector) promoted by a private entity was issued LOA in 2009 and validated in 2012. “The time it took for these [and other] projects to get validation shows that how difficult it is to operate in the current carbon market,” Ambachew says.
However, experts say some of these issues can be resolved simply by fair representation at large global conferences, where developing countries can air their grievances. Additionally, Kare told EBR that participants at the Paris Conference came up with a solution to address this issue. “The problem of access to the fund was raised by participants and was agreed by all that procedures need not be so much complicated.”
He also added that direct access to the Green Climate Fund by the beneficiary was a new thing that happened at the Paris Conference. “Due to this venue, the Ethiopia Ministry of Finance and Economic Cooperation qualified to get registered and directly access climate finance by the end of March, 2016,” the State Minister said. “The Ministry is now preparing a proposal to the Fund and every government sector as well as international consultants are working on that. We even plan to involve the private sector for direct access to the Fund.”
The State Minister is hopeful that the COP 21 Climate Conference will be beneficial for the country. The number of participants that reached consensus is one impressive feat that bodes well for development efforts. Moreover, the probability of the PCA to become a binding agreement is high, since large GHG emitting countries were in attendance. “If the 55 countries that contribute 50Pct of GHG emission sign the agreement, it will become legally binding,” says Kare. The document will be open for signature in New York City on April 22, 2016.
For Ethiopia the COP 21 Climate Conference was especially promising because the country received recognition, as it was chosen to lead the Climate Vulnerable Forum (CVF) beginning in June 2016. The Forum was established with 23 low-income and island nations that are especially vulnerable to climate change, but now the number of member states has grown to 40. The goal of the group is to, among other things, raise awareness about the unique issues facing vulnerable countries vis-à-vis climate change and build consensus and position convergence on international policies.
Ethiopia sees the opportunity to chair the Forum for 18 months as an opportunity to make an influence based on its own self-funded sustainable and economic development goals. The Forum is also aspiring to become one of the bargaining agents at global climate conferences in the future.
Despite the promise of the PCA and the activities of the CVF, a number of structural and logistical hurdles stand between Ethiopia and its ability to access competitive global funds. However, though the country is working to get access to climate finance, stakeholders say this is not something that makes a substantial difference. They insist that country’s aim to build a climate-resilient economy to achieve middle-income status will endure, with or without global climate finance. EBR