Energy Transition Accelerators and Egypt’s $15bn climate plan: Eight things you need to know from Finance Day at COP27

Image: UN Climate Change - Kiara Worth

Finance Day was momentous at COP26 in Glasgow last year, with high-profile investor coalitions launched and bold commitments from the likes of the UK to transform finance sectors into green drivers of the net-zero transition.

Wednesday (9 November) marked Finance Day at COP27 and while the launches and announcements may not seem as big in scale as Glasgow’s finance-themed flurry of announcements, it did offer us important updates to coalition drives, a huge new emissions report, and key carbon market formations steered by both major economies and developing states.

Here, edie rounds up the eight key stories you need to know about from Day Two at COP27.

1) US carbon market initiative raises eyebrows

US Special Presidential Envoy for Climate John Kerry marked Finance Day at COP27 by launching a new Energy Transition Accelerator (ETA) in a bid to finance the decommissioning of coal and accelerate clean energy deployment in developing countries.

The ETA will be set up in partnership with Rockefeller Foundation, and the Bezos Earth Fund, with the intent of unlocking new private capital to help developing nations invest in renewable and low-carbon technologies.

Kerry and the US Government state that social safeguards, job creation and training will all be delivered through the ETA and that carbon credits through the scheme will only be open to companies that have committed to net-zero and have science-based targets matching that trajectory in place. Green groups are already asking for clarity on the scheme, especially around the issuance and pricing of credits.

The ETA states that credits can be used above and beyond interim targets” set by corporates, green groups have expressed concerns that this will enable companies to offset their emissions, especially across Scope 3. There is currently no definition on how much of a company’s carbon emissions these credits can be used for, despite the Science Based Targets initiative’s Net-Zero Standard stating that high quality credits and removals can only be used to cover 10% of emissions.

Additionally, the plan offers a “fixed price” for any corporates wishing for advanced purchase agreements under the ETA. The price is neither confirmed or explained and concerns have already emerged that if prices are too low, it could reduce the quality of the credits and overexpose the market.

Read more here.

2) UN launches most detailed global inventory of greenhouse gas emissions

The world’s most detailed global inventory of greenhouse gas (GHG) emissions has been unveiled at COP27, revealing that emissions from the oil and gas sector may be up to three times higher than reported.

Called Climate TRACE, the inventory has been produced by a coalition of academic institutions and energy data experts through a new non-profit of the same name. It has been contributed to by more than 100 organisations, including Global Energy Monitor, Carbon Mapper and Google.org.

At present, the inventory includes facility-level emissions data for more than 72,000 sources of GHG emissions in high-emission sector. Facilities listed include oil and gas fields, fossil fuel power plants, road networks and facilities in heavy industrial sectors such as steel, cement and aluminum.

Read more here.

3) Egypt plans $15bn climate programme

Back in the summer, the Egyptian Government’s ministry for international cooperation announced a new programme to raise and allocate finance for water, food and energy projects that will reduce emissions. It has now announced partnership with the US and support from international banks, energy and climate finance bodies to get the ‘NWFE’ programme up and running, targeting $15bn of investment this decade.

$10bn will go to energy and the remaining $5bn will be spread across three projects relating to food security, irrigation and water stewardship. The energy projects should enable Egypt to replace some of its least efficient fossil fuel plants, the Government has stated.

4) Nations sign up to the Africa Sustainable Commodities Initiative Declaration

The Africa Sustainable Commodities Initiative Declaration is a single set of principles for the responsible production of agricultural commodities in Africa; protecting forests, good governance, and transparency, while ensuring social benefits for farmers, communities, indigenous peoples and their human rights.

ASCI builds and expands upon principles agreed at CoP22 in 2016 for the palm oil sector. The ‘Marrakesh Declaration for Sustainable Development of the Palm Oil Sector’ acknowledged the role of agricultural commodity development as a driver of deforestation

The ten countries are: Cameroon, Central African Republic, Côte d’Ivoire, Democratic Republic of Congo, Edo State (Nigeria), Gabon, Ghana, Liberia, Republic of Congo and Sierra Leone. These countries account for 25% of the world’s tropical forest and 75% of Africa’s forests.

“From COP22 in 2016, when the Marrakesh Declaration was signed, we saw huge progress at COP26 in 2021 where every country demonstrated crucial milestones to achieve the sustainable development of palm oil,” said Abraham Baffoe, Global and Africa Director of Proforest.

“Many countries have recognised the need to work across multiple commodities so the launch of ASCI is an important progression, as a truly multi-stakeholder initiative, with every country engaging at the regional, national and local level throughout the process.”

5) Multiple finance alliances post progress updates

Finance sector collaborations on net-zero, collectively representing more than $32trn of assets, announced new members and posted progress updates at COP27, but many faced criticism from green groups.

The Net-Zero Asset Managers Initiative (NZAM) has confirmed that it now represents 291 organisations, collectively responsible for some $55.3trn of assets under management. A further 86 of its members have announced initial targets for addressing their portfolio emissions today, bringing the total number of members with specific targets to 169. These 169 organisations collectively manage $21.8trn of assets.

Also posting progress today is the Paris-Aligned Asset Owners (PAAO) initiative, which has released its first annual progress report. It confirms that 40 asset owners have set their initial interim targets on the road to net-zero by 2050 at the latest, out of the 57 signatories to the initiative. Overall, the initiative represents $3.3trn of assets under management.

Away from the asset owner and manager space, the Net-Zero Banking Alliance (NZBA) has launched its first progress report, confirming that it has tripled in size since it was founded in April 2021 with 43 founding banks. It now comprises 122 members that collectively represent around 40% of the global banking sector.

It all sounds promising, but green groups have been scrutinising these collectives for a while now, and with good reason. So, what are the issues with climate finance coalitions? Click here to find out.

6) Report warns of Africa’s investment slump for renewables

New research from BloombergNEF (BNEF) warns that African nations are lagging behind the rest of the world when it comes to renewable energy investment and meeting the aims of Sustainable Development Goal 7 – Clean and affordable energy.

The report examines the opportunities and challenges for clean energy deployment in Africa and finds that while 86% of the African nations surveyed by BNEF now have long-term clean power targets – up from 57% in 2019 – the speed at which capital is deployed is being hindered.

BNEF found that only $2.6bn of capital was deployed across renewable power-generating projects in Africa in 2021 – accounting for less than 1% of the $434bn invested globally.

Overall, renewables investment in Africa has slipped by 35% year-on-year, despite global investment levels rising 9% from 2022 to 2021 to an all-time high.

There’s also some alarming research from Christian Aid that the continent’s GDP growth could be severely impacted by the climate crisis. Read more here.

7) Restore Africa announces batch of carbon removal projects

We’ve seen a lot of big announcements on the carbon markets front and that continued on Finance Day at COP27 when Climate Impact Partners and The Global EverGreening Alliance announced a partnership to deliver $330m million in community-led carbon removal projects in Africa and Asia.

The projects are expected to be set up from 2023 onwards and will ensure that a revenue share from carbon credit sales will be kept for local communities.

The organisations are partnering to develop nature-based carbon removal projects and community-led approaches in Kenya, Ethiopia, Malawi, Tanzania, Uganda, and Zambia. These all form part of the Restore Africa initiative, aimed at creating more sustainable and resilient livelihoods by restoring nature and capturing carbon from the atmosphere.

The projects are expected to account for 1.5 million hectares to the benefit of more than 1.4 million households. After this initial wave of projects is launched in Africa, the two organisations will look to expand by delivering nature-based carbon removal projects in other areas of the world.

8) Uganda spearheads declaration on climate-related migration

Barbados’ Mia Mottley made headlines this week with her two speeches at the world leaders summit portion of the COP. She mentioned that, if the Paris Agreement is breached, up to a billion people will be forced to migrate.

Today, Uganda was joined by 14 other African nations in launching the Kapmpala Declaration formally, after negotiations in July. The Declaration is an international accord pledging cooperation on climate mobility and covers issues relating to both preventing mass climate-related movement and supporting those who do move. It covers those moving between rural areas, from rural to urban areas, and internationally.

Uganda’s Minister for Energy and Mineral Development Ruth Ssentamu Nankabirwa said at the launch: “In Uganda, we have 1.5 million refugees. They scramble for wood, they scramble for water, they scramble for land. But we don’t want to call them refugees, these people are our brothers and sisters and I suspect many have been displaced by climate change.”