Lack of finances could lock Kenya out of Paris deal on zero carbon emissions

By Steve Umidha

More than half of African companies including Kenya are delaying their energy transition targets, leaving them in danger of missing the Paris Agreement target of net zero carbon emissions by 2050, new research from Standard Chartered shows.

Lack of financing has been cited as the biggest barrier to committing to the crucial deal among African companies, with a handful behind the Paris Agreement.

“A successful net-zero transition must be just, leaving no nation, region or community behind and, despite the hurdles, action needs to be swift. We must act now,” said Bill Winters, Group Chief Executive of Standard Chartered.

The research also reveals what business leaders about 90 per cent believe that an effective global carbon tax, based on a carbon price that reflects the true cost of climate change, would help transition.

“Without the financing, it’s hard to have that incentive,” said Damilola Ogunbiyi, special representative of the U.N. secretary-general for Sustainable Energy for All, noting investment in low-carbon energy systems in Africa had lagged, according to reports by Reuters.

Indeed, executives are blaming the coronavirus pandemic that has forced many businesses in the region to focus on immediate survival: A whopping 80 per cent (85 per cent globally) of African senior executives say the pandemic has delayed their company’s net-zero transition.

Of its 54 countries, only South Africa has set a net-zero aim – and failure to revamp policies to benefit from a global low-carbon shift may mean Africa misses out on investment.

The report released yesterday found that a good number of companies are delaying transition because they do not feel they are currently equipped to meet the target. Some 78 per cent said they need extensive organizational change before tackling net zero.

In Kenya for instance, it is reported that some farmers were promised payments for changing their practices to store more carbon in their soils and farm trees – but as the market price for carbon collapsed, they received little reward for their efforts

A lack of finance isn’t the only hurdle companies in Africa face on the road to 2050. Seventy-two per cent believe a lack of consensus on net zero definitions and targets is hampering progress, while the same percentage (60 per cent globally) say a lack of support for net zero transition from their organisation’s investors is a significant barrier to net zero.

Zeronomics, a study into the financing of a net zero world, surveyed the senior leadership of 250 large companies and 100 investment specialists around the world between September and October 2020. Zeronomics examines the economics of transitioning to a net-zero carbon future.

But officials from the continent noted that with sub-Saharan Africa currently producing less than 4 percent of global emissions, “carbon-cutting” goals have limited relevance, with most African nations focused instead on creating jobs and economic growth.

With international investment already lacking in Africa – and some countries burned by disappointing promises of cash from sluggish carbon markets – many African countries are struggling to see net-zero policy as a priority.