By Augustine Aminu
Science researchers have reported that every year, the global energy system produces almost 40 billion tons of carbon dioxide emissions, pushing the planet earth towards irreversible climate tipping points; while the future costs and benefits of climate change are uncertain and unevenly distributed to create the blueprint for climate solutions.
The costs of dealing with the impacts of climate change fall disproportionately on developing countries, whilst the financial costs of cutting emissions to mitigate those impacts fall mostly to developed nations.
The United Nations (UN) Environment Programme estimated in 2016, that the global cost of adapting to these climate impacts is expected to grow to $140-300 billion per year by 2030 and $280-500 billion per year by 2050 .
Climate change could directly cost the world economy US$7.9 trillion by 2050 as increased drought, flooding and crop failures hamper growth and threaten infrastructure, new analysis showed Wednesday, Nov. 20, 2019.
Climate Change has continue to cause havoc in Nigeria just as in other countries in Africa.
President Muhammadu Buhari in a statement, August 30, 2022 said the flood situation in the country has affected over 500,000 Nigerians since January this year; reiterating that these tragic events have brought to fore the need for states and local governments to step up their level of preparedness in handling emergencies, which remains a shared responsibility with the government at the Centre.
According to President Buhari, since January this year, flooding has been reported in Lagos, Yobe, Borno, Taraba, Adamawa, Edo, Delta, Kogi, Niger, Plateau, Benue, Ebonyi, Anambra, Bauchi, Gombe, Kano, Jigawa, Zamfara, Kebbi, Sokoto, Imo, Abia States and the Federal Capital Territory, affecting 508,721 people; displaced 73,379 people, 115 casualties and injured 277 people and 37,633 houses destroyed or severely damaged.
Considering the impact on the developing economy especially the Africa countries, Nigerian Vice President, Professor Yemi Osinbajo while delivering a lecture on “a just and equitable energy transition for Africa” at the Center for Global Development in Washington D.C, September 1, 2022, proposed a Debt-For-Climate (DFC) swap deal to allow African countries help advance the course of global net-zero emission targets and facilitate energy access.
According to the Vice President who is a professor of law, “debt for climate swaps is a type of debt swap where bilateral or multilateral debt is forgiven by creditors in exchange for a commitment by the debtor to use the outstanding debt service payments for national climate action programs.
“Typically, the creditor country or institution agrees to forgive part of a debt, if the debtor country would pay the avoided debt service payment in a local currency into an escrow or any other transparent fund and the funds must then be used for agreed climate projects in the debtor country.”
Justifying the rationale behind such a debt swap deal, the Vice President submitted that the commitment to it would “increase the fiscal space for climate-related investments and reduce the debt burden for participating developing countries; for the creditor the swap can be made to count as a component of their Nationally Determined Contributions (NDC).”
The effects of climate change can be expected to shave 11 percent to 14 percent off global economic output by 2050 compared with growth levels without climate change, according to a report from Swiss Re, one of the world’s largest providers of insurance to other insurance companies. That amounts to as much as $23 trillion in reduced annual global economic output worldwide as a result of climate change.
Poor nations would be particularly hard hit, but few would escape, adding that some Asian nations could have one-third less wealth than would otherwise be the case, “Our analysis shows the potential costs that economies could face, should governments fail to act more decisively on climate,” said Patrick Saner, who is in charge of global macroeconomic forecasts for Swiss Re.
Rising temperatures are likely to reduce global wealth significantly by 2050, as crop yields fall, disease spreads and rising seas consume coastal cities, a major insurance company warned; highlighting the consequences if the world fails to quickly slow the use of fossil fuels.
A group of scientists have projected the total cost of implementing nationally determined contributions (NDC) for climate action in African countries to be $2.8 trillion for 2020-2030, and the countries are relying on external financial support for around $2.5 trillion of the cost, the analysis by Climate Policy Initiative, an advisory organisation, showed.
The transport sector was projected to require the largest share (41 percent, $657 billion) of climate finance. Agriculture, forestry and other land-use sector, which is the biggest emitter of greenhouse gases, only accounts for 7 percent of total needs ($108 billion).
South Africa, Ethiopia, Nigeria and Egypt have the highest need for yearly finance, together representing almost $151 billion per year, they added.
Governments of African nations have committed $264 billion in domestic public resources — about 10 percent of the total cost, indicating that the continent needs about $250 billion per year to meet the 2030 climate goals. Total annual climate finance flows in Africa for 2020 — domestic and international — were only $30 billion, the report added.
“The climate finance figures are probably underestimations due to a lack of capacity and data from sub-national governments and vulnerable communities”, the researchers said in the report.
Vice President Osinbajo also proposed the greater participation of African countries in the Global Carbon Market while exploring financing options for energy transition; saying, “there is a need to take a comprehensive approach in working jointly towards common goals, including the market and environmental opportunities presented by the financing of clean energy assets in growing energy markets.
“In addition to conventional capital flows both from public and private sources, it is also essential that Africa can participate more fully in the global carbon finance market”.
“Currently, direct carbon pricing systems through carbon taxes have largely been concentrated in high and middle-income countries. However, carbon markets can play a significant role in catalyzing sustainable energy deployment by directing private capital into climate action, improving global energy security, providing diversified incentive structures, especially in developing countries, and providing an impetus for clean energy markets when the price economics looks less compelling – as is the case today.”
He encouraged developed countries to support “Africa to develop into a global supplier of carbon credits, ranging from bio-diversity to energy-based credits,” which would be a leap forward in aligning carbon pricing and related policy around achieving a just transition.
While also addressing the concerns of the African continent and other developing countries regarding a just transition, Prof Osinbajo noted that “the central thinking for most developing countries is that we are confronted on this issue of a just transition with two, not one, existential crises; the climate crisis and extreme poverty.
Policymakers and politicians rely on economics to guide decision making on the risks posed to society by climate change. Central to that task are economic models. They can be used to estimate the future costs of climate change impacts such as heatwaves, flooding and sea-level rise, alongside the economic benefits of preparing for them. Models also estimate the costs and benefits of measures that reduce greenhouse gas (GHG) emissions.
