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Last week, COP28 – the UN’s flagship annual climate change conference – began, hosted by the United Arab Emirates (UAE) in Dubai. With 2022 the sixth warmest year since global records began, and the world increasingly impacted by extreme weather events, the need for delegates to deliver sustainable and equitable outcomes has never been so high. Already, however, COP28 has attracted controversy. The UAE is a major oil producer, and accusations have emerged that its government intends to use the summit to strike new oil and gas deals, a move seen counter to the summit’s climate change agenda.
For many African governments, themselves facing the bind of how to develop their extractive resources while meeting climate change targets, the UAE’s alleged dual agenda is not of great concern. The priority for Africa at COP28 is ensuring that the Global North delivers upon past climate finance commitments made to the continent, pledges that have all too often remained unfulfilled. However, with global headwinds, from Russia’s invasion of Ukraine to US-China competition, hampering economic growth, the national budgets of Western countries are constrained. Relying on traditional bilateral partners for climate finance will leave Africa short of the vast funding that it needs for mitigation and adaptation.
Instead, the UAE hosting COP28 should help sharpen the focus of African governments on the need to build a broad range of international partnerships to tackle climate change. With Gulf Cooperation Council (GCC) states already beginning to invest heavily in climate solutions in Africa, COP28 should be used as an opportunity to build upon this existing cooperation.[1] Cash-rich and themselves navigating oil and gas monetisation and the energy transition, GCC countries can play an important role in supporting Africa to unleash its renewable energy potential, and adapt to the existing effects of climate change.
Africa’s priority at COP28: the delivery of climate finance commitments
Top of Africa’s list of demands for COP28 is the Global North making good on past climate finance commitments it has made across the continent. Significant resources have already been deployed to combat climate change in Africa, however, there still exists a vast financing gap between the funds required and the investment made to date. Given that Africa is the global region most impacted by climate change, despite being the lowest producer of greenhouse gas emissions, the financing required is eye-wateringly high. By the estimation of the think tank The Climate Policy Initiative, Africa needs USD 277 billion annually to meet its 2030 climate goals under the Paris Agreement.
Numerous pledges have been made by the Global North to provide Africa with climate finance. Top among these was the commitment made at COP15 in 2009, when delegates agreed to pay USD 100 billion a year to developing economies. This target, however, has not been met, leading African leaders attending the inaugural Africa Climate Summit held in Kenya this year to call on “the global community to… honour the commitment to provide USD 100 million in annual climate finance”. Likewise, at COP27 in Egypt last year, a loss and damage fund for countries most severely affected by climate change was established. In the first days of COP28, USD 420 million has been pledged to the loss and damage fund. However, even the World Bank admits that money from this fund will not be deployed until at least 2025, with the lender also levying a 24 percent fee for hosting the fund. An alternative source of climate finance: increased GCC investment into Africa
For African countries in need of climate finance, the UAE’s hosting of COP28 provides a timely reminder of the different available sources of international capital. At a macro level, GCC countries are already growing their economic presence in Africa. The UAE is now the fourth largest investor in the continent, behind China, Europe, and the US. Saudi Arabia, prompted by domestic food insecurity concerns, has invested heavily in African agribusiness projects, while Qatar Airways acquired 49 percent of RwandAir for USD 1.3 billion in 2020.
Figure 1: FDI flows from GCC to Africa
GCC members are also increasingly investing in climate mitigation in Africa, despite their status as petrostates. In September 2023, COP28 President Sultan Al Jaber, who is also head of the UAE’s national oil company ADNOC and state-owned renewable energy company Masdar, announced USD 4.5 billion of financing for African clean energy projects. At COP28, further plans have been revealed, with Masdar announcing an agreement with the Angolan government to develop a 150 MW solar project in the country’s southern region of Quipungo. Similarly, on 3 December, UAE’s AMEA Power – a renewable energy developer and operator – signed a USD 600 million to build a 300 MW wind farm in Ethiopia. Qatar is also ramping up renewable energy investment in Africa. In 2021, the Qatar Investment Authority signed a deal with Italian renewable energy company Enel Green Power to acquire 50 percent of its projects in South Africa and Zambia – approximately 800 MW of power.
GCC and African states are complementary partners
GCC states are well-placed to partner with African countries on climate change projects. Most obviously, GCC members, fuelled by oil and gas production, are cash rich. They have vast reserves of liquid and patient capital, ready to be deployed. With Western countries struggling to deliver on past climate finance commitments, and Chinese investment in Africa slowing as its domestic economy stagnates, GCC states can step in to alleviate the continent’s climate finance shortfall. Financing from the GCC is particularly welcomed by debt-ridden countries such as Ghana or Zambia, who, due to their fiscal predicament, or unable to access concessional funding from institutions such as the World Bank.
Beyond financial firepower, however, there exists synergies that make the GCC and Africa complimentary partners on climate change. From a technical perspective, GCC companies, given the Middle East’s geography, have strong experience developing renewable energy projects in arid and semi-arid regions. Significant expertise can be brought to bear when developing solar projects in similar conditions in Africa, particularly across the Sahel and continent’s north.
The GCC’s oil and gas driven development is also important. With no global consensus on paying African countries to keep their oil and gas reserves in the ground, many governments on the continent see the growth of their extractive industries as being key to national development. This reality is all too often overlooked by western nations, who have themselves benefitted from centuries of oil and gas production. GCC members, meanwhile, tend to strike a different tone. Given their recent development history, they are more understanding of Africa’s desire to both monetise extractive resources and mitigate climate change, for which the continent has little responsibility in causing. This accommodating approach is welcomed by African governments, who often rail at what they see to be Western hypocrisy on climate change.
Growing international partnerships to benefit Africa: increased GCC-Western cooperation
While the GCC’s role financing climate change mitigation and adaption projects in Africa is set to grow, this need not be to the detriment of investors from other countries. In contrast, increased capital flows from Middle Eastern states present new opportunities for cooperation. The 2021 partnership between UK development finance institution British International Investment and DP World, an Emirati multinational logistics company, while focused on boosting trade in Africa, presents an example for increased Western-GCC collaboration. To combat climate change, Africa needs a diverse array of willing and able partners. Investors that can combine technical and development expertise with deep investment budgets, regardless of their geographic base, will be best suited to supporting the continent on this mission.
[1] The Gulf Cooperation Council is a political and economic alliance of six Middle Eastern countries: Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, and the United Arab Emirates.
