Carbon pricing in Africa: opportunities for action at the territorial level
On Tuesday October 27, 2020, UCLG Africa, in partnership with CPLC (Coalition for leadership on carbon pricing) and CoM SSA (Covenant of Mayors for Sub-Saharan Africa) held a webinar with the theme, “Carbon pricing in Africa: opportunities for action at the territorial level.” The meeting contextualized carbon pricing and its goals in relation to sub-national actors in Africa.
The opening speech was delivered by His Excellency Prof. Lee WHITE, Minister of Forests, Sea and Environment of the Republic of Gabon. Welcoming speeches were delivered by Mrs. Wendy Hughes, Manager for Carbon and Market Innovation at the World Bank and Mr. Jean Pierre Elong Mbassi, Secretary General of UCLG Africa.
Ms. Wendy Hughes explained how the World Bank was engaged in working with several partners in Africa to explore carbon pricing opportunities. Through the Coalition for the Leadership on Carbon Pricing (CPLC), actions were carried out with various partners: national governments, the private sector, civil society and local authorities. “This webinar is part of this collaborative spirit of sharing experiences. I hope that the exchange of views will enable us to make important contributions on climate change and to translate this into real action at the local level.”
Mr. Jean Pierre Elong Mbassi indicated that it was now essential to set a price on carbon. “Thee setting up of Carbon Pricing System and the development of carbon markets are at the heart of the discussions currently being carried out within the framework of the implementation of the Paris Agreement on Climate Change. It should be recalled that under the Kyoto Protocol, a mechanism for the trading of pollution rights had been proposed to organize supply and demand in this field in order to arrive at an efficient price, ensuring the best allocation of resources that should be compatible with the imperative of reducing greenhouse gas emissions on a planetary scale. The question is how to go about it. The Kyoto Protocol proposed to rely on the market mechanisms through the Clean Development Mechanism to freely organize the confrontation of supply and demand for greenhouse gas emission quotas. This is how the carbon market was developed. We subsequently realized that this mechanism was not sufficient to have a carbon price that truly reflects the requirement to branch off towards a low carbon economy. This has led to the consideration of other mechanisms for setting an explicit or implicit carbon price, allowing clear signals to be sent on the benefits of reducing greenhouse gas emissions; or on the cost that greenhouse gas emissions impose on society, the general goal being to organize the transition to a low carbon energy system.
Among these mechanisms one can mention:
- the carbon tax, which makes it possible to have polluters pay directly for the cost of emissions;
- the compensation price or subsidies for low carbon investments (renewable energies, energy efficiency), which reward avoided emissions at the carbon market price;
- the laws and regulations that allow for an implicit carbon price to be set in areas where the price is not explicit, such as agriculture, transport or waste. Laws and regulations can also speed up processes of technological breakthroughs that can accelerate the energy transition.
It is known that by 2050 Africa will have joined the rest of the world in having people living mainly in cities and will have 1.2 billion city dwellers. We also know that cities are the source of more than 60 percent of greenhouse gas emissions, and that their technological choices in the areas of construction, mobility and transport, as well as waste, among others, will be determinants for a branching off towards a low carbon development model.
As you probably already know with the support of the European Union, nearly 200 cities in sub-Saharan Africa have committed to the production of Climate-Energy plans within the framework of the Covenant of Mayors for the Climate. It therefore, seems essential to us that the 100 cities of more than 1 million inhabitants that Africa will have in the next 5 years, commit now to setting a carbon price and setting up carbon markets structured around sustainable development objectives, to send a clear signal of their determination to initiate the energy and ecological transition now.
This is why United Cities and Local Governments of Africa wished to organize this webinar in collaboration with the Coalition for Carbon Pricing Leadership (CPLC), hosted by the World Bank and the Covenant of Mayors for the Climate and Energy in sub-Saharan Africa (CoM SSA), supported by the European Commission.
The World Bank launched the Partnership for Market Readiness (PMR) initiative in 2011 to set a price on carbon. This initiative is implemented in October 2020 in 46 national states and 35 subnational jurisdictions.
30 countries in sub-Saharan Africa are committed to the use of carbon pricing or carbon markets in their Nationally Determined Contributions for the implementation of the Paris Agreement. But this initiative has so far not involved local authorities.
This webinar offers the opportunity to share the international experience in Carbon Pricing and the development of carbon market, and aims at making the most of insights and guidance of the best decision-makers, thinkers and professionals, to bring to national and territorial authorities and practitioners of Africa a better understanding of the carbon pricing mechanisms and the usefulness of using them to stimulate the branching off towards a more energy efficient, low carbon, and more resilient territorial development.”
H.E Prof. Lee White revealed that in 2012, his country, Gabon, “realized that we could not count on a sufficient carbon price. We left the UN REDD process to reflect on how to create a sustainable economy around the Gabonese forest. We have banned logging of unprocessed logs in Gabon. In 10 years, we have multiplied our forestry economy by four. Why is a ton of carbon in Europe not the same price as in Gabon? In Gabon we have established a program to develop what is called the smart code. Unfortunately in Gabon, the construction of houses consumes a lot of carbon. The challenge is to set up infrastructures that are both resilient to climate change and low in CO2 emissions. To achieve this, it is necessary to arrive at a real exchange between developed countries and developing countries. This subject is very important. I wish for ourselves, fruitful deliberations.”
Ms. Ishanlosen Odiaua, Senior Social Development Specialist at the World Bank, spoke to the audience about the importance of involving local authorities in climate action. “Local authorities can help by working with local people to take ownership of these notions of climate action. Local authorities are closer to populations and these populations are the first victims of pollution, and yet they don’t have a say at the international level. Local and regional elected representatives must represent them by carrying their voice. We must find intercession for the implementation of the different actions in order to avoid top-down approaches. By involving local authorities, we ensure that the opinions of citizens are taken- into-account.”
Mr. Andrei Marcu, Founder and Executive Director of ERCST (European Roundtable on Climate Change and Sustainable Transition), is also convinced that cities and local authorities can help achieve the goals of the Paris Agreement on Climate and the Nationally Determined Contributions (NDCs). “60% of greenhouse gases are in cities. In Africa, the carbon market represents an essential element as a source of financing. In making this transition to a carbon neutral world, it is important to have robust funding for Africa and for the rest of the world. The stakes are huge in Africa, but progress is not satisfactory. In 2019 only 3% of NDCS projects were in Africa and of these projects only 66 projects involved local authorities. We have to start talking about the price of carbon at the international level, but we must also talk about the price of carbon at the national level. Carbon markets can be introduced in a hybrid way in Africa. In Africa, the carbon market process has been slow to start and in some cases has collapsed. You need expertise in this area and an understanding of regulatory frameworks. National governments must create a framework for the participation of cities. Local authorities must give their approval. Article 6 of the Paris Agreement is the only part that is not complete. Articles 6.2 and 6.4 are more decentralized approaches. The reason we often don’t have access to the market is that the market comes from projects in developing countries. You have to have access to these markets to have access to these opportunities. Africa came late to this market and was disappointed because as soon as it arrived the market was collapsing.”
Ms. Mandy Rambharos, Head of the Just Energy Transition office at Eskom Holdings SOC Ltd (Johannesburg, South Africa), specified how the problems in Africa are exacerbated by climate change. “There are social economic challenges and adaptation challenges. The important aspect that needs to be looked at is the role of carbon pricing in attracting finance and financing to Africa. We must meet the requirements for the social and economic development of our countries. We have switched to technologies that emit less carbon, which is good. Carbon pricing plays an important role. We must consider carbon pricing in a more realistic way by focusing on actions and enabling environments.”
The first panel discussion was moderated by Ms. Rokhaya Sy Gaye, President of the Tournesol Association, member of the Women Major Group and Country Monitor of the African Gender Group of the Green Climate Fund (City of Dakar). The presenter focused on: “How can African cities contribute to ensuring a successful transition from the Clean Development Mechanism (under the Kyoto Protocol) to Article 6 of the Paris Agreement in order to meet national commitments?”
Ms. Rachel Botti-Douayoua, Representative of the Ministry of Environment and Sustainable Development of Côte d’Ivoire, indicated that in her country, “all CDM (Clean Development Mechanism) projects have been led by individuals from the private sector, whereas local governments were not involved. Local governments are not involved upstream; generally it is representatives of central governments who are at the negotiating table. The transfer of information between the central government and local governments is often not effective. For communities to be more involved in the implementation of the Paris Agreement, a better understanding of climate issues on the national and local economies is needed. This will allow for the development of local climate strategies. We often have national strategies that are not translated at the local level. One of the shortcomings of the first NDCs was the top-down approach used to develop the climate change strategy. It is often difficult to translate the strategic pillars developed at the national level into action on the ground. One of the recommendations is to favor the bottom-up approach.”
For Mr. Yassine Daoudi, Mayor of the city of Guisser (Morocco), Vice-President of AMPCC (Moroccan Association of Presidents of Communal Councils), the fight against climate change requires special funding. “Moroccan local governments are involved in the fight against climate change and are in the search for funding. The local carbon market is an interesting option. Our cities are getting bigger and there is more pollution. If we are thinking of integrating the carbon market, we can switch to a carbon tax which offers possibilities to improve one’s competitiveness where there is trading of CO2 quotas. In 2015, Morocco launched the initiative for the creation of the carbon market in the REDD program with the cement and phosphate sector. At that time, the local authorities were not involved. One cannot speak of a local carbon market without the national carbon market. It is necessary to have a regulator of this carbon market, in particular the central government. It is the same concern with the territorialization of NDCs: it is necessary to territorialize the carbon market.”
Mr. Frédéric Vallier, Secretary General of the Council of European Municipalities and Regions (CEMR), expressed that one of the challenges facing the climate agenda was that it was a danger that seemed very distant to many people. “Nonetheless, everyone recognizes the climate emergency. In 2008, European cities signed up to the Covenant of Mayors. The Covenant of Mayors is a voluntary commitment: there are 10,000 member local authorities. In sub-Saharan Africa, thanks to funding from the European Union, we have developed this convention, which already has several hundred, member cities. ICLEI is the technical arm of the CoM SSA, and UCLG Africa is the political arm to carry out advocacy with African institutions, particularly the African Union, in order to find support and financial instruments. The carbon market is important but we are not there yet. We have to find sources of funding to support cities that engage in actions to both mitigate and adapt to climate change. It is a challenge and an opportunity to rethink the development of our territories.”
Mr. Yacoubou Bio Sawé, Director of the Unit for Environmental Management and Sustainable Development at the West African Development Bank (BOAD), discussed the need for effective collaboration between central governments and local authorities. “BOAD has set up a carbon market which collapsed with the 2018 crisis. We are now committed to the United Nations financial mechanisms, in particular the adaptation fund, the Green Climate Fund that granted to us accreditations which allow us today to work on the financing of projects and to give content to the NDC programs of the national governments. Nonetheless, the silos between national governments and local authorities make it difficult to get results. We must think local and act local. Decentralization as experienced today is not likely to help matters. Decentralization must be total, otherwise there will be no results. We must therefore give leadership to the umbrella organization of local and subnational governments on the continent, which is UCLG Africa. The AfDB has signed a partnership with UCLG Africa to reflect on the possibilities of dealing with the problems. If the central government and local authorities remain in a climate of mistrust, there will be a problem, because national resources must be used as a lever to mobilize external funds. It is then necessary to build the capacities of local governments. Local governments must be involved as a major player in the various Conferences of Parties (COPs).”
The second panel moderated by Ms. Angela Naneu Churie Kallhauge, Director of the Coalition for Leadership on Carbon Pricing (CPLC) focused on the question, “What are the most effective ways to involve subnational authorities in the implementation strategy of a national and regional framework on the carbon market, and how consequently, to structure the operational framework of cities and territories in the carbon market?”
Ms. Hakima El Haité, President of the Liberal International, Former Minister of the Environment of Morocco, spoke out for real decentralization. “The territories produce more than 60% of CO2 emissions and make 90% of the decisions that have an impact on climate change on a daily basis. Local governments have an important role to play concerning the climate issue. I see 4 main obstacles to their involvement. From the institutional and governance standpoint, local governments are not partners in the implementation of public policies. The second obstacle is the top-down approach: it does not involve local governments. The third obstacle is capacity building which is a central aspect, and the fourth obstacle is access to climate finance. Without real and effective decentralization, the implementation of the Paris Agreement will not succeed.”
Mr. Anthony Nyong, Director of Climate Change and Green Growth at the AfDB, said, “the carbon tax is there to deter emissions. We must have a space that allows us to grow. Any policy to be implemented in the future must adapt to the sustainable development model. We have to make sure that the money we earn must be supported and directed towards sustainable development.” On questions regarding the price for carbon, measures to improve carbon pricing and incentives, including the role of AfDB, Mr. Nyong stated, “For the moment, 4 countries in West Africa have been chosen to set up pilot projects. We are going to develop an internal carbon price or a carbon credit trading system.”
For Mr. Andy Deacom, Director of Strategy and Operations (GCoM), carbon markets can potentially be a vehicle for green growth in Africa. “It is necessary to find a role for the private sector. We must move away from the bottom-up dynamic as UCLG Africa and the CoM SSA do. I think there is untapped potential in the carbon market.”
Mr. Stéphane Pouffary, President of Energies 2050, indicated that in order to shake things up and bring out the potential represented by local actions, one must resort to structured dialogues. “These dialogues can be used to enable a dialogue between the central government and local authorities. In Africa there is some enthusiasm for the process, but there are obstacles in terms of methodology. There are many cities that are not all big cities: local reporting will need to be adapted to the size of cities. Complicity between the national government and local authorities must be anticipated.”
In his concluding address, Mr. Jean Pierre Elong Mbassi, Secretary General of UCLG Africa, stressed the fact that, “The carbon price is a compass that is indicative of the real will of societies to commit to the transition to low carbon development. This observation emerged from our discussions. It has also become clear that there is a problem of the social and environmental utility of the carbon price and this is the heart of Article 6 of the Paris Agreement. As a result of our deliberations, we should continue to reflect on how we shall go to Glasgow (COP26) with tangible elements making it possible to understand that the carbon price and the carbon market are essential complements to the achievement of the Paris Agreement. The second thing that has been said is that we will not be able to succeed if we do not go to the local level and we will not be able to succeed if we continue to do the NDCs from top to bottom. This is why UCLG Africa has proposed that the revision of the NDCs be taken advantage of, to start a process by local authorities with Locally Determined Contributions (LDCs) which would enrich and harmonize the Nationally Determined Contributions (NDCs). In this way there is a relationship between the local level and the national level. Obviously, there are procedures and these procedures first require the international community to take the time for national governments (especially in Africa) to adjust to this process. We are among those who say that there is a need for a climate focal point at the level of national associations of local authorities, as is the case at the national level within different ministries. We would thus have a person who is the interface for building the capacity of local governments to come to the table. If they are not around the table, it means that nothing is being discussed. 60% of greenhouse gases are produced in cities. This junction must be made between the national level and the local level. All the countries have national associations which represent these local authorities. At the continental level we have UCLG Africa and at the global level there is UCLG. Finally, it is clear that there is extraordinary scientific work that needs to be produced. Engaging in the construction of carbon markets requires that there be measures, reporting, and systems that allow the recommendations of the last Conference of the Parties (COP) to be applied.”
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