South Africa’s G20 presidency will focus on mobilizing financial assistance for developing countries to shift to low-carbon economies, President Cyril Ramaphosa said on Wednesday. But the efforts come as the United States is reducing its foreign aid, with fears of funding gaps.
Addressing the meeting of G20 finance ministers and central bankers in Cape Town, Ramaphosa highlighted the imperative for stepped-up investment to ensure global climate goals under the Paris Agreement. “Much more financing is needed to cap global temperature increase in a way that is fair and just,” he said.
Though the first country to negotiate a Just Energy Transition Partnership (JETP) agreement, South Africa has had difficulty in securing enough resources for its transition from coal. Initiated at the 2021 UN climate summit, JETPs aggregate funds from governments, multilateral financiers, and private sector investors to speed up the uptake of renewable energy while making sure local people are benifited. Such arrangements have been made with Indonesia and Vietnam.
But fears of dwindling global support have dominated talks in Cape Town. The move by the Trump administration to reduce overseas development aid, combined with European countries diverting aid to defense spending, has put extra pressure. Furthermore, large energy companies are reducing investment in renewables for oil and gas projects.
While international climate financing has grown since 2018, distribution to poorer countries is still disproportionate. African nations, for example, account for less than 5% of the overall climate funding, officials say.
Through its chairmanship of the G20, South Africa’s task is to bridge this gap in funding and obtain long-term commitments to provide a fair energy transition to developing economies.
