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Mobilising private climate finance for sustainable energy access and climate change mitigation in Sub-Saharan Africa

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  • Axel Michaelowa
  • Stephan Hoch
  • Anne-Kathrin Weber
  • Ruth Kassaye
  • Tesfaye Hailu

Abstract

Ensuring access to sustainable energy is equally relevant for both sustainable development and climate change mitigation. Mobilising private finance in Sub-Saharan African (SSA) countries will, in turn, be of crucial importance for achieving both Sustainable Development Goal (SDG) 7 – which calls for universal energy access – and climate change mitigation goals defined under the Paris Agreement. In this paper, we assess how UNFCCC-backed climate finance instruments have engaged private investment for energy-focused climate mitigation in SSA. Based on this assessment, we develop recommendations for public climate finance institutions. Our work builds on documentary and database analysis and interviews, as well as participatory methodologies applied at a stakeholder workshop conducted in Kampala, Uganda, in 2018. Three case studies from Ethiopia, Madagascar and South Africa illustrate how climate finance interacts with domestic policy instruments, including in relation to the Kyoto Protocol’s Clean Development Mechanism, South Africa’s domestic renewable energy auctions, and the Green Climate Fund. The paper finds that there is no ‘catch all’ success model and approaches need to be tailored to local circumstances.Key policy insights International market mechanisms and climate finance can be key catalysts for private multibillion-dollar investment in energy access and climate mitigation, even under the challenging conditions facing many SSA nations.Market mechanisms need to be managed well to provide the private sector with the certainty needed to commit to fresh investments.A programmatic approach with standardised baseline and monitoring methodologies should be anchored in the next generation of project-based market mechanisms under Paris Agreement Article 6.Linking international and regional development programmes with the international carbon market might be an option for closing financing gaps, while at the same time increasing synergies between climate goals and SDGs.

Suggested Citation

  • Axel Michaelowa & Stephan Hoch & Anne-Kathrin Weber & Ruth Kassaye & Tesfaye Hailu, 2021. "Mobilising private climate finance for sustainable energy access and climate change mitigation in Sub-Saharan Africa," Climate Policy, Taylor & Francis Journals, vol. 21(1), pages 47-62, January.
  • Handle: RePEc:taf:tcpoxx:v:21:y:2021:i:1:p:47-62
    DOI: 10.1080/14693062.2020.1796568
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    Cited by:

    1. Mukeshimana, Marie Claire & Zhao, Zhen-Yu & Nshimiyimana, Jean Pierre, 2021. "Evaluating strategies for renewable energy development in Rwanda: An integrated SWOT – ISM analysis," Renewable Energy, Elsevier, vol. 176(C), pages 402-414.
    2. Donia Aloui & Brahim Gaies & Rafla Hchaichi, 2023. "Exploring environmental degradation spillovers in Sub-Saharan Africa: the energy–financial instability nexus," Economic Change and Restructuring, Springer, vol. 56(3), pages 1699-1724, June.
    3. Dalia Streimikiene & Grigorios L. Kyriakopoulos & Vidas Lekavicius & Indre Siksnelyte-Butkiene, 2021. "Energy Poverty and Low Carbon Just Energy Transition: Comparative Study in Lithuania and Greece," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(1), pages 319-371, November.
    4. Babak Khavari & Camilo Ramirez & Marc Jeuland & Francesco Fuso Nerini, 2023. "A geospatial approach to understanding clean cooking challenges in sub-Saharan Africa," Nature Sustainability, Nature, vol. 6(4), pages 447-457, April.
    5. Shobande, Olatunji A. & Ogbeifun, Lawrence & Apergis, Nicholas, 2024. "Crafting monetary policy beyond low carbon legacy," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 764-781.

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