Statement

The Climate Pact for South Africa Must Be Followed by Further Pacts for Other Countries

05.11.2021

Climate economist Prof. Dr. Sonja Peterson sees the financial support for South Africa announced at the COP26 climate summit as a first important step in helping countries with large fossil energy resources to transition to renewable energy production. Other support programs should follow if comparable countries are to join in an ambitious international climate policy.

Kiel Institute Statements - Sonja Peterson

"Countries with significant fossil energy resources and low or medium incomes are lagging behind in terms of ambitious climate policy. This is because they face the greatest economic losses from a global climate policy, which ultimately needs to phase of the use of fossil fuels almost completely in order to achieve the Paris climate goals. Our simulation studies show that these countries' self-imposed climate policy targets are not ambitious and that they will hardly ensure sufficient reduction incentives for the polluters of carbon2 emissions. This group of countries includes Russia and the Middle East, but also South Africa and other economically weaker countries with large coal, oil or gas reserves.

A crucial component of international climate policy must be that the poorer among these countries receive funding from third parties and are supported in their sustainable development in order to be able to achieve ambitious climate targets. The climate pact for South Africa must be followed by further pacts for other countries. To this end, a financing plan announced prior to COP26 to provide 100 billion US dollars annually for adaptation to climate change and the reduction of emissions in developing countries is also an important success. 

The task now is to develop specific projects. In addition to financial assistance, this includes support for institutional reforms, education and research, and technology transfer. The announced partnership of wealthier countries with South Africa could become a practical example of how countries in a comparable economic situation can be won over to an ambitious climate policy.

Other solutions include compensating states for not exploiting fossil resources. A first large-scale experiment in Ecuador failed, however, due to a lack of available funding. One idea—so far pursued only theoretically—is for resource-rich countries to sell tradable rights to extract fossil fuels to countries that want to cut emissions and then refrain from extracting the resources themselves."

Background

South Africa currently generates nearly 90 percent of its electricity from coal and ranks sixth in the world among countries that generate electricity from coal. EU countries, the U.S., and the U.K. announced in Glasgow that they would provide 8.5 billion US dollars to promote the expansion of renewable energy in South Africa and upgrade power grids. Germany pledged 700 million euros.

A detailed paper on this topic

Pittel et al. (2021). Chances and Obstacles to Strengthening the Paris Agreement – The Case of Resource-Rich Countries. Background Paper Forum Climate Economics 9.

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