Tag Archives: Financing

Energy and Sustainable Urban Development CPD Course – Day 5

This blog is part of a series on the Energy and Sustainable Urban Development in Africa workshop, 17 – 21 November, 2014, University of Cape Town. For more details on the purpose of the workshop, see this blog.

Day 5 of the continuing professional development course further developed the theme of policy and governance, and the role of local government, in energy planning, as well as addressing financing for local government energy interventions.

The morning sessions once again highlighted the intersectionality of energy with every discipline of local government, and the need for whole-system approaches to energy transitions, with appropriate solutions at all levels of government and governance. Sarah Ward from the City of Cape Town Energy & Climate Change Unit t presented on the development of South African national and municipal energy policy in the last 20 years, and the fact that cities in the future must help to drive energy policy, rather than ‘receiving’ policy from a national level. Knowledge of local contexts can help local authorities to drive their agenda for the green economy, rather than resorting to a ‘tick-the-boxes’ approach.

CPD blog day 5 imageOne-stop sanitation services building in Kasese, Uganda. Image: John Behangaana

SAMSET project municipal partner John Behangaana, Town Clerk of Kasese Municipality in Uganda, presented on the vision of Kasese for energy transitions, and projects to date in the municipality. This highlighted the importance of partnerships for implementation of energy projects, as Kasese has partner successfully with other municipalities, companies and organisations to improve sanitation and electricity supply in the municipality. These include Aalborg and Frederikshavn municipalities in Denmark for ‘one-stop sanitation shop’ development across the urban area of Kasese, as well as the WWF and System Teknik A/S for the Kayanja Solar Hub project, providing solar lighting and micro-grid services for off-grid households.

Roland Hunter, in his capacity as ex-Chief Financial Officer of the City of Johannesburg, presented on municipality financing in Sub-Saharan African and its implications for energy transitions. City finance can broadly be split into operating revenues and capital finance sources. Despite huge GDP growth in a number of Sub-Saharan African cities, with the exception of South Africa city spending on municipal operations as a proportion of GDP remains very low. This is often a result of a weakness in revenue administration: without sufficient revenue collection, spending cannot increase. This leads to a degradation of services, and then further unwillingness to pay among revenue sources (taxes, licensing etc.). This so-called ‘vicious spiral of performance decline’ is indicative of many Sub-Saharan African cities. Through building tax payer support, increasing revenue collection strength and enforcement, and improving service quality through investment and resourcing, this can be turned around. Two broad challenges concluded the presentation – the local revenue relationship in municipalities, and the assigned revenue powers to municipalities from national government. Implications in the energy sector are widespread, including a lack of infrastructure financing capacity as a result of this, leading to a reduction in decision making powers in the sector, as well as the strength of national agencies for energy in many Sub-Saharan African countries.

Graph day 5 cpd roland hunter

City billing as a percentage of city spending as of 2012 for selected African cities. Source: Hunter van Ryneveld (Pty) Ltd

The end of day five saw a closing address from Professor Daniel Irurah of the University of Witswatersrand, bringing together the ideas from across the week that urban energy transitions are a necessity in the coming period, if rapid urbanisation and energy consumption increases are to be addressed in a sustainable manner. Local approaches for local solutions, considering whole-system approaches in energy transitions, the importance of stakeholder engagement and participatory planning, and strengthening governance and the role of municipal government in energy transitions, were all highlighted as key factors in moving forward.

cpd blog day 5 cartoon image

One of a series of cartoons produced for the Energy and Sustainable Urban Development course, highlighting the role cities can play in driving energy transitions in developing countries.

It is Time to Pay the Climate Debt: Financing a Low-Carbon Urban Africa

Johnathan Silver from Durham University highlights the flaws and limitations of current carbon financing mechanisms, and the pressure they put on an African continent at the forefront of climate change.

Even though sub-Saharan Africa has contributed little to historic Green House Gas emissions, a burgeoning body of research is pointing out that the continent is on the frontline of climate change dynamics and as a result facing multiple infrastructural pressures across an urbanising region.

It is an issue that is of concern to African leaders with the Vice-President of Tanzania, Mohamed Gharib Bilal expressing reservations at the recent ICLEI Local Climate Solutions conference in Dar es Salaam. In the opening session of the conference, he argued that the global response to climate change must be fair, reflecting common but differentiated responsibilities that would put the emphasis on industrialised countries to finance a low carbon urban future and support the separation of growth from carbon and wider resource intensity in African cities. Yet these commonly held views on the continent and beyond seem to be having little effect on the slow, painful process of financing low carbon infrastructures and a green economy in Africa.

This climate change driven, energy, resource and development crisis is not some imagined future but rather taking place in the here and now. Reflecting on these relationships between climate change, low carbon imperatives and infrastructure geographies from across urban Africa generates a critical question: Where is the financing coming from to transform energy systems that respond to low carbon and developmental objectives and fund the plethora of strategies and plans proposed over the last decade?

The prognosis is not an optimistic one. The failure of historic polluters to offer the necessary finance, technology transfer and solidarity highlighted by the Tanzanian Vice President as crucial to a low carbon, resource efficient urban future is achingly visible. The options out there now for African cities limited, full of contradictions and characterised by the dominance of carbon markets. Speakers at the ICLEI conference sought to help city policy makers navigate the Byzantine nature of market-based carbon financing, used (rare) case studies of success stories for the Clean Development Mechanism (CDM) and sought to draw some hope from a thoroughly discredited financing system. Yet these voices seem to be a minority as a growing consensus rejects the market rationalities embedded in carbon financing with a coalition of activists, academics and policy makers highlighting what seems like an endless number of problems with financing mechanisms such as the CDM.

These critiques of carbon financing cover a series of issues from the privatisation of the air and the atmospheric commons through to the non-linearity of climate change. The almost perverse notion that polluters are being rewarded under these market conditions, together with widespread examples of fraudulent behavior seems to reflect the wider flawed logic of relying on the market and corporations to address socio-environmental conditions. Work by researchers in cities such as Durban show that cities with carbon market-financed projects are often positioned around mega-sized waste to energy technologies that are having devastating social and ecological consequences for local communities. Price fluctuations, speculative behaviours and the post-2008 crash of the carbon price have illustrated that these mechanisms are even failing on their own (market) logics and terms, reflecting the wider contradictions of global financial markets, derivatives and such like. Beyond these extensive general critiques there are some very real distribution inequalities to the current financing across carbon markets that suggest even if these wider flaws didn’t exist then this form of financing would marginalise African cities in these global flows of infrastructure investment. Taking the CDM as an example we can see that the vast majority of financing has both a regional and a non-urban bias that leaves urban Africa on the margins.

climate-graph-1 durham

climate-graph-2

So while African cities have been promised the fruits of the carbon markets in reality such projects make a tiny and insignificant part of infrastructure investment through the CDM. There are various discourses emerging from organisations such as the Cities Alliance and the World Bank that seek to ‘get cities prepared to attract carbon finance’ yet previous experience would suggest that such preparations are likely to include energy sector liberalisation, policy reform and cause future difficulties for African cities to address climate change, poverty and other imperatives.

These series of problems, flawed logics and failures characterising carbon financing are not going to address the energy, climate change and development challenges facing urban Africa. So where does this critique of carbon markets and current financing landscapes leave cities in terms of financing low carbon, resource efficient urban futures? As the Vice President of Tanzania made clear in his speech, industrial countries must pay and there must be an equitable and fair way to finance the transformation of infrastructure across urban Africa. This is financing based on the idea of climate debt, of paying for the historical pollution of the atmosphere and offering an alternative to the failed logics of markets in addressing these global inequalities that continue to characterise relationships between the continent and the North.

The need for municipalities across urban Africa to instigate significant investment programs becomes ever more important to address climate change, low carbon imperatives and the multiple development challenges facing these spaces of poverty and inequality. Yet, as the ICLEI conference illustrated again, there seems little in the way of alternatives to the limited, compromised and hopelessly flawed carbon financing mechanisms as countries of the North fail to undertake their historic responsibilities. It is time to pay the climate debt and support African cities to undertake different trajectories from the resource intense urban systems of the North. Many of these cities have yet to construct the required infrastructure systems needed over the next century, providing a limited window of opportunity to build a low carbon, resource efficient and fair urban future. The time for the global North to finance these transformations is now.

This blog is also available on the London School of Economics website and the Situated Urban Political Ecologies platform.