The €100bn climate action allocation in Germany's proposed €500bn infrastructure fund is a "very strong signal" which could help Africa with the huge challenges the continent faces in mobilising private capital, delegates heard at the German-African Energy Forum in Berlin this week.
Germany's €100bn climate fund "couldn't come at a better time", Johannesburg-based Africa Investor Group chief executive and chairman Hubert Danso said, given South Africa's presidency of the G20 and the presidency's focus on reducing the cost of capital for developing countries through the planned set-up of a "cost of capital commission", which Danso said is addressing the "unjustified" premiums paid by developing countries.
Germany's budget allocation could "fold into" the work of the G20 and the run-up to the UN Cop 30 climate summit in Belem, Brazil, later this year, Danso suggested.
Michael Kellner, junior minister at the economy and climate ministry of Germany's outgoing government, told delegates that the multi-billion euro package will provide "much more finance for fighting climate change". Kellner, a member of the Green Party which lost the election but was instrumental in pushing through the €100bn allocation, said that the finance will also be used outside Germany. He pointed to Germany's "flagship" green hydrogen import scheme, H2Global, which is likely to see more co-operation with Africa. Kellner flagged the "impressive" production of green iron in Namibia, which could be of interest to German carmakers.
"We will be watching [the €100bn climate allocation] closely," Danso told Kellner and representatives from Germany's development ministry.
The main challenge, and opportunity, is to make developing countries' nationally determined contributions (NDCs) to the Paris climate agreement more "investable", Danso said. The next round of NDCs, to be submitted this year, must become more "strategic" and "programmatic", Danso urged.
In this context, NDCs can drive carbon markets by opening up collaborative approaches, consultant CarbonWise founder and chief executive Toni Heigl told delegates. If a country decides to exceed its NDC, for instance by pushing certain activities that are dependent on external funds, this "helps to trigger the funding", Heigl said.
Carbon markets offer "vast" opportunities in Africa, especially the schemes under Article 6 of the Paris deal, Heigl said. With the final Article 6 rules passed at Cop 29 last year, most companies still "underestimate" the potential of these carbon markets, Heigl said, despite Article 6 credits being "8-10 times" more valuable than those under the voluntary carbon market.
