8.1 Financial Resources
The substance of this policy document has demonstrated that a successful national response to climate change will require South Africa to invest heavily in both the development of a low carbon growth path, as well as in a forward looking and proactive approach to identifying and managing the inevitable impacts of climate change.
This imposes an additional set of costs on society. These costs are recognised in the UNFCCC Convention and in particular, the obligation of the developed world who has primary responsibility for the emissions currently in the atmosphere, to provide resources for the adaptation and mitigation efforts of developing countries. It is in this context that the conditionality on South Africa’s mitigation announcement in Copenhagen, namely that our efforts are conditional on the provision of finance, technology and capacity building, can be understood.
Furthermore, substantial work that has been undertaken internationally has demonstrated clearly that the costs of the investments that are necessary to address the threats posed by climate change, are much less if early action is taken. Delayed action in relation to both mitigation and adaptation will impose much greater burdens on the world economy overall.
South Africaaccepts the need for early and decisive action and in that context is committed to mobilising the resources that are necessary to address both mitigation and adaptation. It is accepted that this financing must come from a range of sources and that our own domestic efforts to create, allocate and mobilise finance for the necessary investments, must be met by substantial resources flowing from the international community.
In line with the requirements of the UNFCCC Convention it is important that a significant element of these resources are from international public sources and are additional to existing Overseas Development Assistance. It is also clear that the element of the resources that comes from private sector sources is likely to be largely made up of concessional loan financing.
The mobilisation of the scale of resources necessary to address the climate challenge is currently a subject of negotiation internationally. South Africa has an opportunity at the present time to develop a coherent approach to climate financing and to do the preparatory work necessary to be able to mobilise the appropriate scale of resources at an early stage. At the same time, South Africa also recognises that as a middle income developing country and given the current global economic downturn, the quantum of resources there is likely to be a limited degree of funding that is likely to be able to be mobilised from the international community and that much of this is likely to be either concessional loan financing or financing flows channelled through the private sector. It is also likely that there is likely to be a weighting towards mitigation finance in this scenario. The mobilisation of national sources of financing and the integration of climate plans into the work of government and their resourcing as such is therefore of utmost importance. I
South Africaalso recognises that our existing financial institutions in both the public and private sector are increasingly aware of climate change issues and are considering how to engage in providing finance for climate related activities. This should be actively supported and encouraged.
Furthermore, South Africa recognises that economic and fiscal incentives and disincentives can both support climate change policy objectives and also can be structured so as to generate a revenue stream that can allow fiscal decisions to be made over time to support climate change policy objectives.
Government will undertake work to determine the economic and fiscal costs and benefits of the proposed Climate Change Response Strategy. This work will specifically address the costs and opportunities resulting from a low carbon growth strategy, including on jobs and livelihoods and specific economic sectors. The work will also address the impacts of climate change through an assessment of the costs of action versus those of inaction and will address the costs of priority actions for specific sectors. This work to, to the extent possible will be incorporated into the National Climate Change Response Strategy White Paper.
Government will consider establishing a National Climate Change Fund that will mobilize resources from national and international sources for investment in both climate change mitigation and adaptation actions. A feasilbility in this regard will be undertaken and its conclusions incorporated in the National Climate Change Response Strategy White Paper.
Government will establish a Climate Finance Tracking Facility that will have the responsibility to track the flows of climate finance in both the private and public sector and that will also be responsible for reporting on the mitigation actions that have been implemented with international support.
Work closely with South Africa’s Development Financing Institutions to ensure that climate change information and climate change risk is factored into their planning and that their lending portfolios support the country’s climate change objectives.
Collaborate with the private banking and insurance sector to ensure that it has adequate information to make informed decisions on risk management measures and lending decisions that may be affected by the impacts of climate change
Work with and support the banking sector in mobilizing and making available finance for climate mitigation initiatives.
Provide information that would support the banking sector to consider carbon implications in financing and investment decisions.
Carbon trading schemes will be investigated as a medium- to long-term policy response to climate change and will focus on the scope and administrative feasibility of trading schemes for South Africa.