At COP29, nearly 200 nations convened with one overriding agenda: addressing the gaping climate finance deficit.
The United Nations Framework Convention on Climate Change (UNFCCC) estimates that developing countries need over $1 trillion annually by 2030 to adapt to and mitigate the growing impacts of climate change. Yet, concluding this year’s summit in Baku, developed nations committed to a more modest goal: tripling their annual financial contributions to poorer nations by 2035, from $100bn to $300bn.
More transformative, however, is the goal to mobilise $1.3 trillion annually from a mix of public and private sources by 2035. This ambitious target is expected to catalyse investment in renewable energy, adaptation measures, and infrastructure for climate resilience across the Global South.
These funds could be a game-changer in achieving a just energy transition for African nations while tackling the escalating impacts of climate change. But, if Africa is to attract the private sector and scale up investment activity, political will is fundamental.
Perception – a key barrier to investment
In Africa, there is certainly no shortage of political will when it comes to climate action. 20 of the 32 signatories convened by the Climate Parliament for the recent Green Energy Zones and Corridors Pledge represented African nations.
It comes as no surprise. The continent is disproportionately affected by our warming planet. Yet, it faces a critical challenge: balancing a rapidly growing population, escalating energy demand, and insufficient climate finance. Despite being home to 18% of the world’s population and bearing a significant share of climate-related risks, Africa receives less than 4% of global climate finance, according to the African Development Bank. The continent requires multi-trillion-dollar investments to build resilient, low-carbon infrastructure and meet its energy needs sustainably.
For African nations, the stakes are high: rising temperatures and erratic weather patterns threaten Africa’s food security, livelihoods, and economic stability. However, Africa’s potential to lead the global green energy transition is unmatched and with adequate support, this transformation is within reach. A key barrier to investment, however, is the perception of financial, political, and currency risks. African politicians have a crucial role to play in addressing these challenges by improving the regulatory and legislative landscape to attract investment and reshape Africa’s image as a long-term partner for climate finance.
African parliamentarians as climate finance champions
Political will is the linchpin of the climate mission. The investment gap to achieve net-zero emissions by 2050 is vast, and bridging it requires both public funding and significant private sector involvement. MPs are essential in creating the environment that unlocks these investments. They have the power to prioritise infrastructure development, such as transmission grids and interconnections, without which the clean energy revolution cannot succeed.
Through their legislative powers, MPs can:
- Pass laws setting ambitious renewable energy targets and mobilise additional funding for climate action through budget allocations.
- Catalyse private finance by reducing the perceived risks around renewable energy investments, by fostering transparency and promoting multi-year plans that provide long-term stability for investors.
- Leverage a variety of fiscal measures such as tax incentives, subsidies, public-private partnerships, carbon markets, blended finance models, financial guarantees, to open new funding channels.
- Ensure climate laws are not just passed but enforced. MPs can push governments to honour international commitments, including those made at COP.
By embedding these mechanisms in national strategies, MPs can provide clear signals to the private sector that sustainable projects in Africa are both viable and supported by sound legislative frameworks.
Additionally, elected representative scan ensure that the green transition is built around social and economic inclusion. They play a critical role in making sure that renewable energy projects benefit local communities, especially women and youth.
A cross-party network of legislators is essential for fostering long-term environmental policies that transcend political divides, ensuring continuity in climate action. This unified approach mitigates the impact of short-term political cycles and guarantees that climate policies remain stable and effective. MPs occupy a unique position in driving climate change solutions, bridging the gap between ambitious commitments and practical, actionable policies.
The potential of green zones
The Istanbul Green Investment Dialogue, organised by Climate Parliament and UNIDO, marked the beginning of a dynamic process under the Parliamentarians for Climate Finance project – which aims to strengthen the capacity of national legislators in 15 Sub-Saharan African countries. Its goal is to massively increase the flow of green investment at the country level. This event brought together MPs from 35 countries, academics, and financial experts to explore green zones as a key area for investment. Building on this dialogue, a closed-door meeting at COP29 in Baku provided a platform for MPs from the participating countries of this project and key GCF representatives to further discuss the economic potential of green zones, strengthening the link between policy, finance, and green investment.
Green zones are designated areas where the limited public money for investment guarantees can be concentrated to attract large amounts of investment in renewable energy, in green hydrogen, and in industries using these resources to make green steel, aluminium, cement, fertiliser, aviation fuel and other products.
Green zones offer a way for developing countries to compete for green investment globally and to build low-carbon infrastructure for the future, without needing to revise a wide range of national laws and regulations. But any of the ideas that might be applied to Green zones could also be applied nationally in any country that wants to do so. The design and content of green zones will vary from country to country, and much of this work needs to be done at the national level. At the same time, our hope is to create a model that can be replicated throughout the world.
The idea is simply, yet powerful. Green zones can serve as competitive hubs for green investment without necessitating comprehensive national policy overhauls. They are adaptable models that countries can replicate or scale nationally, accelerating their transition to low-carbon economies.
The Green Investment Dialogue aims to find solutions to make green zones as attractive as possible for investors. The discussions will contribute to a toolkit for MPs, detailing key factors that make these zones profitable and bankable. These include:
- Location. There needs to be access to renewable energy resources, industrial materials, and community involvement in ownership to ensure local engagement.
- Connection. It must have robust transmission lines linking green zones to cities and cross-border regional grids, alongside transport infrastructure for exporting green industry products.
- Risk Reduction. This involves a streamlined approval process, transparent investment frameworks, and government or multilateral guarantees to mitigate risks, ensuring competitive pricing and attracting private investment to these zones.
The Climate Parliament and UNIDO will produce a Green Zones Toolkit to guide legislators in creating green zones within their countries. This toolkit will include model legislation, successful examples and best practices, and policies that have worked around the world. One outcome from the dialogue will be draft concept notes for countries to submit to the GCF or other agencies to request funding for developing green zones.
It’s clear that African MPs are taking a proactive role in challenging perceptions, fostering dialogue and catalysing investment to ensure finance reaches the people and communities most impacted by climate change. Despite the final COP deal receiving a lacklustre reception, with these trailblazing parliamentarians and policymakers, a greener, safer, fairer Africa is well within our grasp.
