Dion George Urges Urgent Action to Reduce Cost of Capital for Africa's Just Transition at COP29

In his address, the Minister emphasized that in 2021, Africa’s cost of capital for energy projects was approximately seven times higher than in Europe and North America.

Dr. Dion George, South Africa’s Minister of Forestry, Fisheries, and the Environment, has called for urgent global action to reduce the cost of capital to enable a successful and equitable just transition in Africa. Speaking at the second annual High-level Ministerial Roundtable on the Just Transition at the Conference of the Parties (COP29), Dr George highlighted that the high cost of capital is a significant barrier to the continent’s ability to tap into the socio-economic opportunities that the just transition could provide.

In his address, the Minister emphasized that in 2021, Africa’s cost of capital for energy projects was approximately seven times higher than in Europe and North America. This stark difference in financing costs significantly hinders the continent's ability to implement projects that would advance its climate goals and provide economic growth opportunities for its citizens. Dr. George stressed the need for coordinated efforts among governments, financial institutions, and businesses to remove the financial barriers, including high transaction costs, which inflate these financing costs.

“The current global financial system is not designed to respond appropriately to the needs of developing economies. Many of these countries cannot access the scale and quality of finance required to support their Just Transition Pathways or meet their Nationally Determined Contributions (NDCs),” Dr. George stated. He pointed to the numerous challenges faced by developing countries, including limited fiscal space, debt burdens, and insufficient access to technology, which further constrain their ability to transition to low-carbon, climate-resilient economies.

South Africa’s Transition: A Path Toward Equity and Sustainability

South Africa, which is in the early stages of its transition journey, is focusing on creating policies and actions that ensure a fair and equitable shift towards low-emissions and climate-resilient development. Dr. George reaffirmed that South Africa’s National Framework on Just Transition is centered around fairness, equity, and inclusivity. This framework is designed to ensure that the country’s climate actions prioritize social justice, providing opportunities for workers and communities to actively engage in the transition process.

“We are committed to ensuring a just and equitable transition that empowers workers, communities, and society to define and drive the journey toward low-emissions development,” Dr. George explained. He added that this commitment is reflected in South Africa’s new Nationally Determined Contribution (NDC) trajectory, which aligns with the 1.5°C global temperature rise goal, ensuring that equity and fairness are central to the country’s approach.

Job Creation and Local Industrialisation as Key Transition Goals

Dr. George also emphasized that South Africa’s transition pathways must not only focus on environmental goals but also aim to create sustainable jobs, enhance livelihoods, and promote local industrialization. He stressed that a transformative process is needed to support an inclusive economy, where the benefits of the just transition are felt across all sectors of society.

“Our transition must create opportunities that support the livelihoods of local communities and help build a more inclusive and competitive economy,” he said.

International Cooperation: The Key to Unlocking Transition Opportunities

The Minister also underscored that international cooperation is essential in unlocking the full potential of the just transition, noting that access to transition opportunities and financial resources remains a key barrier. “In our collective commitment to achieving low-carbon, climate-resilient development, international cooperation is critical. We need to unlock access to transition opportunities for all countries, especially those in the Global South,” Dr. George added.

COP29 is currently ongoing in Baku, Azerbaijan, and is set to conclude on 22 November 2024. The conference serves as an important platform for global leaders and stakeholders to discuss and develop solutions for addressing climate change and implementing the Paris Agreement goals.

Dr. George’s address at the Roundtable on the Just Transition called for immediate and coordinated action to reduce the cost of capital and ensure that Africa can effectively contribute to global climate solutions while creating sustainable economic opportunities for its people.