Q: Thank you for joining us. Would you mind introducing yourself to our audience, for those who don’t know you. You have a strong background in climate-mitigating finance.
Good day. My name is Jonathan First. I’m with Climate Policy Initiative. I’m head of Africa. It’s an office we recently opened, in fact, in February this year. It’s our seventh office, focused primarily on the Global South.
In terms of my background, it’s a combination of investment banking, which is almost 20 years in investment banking, and then almost 10 years in development finance. Most recently, I was at the Development Bank of Southern Africa and retired from the DBSA about 4 years ago and have been with CPI, initially in an advisory capacity until we started the office, as I said, in February this year.
In terms of climate and climate finance, I have been involved in what we call climate finance and impact investing for almost eight years now. I very much an interest that I developed at the DBSA when the DBSA was going through its transition to become a far more focused impact type bank.
Q: Tell us more about CPI Global and The Lab? What is unique about the way you do climate finance and who are your partners?
As far as CPI is concerned, as I said, we have seven offices, predominantly in the Global South, which includes offices in Brazil, in India, in Indonesia and now South Africa. We also have offices in the US and in the UK.
We’re over 200 people. We’re probably best known for being the secretariat for something called the Global Innovation Lab for Climate Finance, which is one of CPI’s strengths, namely the ability to mobilise private sector funding and funding in general for climate finance.
The Lab itself develops financial instruments which either prevent or mitigate climate change. To date, and that’s over a 10 year period, we have helped develop and endorsed 68 instruments which have catalysed just under $4.5 billion of climate finance.
We’re also well known for what we call our landscape work or climate mapping. We’ve done a lot of work in Africa plus other developing regions and sort of closer to home or closer to South Africa, we’re currently doing landscape work for the President’s Climate Commission, where we’re in the second year of mapping climate flows for the PCC, which is very important to them in terms of developing policy and strategy.
As far as our partners are concerned, we have numerous partners. We have our funding partners, which are predominantly foundations, philanthropies and governments. And then we do work with a number of partners in terms of the various programs that we’re involved in. We tend to be very much partners of cooperation; very seldom do we compete.
Q: Why is climate finance considered central to the achievement of a low-carbon, climate resilient future?
Climate finance is currently going through a bit of a rethink and a relook. But at the end of the day, if you strip aside the politics, which is sort of bordering a little bit on hysteria, to be quite honest, it is absolutely still crucial to achieving a low carbon, climate resilient future.
Climate change is with us. We are seeing more climate events than we’ve ever seen before. So we cannot deny that there is climate change.
What we have to recognise is that the only way that we can slow it down is through finance and financing projects which lead to the reduction effectively in carbon emissions, which are central to the damage that is being caused and the climate events we are experiencing.
Climate finance is a word which can mean many things, but basically it’s funding both from public and private sector that is channelled towards projects, predominantly infrastructure type projects, which prevent or slow down climate change.
We have very deep domestic savings pools. We have a considerable amount of funding available, but not enough is being channelled towards funding projects which will effectively reduce or better manage climate change.
Q: What in your view are African success stories of climate finance up until now?
I’d rather answer this question in a slightly different way. I think there are a number of programmes at the moment which are going to make a big difference towards climate finance on the continent.
The first one that comes to mind is something called Mission 300, which was recently announced by the president of the World Bank. And it’s a programme, jointly funded by the World Bank and the African Development Bank, the intention of which is to bring power to 300 million people in Africa by 2030. It is a big ask, but it is not unrealistic.
In that vein, there is currently an intended programme by way of a facility called RTIFF (Regional Transmission Infrastructure Financing Facility). It’s aimed at transmission infrastructure in Southern Africa, connecting countries in all, which represent what is called the SAPP, the Southern African Power Pool. This programme, which is led by SAPP, goes a long way to supporting Mission 300. So, what I’m seeing is a far more programmatic approach to try and resolve the climate challenges in Africa by using climate finance.
The other big initiative at the moment which started probably a year or so ago, is something that we call country platforms. Country platforms are development priorities, which are decided upon by countries, not only in Africa, but other continents, but there is a big emphasis on African countries, where funders, and I’m talking about funders outside of the continent, support these African countries fund and develop what we call funding vehicles to develop their development priorities. I think country platforms and Mission 300 are two very important programmes in Africa that I think very much support the climate finance story on the continent.
Q: How important are the carbon markets to Africa’s ability to create funding for its green transition.
A lot has been written and said about carbon markets. There are a lot of conferences, meetings and conversations that have been had on carbon markets. Carbon markets are important, and the strong belief is that they will play a significant role in the ability to fund projects on the continent. I think that the sector or the markets are still very nascent. There are issues, and these issues are well understood. There are issues around the supply of the credits. There are issues around the integrity of the credits. There are issues around what the funders or the banks refer to as liquidity and secondary market issues around the credits. And of course, there are issues or challenges around the demand side and who and under what circumstances these credits can be purchased.
I think the market will develop. I think it can develop. I just think it’s going to take a few more years. And I strongly believe that only when the banks really engage in terms of funding projects that generate credits and then set up effectively trading capabilities and committing balance sheets to the trading of credits will this market really take off.
On the demand side, this will be driven by a number of factors. So for example, in South Africa, the carbon tax, but also commitments to the NDCs and also companies’ commitments to net zero. So yes, it has a future. I just think that it’s probably overexaggerated at the moment. And there is a lot of hype, which has to be dealt with before it becomes a really effective source of funding to prevent or to slow down climate change.
Q:Let’s talk about AGES, you have been on the advisory board from the start. How important is this annual gathering for the continent?
We’re going into our fourth AGES if I’m not mistaken. I’ve been involved in the advisory board from the outset. I believe that AGES is successful and should continue to be successful for a number of reasons.
I think they choose themes that they address each year very carefully but also very topical. Also, some of them are controversial, which I think is important. But I think the other real strength of AGES is they’re bringing together the different stakeholders involved in the sort of green economy in Africa and in particular the investors.
I think there’s a good combination, a good mix of delegates and attendees at AGES, and certainly you can feel it when you’re at an AGES conference. I think as long as AGES continues to think cleverly about the themes, they will continue to become relevant and continue to be a very popular conference.
www.climatepolicyinitiative.org/
www.linkedin.com/in/jonathan-first-196aa72ab/?originalSubdomain=za
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