Osinbajo’s idea for the novel Debt against Climate
In faraway Washington, DC, over the weekend, Vice President Yemi Osinbajo offered fresh ideas on how best to get developing countries to contribute adequately to achieving global zero emissions goals. net, to facilitate access to energy and the development of African countries. Speaking at a conference on Just and Equitable Energy Transition for Africa at the Center for Global Development, the Vice President proposed a debt-for-climate (DFC) swap deal in which ”the Bilateral or multilateral debt is canceled by creditors in exchange for a commitment from the debtor to use outstanding debt service payments for national climate action programs.”
“As a rule, the creditor country or institution agrees to cancel part of a debt, if the debtor country would pay the payment of the avoided debt service in a local currency into an escrow or other transparent fund and the funds are then to be used for agreed climate projects in the debtor country,” Professor Osinbajo said.
Justifying the rationale for such a debt swap agreement, the Vice President argued that the commitment in this regard would “increase fiscal space for climate-related investments and reduce the debt burden”. participating developing countries. For the creditor, the swap can be made to count as a component of their Nationally Determined Contributions (NDCs).” Osinbajo explains that “there are of course significant political actions needed to make this acceptable and sustainable. ”
The immediate implication of the Vice President’s debt-for-weather swap idea is that it would essentially lead to the cancellation of billions of Nigeria’s external debts over time. Nigeria’s external debt is around $40 billion.
According to the WHO, climate change impacts human life and health in various ways. It threatens the essential ingredients of good health – clean air, clean water, nutritious food supplies and safe shelter – and has the potential to undermine decades of progress in global health. Between 2030 and 2050, climate change is expected to cause around 250,000 additional deaths per year from malnutrition, malaria, diarrhea and heat stress. Direct health damage costs are estimated at US$2-4 billion per year by 2030.
Greenhouse gas emissions that result from the extraction and combustion of fossil fuels are major contributors to both climate change and air pollution. Many individual policies and measures, such as transport, food and energy use choices, have the potential to reduce greenhouse gas emissions and produce important co-benefits for society. health, in particular by reducing air pollution. Phasing out polluting energy systems, for example, or promoting public transport and active travel, could both reduce carbon emissions and reduce the burden of household and ambient air pollution, which causes seven million premature deaths per year. Areas with weak health infrastructure – mainly in developing countries – will be the least able to cope without help to prepare and respond; and that is why Professor Osinbajo’s proposal is innovative, important and requires urgent attention from the global community.
The Vice President also proposed greater participation of African countries in the global carbon market while exploring financing options for the energy transition. He explains that there is a need to take a holistic approach by working jointly towards common goals, including the business and environmental opportunities presented by financing clean energy assets in growing energy markets. “In addition to conventional capital flows from public and private sources, it is also essential that Africa can participate more fully in the global carbon finance market. Currently, direct carbon pricing systems through carbon taxes are largely concentrated in high- and middle-income countries.
However, carbon markets can play an important role in catalysing the deployment of sustainable energy by channeling private capital into climate action, improving global energy security, providing diversified incentive structures, especially in developing countries, and giving a boost to clean energy markets when the economics of prices seem less compelling – as it is today.
It is important that developed countries help Africa become a global provider of carbon credits, ranging from biodiversity to energy credits, which would be a leap forward in aligning carbon pricing and related policy around of a just transition. I congratulate the Vice-President for the depth of his reflections. The acuity and depth of his suggestions testify to Professor Osinbajo’s intelligence and ability to understand the major issues of our time. It is unfortunate that none of our presidential candidates who are preparing for the elections next year have a good understanding of this issue. Over the past seven years, Professor Yemi Osinbajo has distinguished himself as a thought leader, a man of big ideas and ideals. I call on the Nigerian government to make climate debt swap a major policy focus of our diplomacy. We should strive to make it an item on the agenda of every international meeting: AU Summit, UN General Assembly and World Bank/IMF meetings.
* Etim is a journalist and author