While the global Covid-19 pandemic has overwhelmed governments and citizens around the world in all kinds of ways many of the challenges they had at the start of 2020 are still very much present.
The first three months of 2020 were the second-hottest on record going back to 1880, according to NOAA’s National Centers for Environmental Information. Climate adaptation costs in Africa are predicted to reach up to $50 billion a year by 2050 in the event of the planet warming by an additional 2°C (3.6°F).
The risks associated with climate change may be at least as great as those posed by Covid-19, note analysts at Brookings Institution.
The expectation is that as the input costs of renewable energy fall precipitously it will help make solar and wind energy more competitive in the open market. One way to do this is for policymakers “to create a credible expectation of long-term profits by committing to strong environmental standards and providing a long-term framework for eliminating fossil-fuel subsidies,” says Brookings.
This should in turn encourage investors to take on the fixed costs of green investments.
African investors are already thinking seriously about this, both in terms of assessing risk through a climate lens but also in terms of investable opportunities, according to a survey by AVCA, the African private equity trade body. This makes sense considering Africa is often cited as the most vulnerable continent to the fast-evolving impact of global climate change. We’re already seeing high-profile challenges in places including Cape Town’s water shortages and floods in several African cities.
Up to 77% of all African and non-African investors consider climate risk when making investments “sometimes” or “regularly”.
The vast majority of investors (95% ) were concerned about the risk their investee companies face from climate change versus 90% who were concerned by their carbon footprint and just over half see as equal an investment opportunity as they see risk mitigation.
Among the majority of investors who see climate-lens opportunities in Africa, up to 95% see the best investments in energy, but also in agriculture (62%) and water (44%).
“We are now shifting from an awareness phase to a measurement phase, that will give businesses the data they need to take better decisions about climate risk and opportunity,” says AVCA.
Investments in renewable energy by private and public backers has been trending up across the continent for the last decade led by solar and wind. In sub-Saharan Africa it jumped to $7.4 billion in 2018 up from $2.3 billion in 2017, according to BloombergNEF. South Africa accounted for $4 billion of investment driven by a major onshore wind project in 2018.
Sign up to the Quartz Africa Weekly Brief here for news and analysis on African business, tech and innovation in your inbox