The United States Climate Envoy, John Kerry, has said that the US does not have $4 trillion a year to help other countries with the energy transition process.
He stated this during the Atlantic Council Global Energy Forum which took place from January 14 to 15 in Abu Dhabi.
According to Kerry, his country put up $94 billion for less developed countries’ initiatives but they have gotten no credit for that, meanwhile, they are expected to put up $100 billion for the energy transition. He said:
“We put $94 billion last year out of the Pittsburgh energy meeting—$94 billion mobilized within three weeks put on the table as real money to go to less developed country initiatives. We don’t get credit for that, no credit in our system which says you’ve got to put a hundred billion [dollars]. So, we have 94 billion [dollars] but it doesn’t count towards a hundred [billion dollars].”
The financing context: Kerry said that the UN finance report, and the other individual finance reports, all say that to have this transition effected adequately to meet the challenge of keeping 1.5 degrees as the limit of warming on the planet, developed countries are going to have to invest a minimum of about four trillion dollars a year for the next thirty years to build out the grids, deploy the renewables, the transition from gas turbines.
The African context: Kerry said African presidents have said they would love to stop using fossil fuels to contribute to the global energy transition, but they have no choice but to use these resources because their countries need to improve energy access and industrialization. He said:
“When I met with Macky Sall, the president of Senegal, or I met with Tshisekedi, the president of DRC, and I met with President Buhari in Nigeria, to a person they said, you know, we’d love to be able to not have to exploit our gas. We understand the challenge. But I’ve got people who don’t have electricity. I need to be able to grow my economy. I need to be able to have my country share in what the rest of the world has, to build our community and build out capacity.
“And they would say, you know, can you help us with the build-out of our renewable energy structure or new grid? The answer is no, we can’t, because we don’t have the money.”
Why energy transition funding seems non-existent: According to Kerry, some risks need to be eliminated before stakeholders can work together to avoid the worst consequences of the global climate crisis which exist because the world turned its back on the collective responsibility to hold people accountable for carbon emissions.
“So, the money part we have been working on with Rockefeller and Bezos Earth Fund to figure out how could we de-risk the deals that are out there to provide energy, to deploy renewables, to do this transition. But how do we de-risk it and create bankable deals? Because the trillions that are in the background waiting to be invested by the largest financial institutions—in fact, all financial institutions in the world—would love to be able to invest. But there are hurdles—political hurdles, currency hurdles, various natural disaster hurdles, and risks. We have to eliminate those,” he stated.
According to Kerry, although efforts are being made to address energy transition challenges and fund the transition, there are special circumstances that pose further challenges to the process. He gave an instance with some African countries, where over half of the population is unelectrified, making it impossible to have a particularly large pool of paying customers to be able to support a long-term power purchase agreement (PPA) at market rates.
Kerry reasoned that although the highlighted challenge is political, stakeholders are going to have to be able to provide a concessionary structure for some time so that they can then get enough of a revenue stream that they can support something in the marketplace.
For the record: In September 2022, John Kerry signed the Climate Energy Demand Initiative (CEDI) with Nigeria’s Minister of Environment, Mohammed Abdullahi. As a CEDI partner, Nigeria could profit from the $12 billion set aside for the implementation of the program.