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Finance ready for Climate Smart Agriculture in Africa

Climate change is impacting agricultural productivity in Africa. Smallholder farmers, who supply up to 80% of produce, are among the most vulnerable to its effects. Climate-smart agriculture (CSA) can offer smallholders a way to better absorb climate shocks and sustainably increase productivity and income.

 

Public and private investments into agriculture has remained insufficient, due to high transaction costs and the risks associated with the sector. Coupled with unaffordable financial services and lack of information, the high upfront costs of implementing CSA practices limit the ability of smallholder farmers in West Africa to adopt CSA practices. WAICSA therefore builds climate resilience among smallholder farmers, by providing financial and technical support to incentivize the adoption of climate-smart agriculture, and increasing local financial institutions’ capacity for climate-smart lending. At scale, WAICSA can improve the food security of 90,000 smallholder farming households in West Africa, and mitigate emissions equivalent to over 4 billion miles of driving.

The West African Initiative for Climate-Smart Agriculture (WAICSA) is the only West African led finance fund with a specific focus on increasing the uptake of climate-smart agriculture practices by smallholder farmers. By mobilizing public and concessional capital, WAICSA is able to provide subsidized interest rate loans to smallholders’ organizations and agribusinesses of ticket size below US$ 1 million, thus making credit more accessible. WAICSA also builds the capacity of local financial institutions to design loan products with CSA adoption conditions, helping bring additional resources to this sector. In addition, technical guidance on CSA implementation is provided to bridge the knowledge gap and further support smallholders to adopt these practices and comply with loan conditions.

An initiative led by the Commission of the Economic Community of West African States (ECOWAS), WAICSA will target six of the 15 ECOWAS member states in its pilot phase, with the objective of being replicated in all 15 states after the concept is proven. At scale, WAICSA has the potential to improve the food security of 90,000 smallholder farming households in the region and convert over 185,000 hectares to climate-smart agriculture. The fund can also contribute to mitigating up to 2 million tonnes of CO2 emissions a year, which is equivalent to over 4 billion miles of driving.

WAICSA is composed of a Financing Facility, managed by the ECOWAS Bank for Investment and Development (EBID), and a Technical Assistance Facility, managed by the Regional Agency for Agriculture and Food (RAAF).

The Financing Facility offers subsidized-rate loans, guarantees, and equity investments to agricultural businesses and smallholder organizations, both directly and through local financial institutions. It uses guarantees and blended finance, including contributions from ECOWAS Member States and investments from the fund manager, to de-risk and crowd-in private investments. Embedded into WAICSA’s financial products are conditions meant to incentivize the adoption of CSA by smallholders, thus reducing their exposure to climate risk.

The Technical Assistance Facility supports financial intermediaries to design loan products that integrate CSA conditionality and guides smallholders in implementing locally adapted CSA practices. In this way, the Technical Assistance Facility further de-risks investments, ensuring favourable conditions for repayment of loans by providing support for CSA practices that offer improved productivity and income.

The Federal Reserve develops digital currency for the US

US central bankers have explored the possibility of developing a digital currency that would be directly available to businesses and households, Federal Reserve Chairman Jerome Powell confirmed to lawmakers this week.

"While we are not currently developing a central bank digital currency, we have assessed and we continue to carefully analyze the costs and benefits of pursuing such an initiative in the U.S.," Powell wrote in a letter to lawmakers dated Tuesday.

A digital currency backed by the central bank in the largest economy would be unprecedented and raise a host of legal and operational questions. Powell said it would be closely considered by policymakers but added that the US could be in some ways better positioned than other countries that have looked into such a proposal.

"We are carefully monitoring the activities of other central banks to identify potential benefits that may be relevant in the U.S. context," he wrote. "To date, our observation is that many of the challenges they hope to address do not apply to the U.S."

The letter was a response to questions raised in September that said the central bank should consider a US-backed cryptocurrency to remain competitive.

"We are concerned that the primacy of the U.S. Dollar could be in long-term jeopardy from wide adoption of digital fiat currencies," the lawmakers wrote in the initial letter to Powell, adding that "it may become increasingly imperative that the Federal Reserve take up the project of developing a U.S. dollar digital currency."

Africa is Ripe for Investments

At the 'G20 Compact with Africa' Investment Summit held in Berlin on Tuesday the Rwandan President Paul Kagame made the case for Africa's business environment, saying the continent is ripe for investments from the European Union.

G20 Compact with Africa is an initiative launched in 2017 to promote private investments in Africa and currently, 12 African countries - including Rwanda have joined it.

Kagame commended Germany Chancellor Angela Merkel's leadership in prioritizing investment from the German business community and highlighted an example of Rwanda's partnership with Germany companies like Volkswagen and Siemens, saying that it "demonstrates the competitiveness of our economies and the reforms that have been happening in the ease of doing business."

According to figures from Rwanda Development Board (RDB), German business interests in Rwanda have been expanding over the past few years.

"This really showcases how Africa is ripe for business and investment, and how far we can go," he told participants, where heads of state and business communities had gathered.

Besides Rwanda, other African countries that are part of the partnership are Benin, Burkina Faso, Côte d'Ivoire, Egypt, Ethiopia, Ghana, Guinea, Morocco, Senegal, Togo and Tunisia.

Thomas Schaefer, the Chairman and the Managing Director of Volkswagen South Africa told business executives present especially those from Germany that the continent was particularly ready for investments in the automotive industry where his group is already invested.

He pointed out that the continent was faced by challenges of dumping of used cars and extraordinary importation of fuel, saying businesses could tap into that to address challenges.

VW presently assembles cars in Rwanda, which started back in 2016.

"In the next move, we are going into electric mobility because there is no way a country like Rwanda can continue to import fuel. We believe Rwanda can go carbon neutral," he noted.

Last month, VW unveiled an electric mobility project in Rwanda which serves as a pilot for the company's future decisions of electric mobility in the continent.

The company now uses electric-powered versions of its Golf hatchback cars for a ride-sharing service.

While Foreign Direct Investments has decreased globally, Africa continues has seen an increase nearly 11 per cent valued at USD46 billion, according to available statistics of 2018.

UN: Time to end fossil fuel subsidies

By artificially lowering prices, subsidies drive wasteful energy consumption which increases local air pollution and congestion, while crowding out investment in renewables and energy efficiency. The sheer size of the subsidies is a significant drain on national budgets, diverting resources from other areas like health and education.

 

Every year, governments spend between US$160 and US$400 billion as fossil fuel subsidies for the production and use of coal, oil and gas. Payments to consumers, companies, tax breaks or other fiscal incentives are some of the ways governments subsidize fossil fuels, moving ever farther away from meeting the goals of the Paris Climate Agreement, writes UN Environment in its report. UN Environment is working with governments to collect internationally coherent data on fossil fuel subsidies that can help advance global efforts to address climate change.

“Understanding the size of existing fossil fuel subsidies is an important first step towards achieving reform,” says UN Environment fossil fuel subsidy expert Joy Kim. “You can’t manage what you can’t measure.” In contrast, the total financial support to renewable energy amounts to US$121 billion.

Although advocated as a measure to fight poverty, fossil fuel subsidies often do not reach the poorest households and instead tend to benefit wealthier segments of society more.

The International Monetary Fund estimates that removing fossil fuel subsidies and then taxing fossil fuels correctly (based on the cost borne to society through air pollution, carbon emissions and accidents) could lead to a decline in fossil-fuel related carbon emissions by over 20 per cent globally. Removing the subsidies would also reduce premature air pollution-related deaths by over 50 per cent and raise government revenue by US$2.9 trillion (3.6 per cent of global gross domestic product), it says.

China's environmental transformation: From the worlds bad guy to its good guy

China's recent transformation from the world’s environmental ‘bad guy’ to its ‘good guy’ in a matter of years is the result of the top-down enforcement of a green vision held by President Xi himself. But, as his environmentalism is nationalistic, not global, there is still need to broaden up the scope.

Comparing his climate policies to his predecessors, Xi’s is much more advanced. He is the first Chinese leader to enforce an environmentalism that is built upon the idea of nature as a ‘national asset’. He even famously said that "green mountains are essentially gold mountains".

Xi’s environmentalism relies on centrally controlled, top-down mechanisms though. In the past few years, the most visible environmental campaigns have been run by the Party’s disciplinary arm, detaining thousands of government officials for negligence and other offences. Public-interest litigation, for holding environmental violators to account, is now used frequently by government prosecutors.

This brand of environmentalism can be effective, to an extent. but as Scholar Bruce Gilley noted in his paper on China’s ‘Authoritarian Environmentalism’: "Environmental laws and regulations from the top down delivers short-term, low-hanging fruit results, but the lack of extensive deliberation may undermine long-term implementation".

To get popular consent Xi therefore use an appraisal system with clear indicators, rewards and punishments. This is according to him "most crucial" factor while creating an "ecological civilisation".

Even though China’s elaborate state machinery may be the envy of many governments struggling to ‘get things done’, its non-participatory way of doing business can lead to poor decisionmaking.

While China both embraces, appreciates and enforces environmental measures at home, it tends to export those same problems out of its borders. China has quickly become the world’s largest financier and builder of coal-power plants overseas. This is in stark contrast to what’s happening domestically, where, in early 2017, the government cancelled or mothballed 120 gigawatts of coal-power construction.

But building up coal power abroad is no contradiction under Xi’s ecological nationalism. Exporting environmentally destructive industries abroad and cutting them at home, as a way to strengthen the nation, is the core of China’s environmentalism.

As nationalism can not provide a sustainable solution to a global problem, Xi therefore need to broaden his model of environmentalism in the future.

UK to de-list companies not acting on climate change

In a major election campaign speech on the economy, the British Shadow Chancellor John McDonnell said Labour would amend legislation to force listed firms to take action on climate change or face expulsion from the London Stock Exchange.

The Labour Party first promised to de-list companies for climate reasons in June 2019. McDonnell presented the pledge a second time today as part of Labour's vision to improve long-term thinking in the financial industry. It now promises to be a key plank of the Party's economic policy.

"If we are to meet the climate change target to keep global warming to 1.5C above pre-industrial levels, we need to ensure that companies are also working alongside government. Many now are," McDonnell said. "But business bodies themselves are calling for companies to improve climate-related financial reporting, and for all companies to bring forward their decarbonisation plans. And we support those proposals. But for those companies not taking adequate steps under Labour, we believe those companies should be de-listed from the London Stock Exchange," he continued.

The environment has already proved to be a major issue in the election campaign, with Labour, the Liberal Democrats, the Conservatives and the Green Party all promising to tackle the climate emergency.

Wind speeds have increased

Research led by a team at Princeton University shows that wind speeds in northern mid-latitude regions have increased by roughly 7% since 2010.

 

The team examined the potential causes underlying global terrestrial stilling and its reversal. While changes in urbanization and vegetation have been proposed as contributors to global terrestrial stilling, these trends have not reversed since 2010, said Zhenzhong Zeng, who led the study as a postdoctoral researcher working with Eric Wood, Princeton’s Susan Dod Brown Professor of Civil and Environmental Engineering, Emeritus.

The analysis showed that in each region of the globe, specific large-scale ocean-atmosphere oscillations, which are driven by many factors including the uneven heating of the Earth’s surface in different regions, were likely explanations for the observed trends in wind speeds.

Extending their findings to wind power generation, the researchers calculated that a typical wind turbine receiving the global average wind would have produced about 17% more energy in 2017 than in 2010. And using climate indices to project future wind speeds, they predicted a 37% increase by 2024.

“We predict that the increasing wind speed trend will continue for 10 years, but we also show that because this is caused by ocean-atmosphere oscillations, maybe a decade later it will reverse again,” he said. And since the lifespan of a wind turbine is usually 20 years at most, having reliable projections of wind speeds at particular locations could be crucial to making smart investments in wind power and increasing the global share of renewable energy.

The research, which looked only at regional averages, did not examine how the uptick in wind speeds might affect the severity of storms, which also has been increasing.

The European Investment Bank decided to stop funding fossil fuel projects

Last week the European Investment Bank (EIB) adopted its new energy lending policy, which would see it end funding to most new fossil fuel projects from the end of 2021

This means that from the end of 2021 the world's biggest multilateral bank will end new lending to fossil fuel infrastructure projects.

Colin Roche, fossil free campaigner at Friends of the Earth Europe, said: "Today's decision is a significant victory for the climate movement. Finally, the world's largest public bank has bowed to public pressure and recognised that funding for all fossil fuels must end – and now all other banks, public and private must follow their lead.

The final policy has been the subject of intense debate since its publication in July and has been watered down under pressure from Germany and the European Commission. The Commission continues to promote dozens of gas projects while Germany backs new infrastructure such as the gigantic Nord Stream II.

Colin Roche continued, "The European Commission must now end their obsession with gas and focus on the emergency action needed to stop the climate crisis instead of building yet more gas projects to last for decades to come. But 2021 is still too late if we are to avoid the worst effects of climate breakdown, the EIB needs to reject any fossil fuel projects and close its loopholes for gas, and not wait till 2021."

Stronghold for Power One in East Africa

Earlier this year Power One was offered to electrify a university in Amhara in Ethiopia. Now five more Ethiopian universities also wish to be electrified by Power One.

 

Power One is specialised in electrifying formerly non electrified areas with renewable energy. The area of operation is established in East Africa but is growing. Apart from electrifying remote areas in Burundi and eastern Congo the company was earlier this year asked to supply one university in Ethiopia with 50 MW renewable energy. Now five other Ethiopian universities also wish to be electrified by Power One.

Power One´s mini-grid projects will bring much needed renewable energy resource to hundreds of thousands university students, professors and staff at major universities. These universities are located in cities with strong economic activities and expanding industrial parks.

Located in East Africa and just north of the Equator, Ethiopia is a country endowed with an ideal level of solar irradiation for the development of solar energy. Presently Ethiopia has approximately 4,300 MW of installed generation capacity which is short of the demand to serve a population of over 100 million people. However, the demand for electric power continues to outpace supply as Ethiopia’s hydropower plants, supplying more than 90 percent of the electricity, struggle to produce at full capacity. The country's solar radiation has therefore the potential to generate thousands of megawatts of renewable energy.

Power One now aims to develop a replicable platform under which five additional major public universities in Ethiopia can develop similar solar-based mini-grids that are scalable to meet rising demand.

A car that runs forever?

Put together the best solar panels money can buy, super-efficient batteries and decades of car-making know-how and, theoretically, a vehicle might run forever. That’s the audacious motivation behind a project by Toyota Motor Corp.Sharp Corp. and New Energy and Industrial Technology Development Organization of Japan, or NEDO, to test a Prius that could revolutionize transportation.

 Even if fully electric cars overtake petroleum-powered vehicles in sales, they still need to be plugged in, which means building a network of charging stations across the globe. The sun, on the other hand, shines everywhere for free, and when that energy is paired with enough battery capacity to propel automobiles at night, solar-powered cars could leapfrog all the new-energy technologies being developed, from plug-in hybrids to hydrogen fuel-cell vehicles,.

 But the current forecast is only partly sunny because there’s still some work left to reach that level of efficiency.

“This is not a technology we are going to see widely used in the next decades,” said Takeshi Miyao, an auto analyst at consultancy Carnorama. “It’s going to take a long time.”

Not for lack of trying. Toyota and Hyundai Motor Co. already introduced commercial models with solar panels on the roof, but they were too underpowered and could barely juice the sound system.

“The solar car’s advantage is that — while it can’t drive for a long range — it’s really independent of charging facilities,” said Koji Makino, a project manager at Toyota.

Indeed, there have been some breakthroughs, mainly due to advancements by Sharp. The prototype’s solar panel converts sunlight at an efficiency level of more than 34%, compared with about 20% for current panels on the market.

Because the solar cell being used by Toyota, Sharp and NEDO is only about 0.03 mm thick, it can be placed on more surfaces, including the curvy parts of the roof, hood and hatchback. The electrical system can charge the vehicle even when it’s on the move.

If the car is driven four days a week for a maximum of 50 kilometers a day, there’s no need to plug into an outlet, NEDO’s Yamazaki said.

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