News Ethiopia requires USD 300 bln to fill climate finance gap by 2030
December 21, 2024
The Ministry of Finance says Ethiopia will require up to USD 300 billion in climate financing by 2030.
The substantial funding will go towards the government’s ambitious target to reduce emissions by close to 70 percent within five years, which was set out in the country’s first updated Nationally Determined Contributions (NDCs) in 2020.
The government is working to submit updated NDCs in the coming year, which will reportedly feature details on a Climate Resilient Green Economy strategy (CRGE), Ethiopia’s 10-Year Development Plan, the Green Legacy Initiative, and the National REDD+ Strategy, among others.
The CRGE strategy was first put forward during COP17 in Durban, South Africa, in 2011.
It notes that climate change poses a significant current and impending threat to Ethiopia’s development, further heightening existing socio-economic vulnerabilities. Natural hazards and increasing climate variability keep on diluting remarkable development gains on both economic and non-economic fronts.
The subject was a central topic during Financial Sector Deepening (FSD) Ethiopia’s first Annual Climate Finance Summit organized this week.
FSD Ethiopia, a non-profit organization established to promote financial sector development in Ethiopia, brought together government officials, private sector leaders, financial institutions, and international partners to discuss innovative climate finance solutions and accelerate the country’s efforts to tackle climate change.
“The challenges we face in Ethiopia are clear and undeniable. From devastating droughts to erratic rainfall patterns, our communities are bearing the brunt of the climate crisis,” said Hikmet Abdella, CEO of FSD Ethiopia. ”Despite these challenges, Ethiopia remains steadfast in its commitment to becoming a climate-resilient, green economy by 2030. However, addressing significant gaps in the climate finance landscape is crucial to realizing this vision. This summit is an important opportunity for all stakeholders to come together and chart a clear path forward for climate finance in Ethiopia, with a focus on inclusivity and sustainability.”
Yonas Getahun, head of the CRGE Facility Regional Economic Cooperation Directorate at the Finance Ministry, says the strategy promotes a cross-sectoral approach to drive a carbon neutral and climate resilient middle-income economy.
The CRGE strategy requires USD 300 billion by 2030, according to Yonas.
The Ministry has thus far managed to mobilize just a fraction of that figure at USD 300 million, with an additional USD 280 million in the pipeline, according to Yonas.
“Regarding domestic resource mobilization, we are working on the establishment of a special grant that will help us to finance our efforts in green legacy initiatives and restoring degraded landscape,” he said.
Yonas noted Ethiopia is home to 54 million hectares of degraded land, of which 11 million hectares is in critical condition.
He disclosed that up to one percent of the annual federal budget would go towards this special grant if lawmakers ratify a bill that has been submitted to Parliament.
The Landscape of Climate Finance in Africa 2024 report indicates that less than a quarter of Africa’s estimated annual finance requirements to implement NDCs and deliver on the 2030 climate goals is currently being met.
While financing gaps remain, Ethiopia is one of the top 10 recipients of Africa’s climate finance. Together, these 10 countries account for nearly half of climate financing to the continent.