3 Minutes with…..Trade and Environmental Policy Expert
Elena Antoni

Credit: UNECA

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By Beru Lilako

Following the Nairobi Climate Summit discussions which took place three months ago, and the just ended COP28 hosted in Dubai, Beru Lilako caught up with Elena Antoni, a sustainable trade, finance and investment consultant. She shared her expert views on trade and climate change.

Enjoy their insightful conversation!

Beru Lilako: Can you introduce yourself and share how you’re involved in shaping climate and sustainability development in Africa and beyond

Elena Antoni: I am a consultant with the African Trade Policy Center, at the UN Economic Commission for Africa (UNECA). In my work, I look at the interlinkages between trade and economic policy on the one hand, and environmental impacts on the other. In my day-to-day, I work with trade ministries across the continent to ensure integration of environmental considerations into their National African Free Trade Area implementation strategies.

Beru Lilako: What were your key takeaways from the inaugural Africa Climate Summit (ACS) which was hosted in Nairobi few months ago,  especially related to African heads of states and governments?

Elena Antoni: The outcome document of the African Climate Summit, formulated the commitments of African Heads of State, as well as their demands towards the international community. This is important, as Africa needs both national leadership, conducive national policy frameworks, as well as a more conducive macroeconomic environment in order to adequately respond to climate change. According to figures by the African Development Bank, African economies will need between $1.3 to $1.6 trillion to implement their commitments under the Paris Agreement by 2030. Raising this sum will only be possible by getting private capital markets involved.

At the same time, public funding will be needed to leverage private finance, or make it more attractive for private investors to get involved. Currently, African economies spend a huge amount of their domestic resources on servicing debt. They also pay several times the amounts that many other countries pay to lend money. For this reason, African leaders have called for a new international financial architecture, as well as the deployment of specific mechanisms to raise climate finance.

Beru Lilako: What do you think might be the hindrance towards actioning the Nairobi declaration?

Elena Antoni: Climate change adds a new dimension and a greater sense of urgency to the lack of development finance available to African countries. Already with the 2015 Addis Ababa Action Agenda, the global community had committed itself towards addressing the challenge of development financing and towards creating an enabling environment at all levels for sustainable development. However implementing these commitments at the scale and level required has been patchy, to say the least. At the same time, at domestic level, many African economies currently heavily depend on oil and gas for exports and domestic energy needs. It will thus require a strong commitment by policy makers to put in place a robust policy framework for the green economy transition, in a manner that is least disruptive to jobs and the poorest in society.

Beru Lilako: Climate change can be disruptive to trade both with direct and indirect impact. How do you think we can mitigate these disruptions as a continent?

Elena Antoni: Trade can be affected by climate change in numerous ways. For example rising temperatures and less rainfall can lead to crop failures which again affect agricultural exports. Extreme weather events such as flooding can also disrupt trade infrastructure, such as rail or road transport. But climate change also affects trade in more indirect but no less import ways: for example, new investment in fossil fuel infrastructure exposes African economies to the risks of stranded assets, a situation in which an asset becomes worthless as a result of a changing socio-economic or policy environment.

African economies will need to invest in adaption to reduce the physical impacts of climate change on trade. However, they will also need to reduce the climate intensity of existing industries and provide the right incentives to help economic actors transition to more sustainable economic activities.

For example, countries might choose to grow more climate-resilient crop varieties, and restore natural ecosystems such as mangroves that can cushion against extreme weather events such as droughts. Policy makers can furthermore increase taxes on polluting activities while subsidising sustainable ones. For example, countries can put a price on carbon and eliminate fossil fuel subsidies. Instead, they can provide targeted support to specific low-income households, subsidise public transport and the deployment of renewable energy.

Beru Lilako: The global shift to a low-carbon economy is an opportunity for trade, what roles do you think Africa should play to set a front-line agenda

Elena Antoni: Yes absolutely. For example, the African continent is home to many of the primary resources needed for the green energy transition. They can use this resource base as leverage to build their own domestic industrial capacity in the sector. The African Continental Free Trade Area, which has been signed by most African countries, is a great opportunity in this regard, as it facilitates the creation of regional value chains of production and can thus promote industrialization. African countries are also home to much of the planet’s biodiversity and contain a great number of the world’s carbon sinks.

New instruments, like carbon or biodiversity credits can provide new, innovative ways to finance the conservation of these natural resources.

Beru Lilako: There is the option of adding a Protocol on Trade and Climate Change to the AfCFTA as stated under Article 23 of the AfCFTA agreement, what are your thoughts on this?

Elena Antoni: Adding a Protocol on Trade and Climate Change to the AfCFTA Agreement could prove to be a powerful signal and be a useful instrument to facilitate cooperation on environment and climate change between countries. This will be particularly relevant to coordinate countries’ efforts in establishing production capacity in renewable energy infrastructure and similar mega-investments.

However, we should be mindful that such a Protocol will not be sufficient in and by itself: effectively aligning trade and environment will still need to take place on national level and will thus be reliant on effective policy implementation on the level of each Member State. Supporting AfCFTA Members in the design of national policy, and subsequently, policy implementation, will thus be key.

For example, at UNECA, we are currently working with 20 AfCFTA Member States to integrate climate-related considerations in their national AfCFTA implementation strategies.

Beru Lilako: Finance emerged as a pivotal cross-cutting theme, intricately intertwined with climate transition and adaptation at the recently concluded COP28. What is your take on this?

Elena Antoni: Financing was indeed a key theme at COP28 and an opportunity for the African negotiation Group, to commit other Members of the Paris Agreement to pledge the necessary resources to fund the continent’s adaption to climate change. Under the banner of the just transition, the African group also argues it should be given the right to burn more fossil fuels before decarbonising, to improve the continent’s energy security and helping it to industrialize. This is contentious. However, other countries can only deny Africa this right if they put realistic alternatives on the table.