The Role of Climate Financing for Green Growth and Development

The paper analyzes how South Africa and Brazil utilize climate financing to achieve carbon neutrality by 2050, highlighting the differences between South Africa's coal-dominant economy and Brazil's land-use-driven emissions. It evaluates national mechanisms such as South Africa's carbon tax and Brazil's proposed Emissions Trading Scheme, while advocating for the reform of multilateral development banks to lower the cost of capital for the Global South. The author emphasizes the importance of green taxonomies and central bank risk management in mobilizing private investment and ensuring financial stability during the energy transition.

• Developing countries face significant financial barriers in accessing climate finance, paying approximately eight times more than developed countries to access funds from multilateral development banks (MDBs).
• South Africa and Brazil have distinct emission profiles: South Africa's emissions are primarily driven by coal combustion via Eskom and Sasol, whereas Brazil's emissions are mainly caused by land-use change and deforestation for agriculture, specifically beef and soy production.
• South Africa's carbon tax, introduced in 2019, has seen limited effectiveness due to the government delaying the second phase of implementation until January 2026 and granting tax-free exemptions to the coal-based utility monopoly, Eskom.
• Brazil is developing a Draft Law for an Emissions Trading Scheme (ETS) that would enforce emission caps on companies emitting over 25,000 tonnes of CO2, though it has been criticized for excluding the agriculture sector, the country's highest emitting sector.
• The European Carbon Border Adjustment Mechanism (CBAM), which equalizes carbon prices between EU producers and importers, could potentially reduce African exports to the EU by as much as 5.7%.
• South Africa's Just Energy Transition Investment Plan (JET-IP) 2023–2027 identifies a requirement of $98 billion over five years to initiate a 20-year energy transition, focusing on the electricity sector, green hydrogen, and new energy vehicles.
• Both South Africa and Brazil are implementing green finance taxonomies to de-risk investments and reduce greenwashing; South Africa's 2022 taxonomy is currently voluntary and aligned with the EU's design, while Brazil's Sustainable Taxonomy (TSB) is expected to have mandatory adoption by January 2026.
• Central banks in Brazil and South Africa are integrating climate risks into financial stability policies through the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), including the use of stress testing and climate-related financial disclosures.

APA

SACK, H. (2025). The Role of Climate Financing for Green Growth and Development. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2025/11/CNRP_SABTT-Working-Paper-4_Sack_Climate-Financing.pdf

Chicago

SACK, HANNAH. The Role of Climate Financing for Green Growth and Development. South African Institute of International Affairs, 2025. https://saiia.org.za/wp-content/uploads/2025/11/CNRP_SABTT-Working-Paper-4_Sack_Climate-Financing.pdf.

Wikipedia

{{cite report |last1=SACK |first1=HANNAH |title=The Role of Climate Financing for Green Growth and Development |publisher=South African Institute of International Affairs |date=2025 |url=https://saiia.org.za/wp-content/uploads/2025/11/CNRP_SABTT-Working-Paper-4_Sack_Climate-Financing.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sack2025role, author = {SACK, HANNAH}, title = {{The Role of Climate Financing for Green Growth and Development}}, institution = {South African Institute of International Affairs}, year = {2025}, url = {https://saiia.org.za/wp-content/uploads/2025/11/CNRP_SABTT-Working-Paper-4_Sack_Climate-Financing.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }