JOHANNESBURG (Reuters) -Western fossil fuel companies investing in Africa face a significant risk of regulatory action that’s getting more explicit as the world moves to try to tackle dangerous climate change, a U.S. climate envoy said on Friday.
During a virtual media briefing while in South Africa as part of a continental trip, U.S. Deputy Special Envoy for Climate Jonathan Pershing urged Western investors to consider whether fossil fuels were a good commercial opportunity anymore.
“There’s a risk of regulatory … and financial action, and I believe that’s getting more and more explicit,” he said, after being asked what U.S. authorities likely response was to the current rush by Western oil and gas companies to develop deposits in Africa.
“There’s an increasing implicit (and) explicit price on carbon,” he said. “If you’re a company looking to make an investment in oil and gas, you have to ask yourself … am I going to be left with a stranded asset?”
Rich Western nations are increasingly realising that African countries will need financial persuasion to make a transition to renewable energy, and are slowly making funds available to help it move more quickly.
On Tuesday, South Africa, by far the continent’s biggest emitter and the world’s 12th largest, owing to its reliance on coal for electricity, told Pershing, along with climate envoys from Britain, Germany and France, that it needs major financial support to move away from the black rock.
Pershing has held meetings with South African officials, business leaders and trade unions on the country’s energy plans.
“We believe that part of what the donors will be seeking to do (is) to help raise concessional finance for the South African transition,” he told the news conference.
(Reporting by Tim CocksEditing by Alexander Winning)
