Q&A: Interview with Thomas Anker Christenson, the Danish Climate Ambassador

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In a recent interview with Richard Wetaya, Thomas Anker Christenson, the Danish Climate Ambassador, who was in the country to engage with key stakeholders to better understand the country's climate priorities, particularly in terms of climate finance, shared his thoughts on, among other things, Uganda's fossil fuels prospects, and Denmark's $95m development programme that will support Uganda's climate change.

1. Denmark increased its grant-based climate finance to developing nations by $500m a year from the previous year. Is this grant-based funding source sustainable, and how does Denmark make sure developing nations are investing money—like the $95m it recently gave Uganda—into projects that reduce greenhouse gas emissions and build climate change resilience?

Denmark is putting into execution a rigorous monitoring system and cooperating with partners that receive our funding to be sure that indeed emissions are being reduced and that there is a positive climate change impact.

Investing in forest conservation in Uganda seems to be an obvious investment topic though I know; there is a whole range of debatable topics, included in our programme with Uganda. Many of these are related to the green transition, some are related to supporting Uganda’s efforts with refugees and others are focused more on civil society, principally women and youth.

Thomas Anker Christenson, (left) with other Danish officials after meeting President Museveni in January at State House Nakasero. (Courtesy)

At the global level, Denmark has taken a decision to increase funding for a green transition with a bias towards adaptation. The grant financing that the Danish government gives is 60% for adaptation and 40% for mitigation. That is because we think it’s more difficult to create a return on the investment for adaptation, as opposed to mitigation where there is a revenue stream. When you invest for example in energy production, there will be a revenue stream attached to it that you can bring back to the market and find private investors for it. That may be more difficult for some adaptation projects.

2. Some analysts say that Uganda and other African countries should look into other financing options for a green transition, such as green bonds. Can green bonds be a viable means of financing a clean green energy transition and strengthening climate resilience in Uganda and other developing countries?
   

That entirely depends on a country's financial markets and capacity; what they want to spend the money on, because, in the end, even a bond has a revenue stream, and you have to invest it into something that generates income to pay the bond holder. A bond is essentially a loan that you take out with a group of others who invest in it with the intention of receiving a revenue stream.

Many governments throughout the world are currently using green bonds successfully and many private companies are making investments by issuing green bonds. They have grown from a niche commodity to a very common way of financing the green transition, so I believe Uganda's upstream risk is lower today than it would have been ten years ago when it was a novel and new product on the market that many investors were unfamiliar with.

3. At COP15 in Copenhagen in 2009, developed countries committed to mobilise $100b annually in climate finance (climate adaptation and green transition) for developing countries like Uganda from 2020 to 2025. 2025 is on the horizon and there are indications that this promise may not be kept. How much money has Denmark contributed to developing nations thus far, and how much has Uganda received specifically?

The most recent numbers available for Denmark indicate that we are somewhere between $1 and 1.5 billion every year, with an upward trajectory. Denmark is a small country; thus, we believe that contributing more than 1.5% of the overall target is more than fair. There has been criticism, including in Uganda, that rich countries' goal of mobilising $100b in climate funding per year by 2020 was not met.

Tomas Anker Christensen speaking at COP28 in the UAE. (Courtesy photo)

A report will be released soon showing that we met and possibly exceeded the $100b target in 2022.

If we look at the average from 2020 to 2025, we're likely to hit $100b per year. One common complaint I hear is that money isn't seen, and they don't know where it goes or what happens to it, but these people should understand that the funding that a country like Uganda receives from multilateral institutions such as the World Bank, the African Development Bank, the Green Climate Fund, and the Global Environment Facility, among others, comes from us.

Denmark's $ 95 million development programme will support Uganda's climate change mitigation and adaptation initiatives, as well as its refugee programme.

4. As you are aware, Uganda is moving towards the exploration of traditional energy sources or fossil fuels, such as oil, which are widely considered to be the primary contributors to climate change and global warming. In your view, is this likely to have a dampening impact on Uganda's target of decreasing greenhouse gas emissions by 24.7% by 2030?

I am not an expert on Uganda's mitigation status, but, by all accounts, the agriculture, forestry, and other land use sectors are the largest contributors to the country’s greenhouse gas emissions, particularly due to deforestation for a variety of reasons including energy use, agriculture, and logging.

Deforestation and wetlands degradation are the primary causes of rapid emissions in Uganda, rather than greenhouse gases produced by fossil fuels. Degradation lowers the capacity of wetlands to store carbon. Large volumes of carbon dioxide and other greenhouse gases may then be released into the atmosphere as a result of this. The key to reducing the rate of increase in emissions will be safeguarding your nation's natural resources.

The question of fossil fuels is primarily about generating revenue for your country. However, when accounting for emissions from the production of fossil fuels, it is the user of the fuel who has it in his budget rather than the producer. So, it is not Uganda that will include oil and gas in its carbon budget; it is the country that purchases the commodities and consumes or burns them. That is one of the inconsistencies in carbon accounting. That the world's largest fossil fuel producers earn enormous profits and are not required to account for them in their carbon budgets.

When it comes to the specific issue of the Ugandan oil plan, it is not my place to pass judgement or advise Uganda on how to manage its natural resources because that is a national sovereign decision, but I will say this: in my country, we have decided to put an end date to fossil fuel exploration and not to issue any exploration licenses. We sold our reserves because we believe that in a 1.5-degree future when the globe electrifies energy and transportation networks, demand for oil and gas will begin to fall drastically.

I recommend that Uganda consider the rentability, the market for the commodity, the asset's quality, the cost of production, and the world oil and gas price before deciding whether this will be a profitable investment. In the end, we need a managed transition in which countries do not destroy value and their economies as fossil fuel producers, but instead retain macroeconomic stability and the appropriate growth path for themselves and their people.

5. This year’s World Environment Day was marked under the theme-land restoration, desertification, and drought resistance. In your perspective, what are some of the suitable responses to challenges such as human-induced land degradation and drought in developing nations?
   
   

Drought hits farmers, families and livelihoods hard and very often people move from their homes.

Uganda is not like Ethiopia or part of the Horn of Africa where they have had drought for so long that animals die, and people have to move from their farms like in Kenya.

A reduction in land degradation and drought is imperative for developing countries like Uganda to achieve sustainable food security and nutrition, adapt to climate change, preserve biodiversity, and enhance their resilience against natural calamities.

Uganda must work to restore and reconnect wetlands because they do not only provide wetland ecosystem services such as water supply, water treatment, flood protection, fuel, and construction materials but are also critical for increasing resilience to climate-related challenges such as drought. Their degradation, which is caused by, among other things, the expansion of land for agriculture and industrial development, is a major cause of droughts and flooding.