South Africa, which has received $8.5 billion in climate finance from some of the world’s wealthiest countries, is in talks with other countries to reduce its reliance on coal, according to Environment Minister Barbara Creecy.
Climate finance provided by the United States, United Kingdom, Germany, France, and the European Union as part of the Just Energy Transition Partnership has been hailed as a model for deals to wean other coal-dependent developing nations off the dirtiest fossil fuel.
Nonetheless, it is a fraction of the R1.5 trillion ($87 billion) that the country has estimated is required for its plan to phase out coal over the next five years.
“We’ve had some bilaterals where there’s been additional interest shown,” Creecy said in an interview at the COP27 climate summit in Egypt, referring to talks with other countries. President Cyril Ramaphosa indicated to the partners “that we are now going to make the circle bigger and other countries that would want to contribute to the JET Investment Plan, we are going to include them as well.”
With more than 80% of its electricity generated by a fleet of mostly dilapidated coal-fired power plants and regular rolling blackouts caused by Eskom Holdings SOC Ltd.’s inability to meet demand, the country is in desperate need of investment in its electricity sector.
The Sun, the Wind
South Africa, as the world’s 13th-largest source of climate-warming gases, is an appealing option for wealthy nations seeking to maximise the impact of their carbon-cutting investments. Because its power plants are old, they will have to close in the coming years, and the country has plenty of sun and wind resources to generate renewable energy.
In addition to electricity, South Africa is attempting to increase investment in its nascent electric vehicle and green hydrogen industries as part of its coal transition plan. Green hydrogen refers to a process in which water is split to produce fuel using renewable energy.
On November 15, the United States and Japan announced a $20 billion deal for Indonesia. On November 16, Bloomberg reported that Vietnam could secure up to $14 billion in a process led by the United Kingdom and the European Union, citing unnamed sources because a public announcement has yet to be made.
Creecy also emphasised the importance of reforming multilateral development banks such as the World Bank and the International Monetary Fund to make it easier for them to lend to climate finance projects. She also stated that they would need to be recapitalized in order to support the level of spending required to transition to a lower-carbon future.
“You’ve got to actually say what this transition is going to cost,” she said. “If we think that the only source of finance that will be available to all of us is going to be what’s in the climate funds, it’s not going to be enough.”
