- South Africa’s National Treasury has noted that it expects as much as $2.4 billion from a climate finance pact to flow into the country this year.
- South Africa’s pact is a prototype for similar programs that are now being developed with Vietnam, Senegal and Indonesia.
South Africa‘s National Treasury has noted that it expects as much as $2.4 billion to flow into the country this year from a climate finance pact with some of the world’s richest nations.
South Africa has secured pledges of $9.3 billion under the so-called Just Energy Transition Partnership—an agreement with Germany, France, the European Union, the UK, the US, the Netherlands, and Denmark—in the form of grants, loans, and guarantees. While the pact was initially inked in 2021, a series of procedural setbacks and infighting in the South African government over a promise to shut coal plants have delayed its implementation.
“We are currently engaging with the partners to raise further funding from the JET package,” Mmakgoshi Lekhethe, deputy director-general for asset and liability management at the National Treasury, said. The ultimate objective is to move toward developing a good growth strategy.
South Africa’s pact is a prototype for similar programs being developed with Vietnam, Senegal, and Indonesia. Together, the JETPs total more than $40 billion in investment pledged to developing countries in exchange for lessening their dependence on climate-warming fossil fuels.
This underpins South Africa’s Presidential Climate Commission’s recommendation that the government establish a body to guide and raise investment in the energy transition.
South Africa relies on coal for about 80 per cent of its electricity generation and has the most carbon-intensive economy of the Group of 20 nations.
The latest setback to the program was a June request to the World Bank-linked Climate Investment Funds that it run three coal-fired plants below capacity rather than close them as it had initially agreed.
South Africa must explain to the CIF by the end of October how it will do that. The plan’s acceptance is needed to secure $500 million in concessional loans from the fund, which would, in turn, trigger about another $2 billion in lending from development finance institutions and private companies.
Dipak Patel, head of climate finance and innovation at the Presidential Climate Commission, said South Africa’s slow pace of implementation was needed to ensure community support for the investments.
Those include facilitating investment in renewable energy plants and transmission lines and providing alternative livelihoods for coal miners, power plant workers and communities dependent on economic activity linked to the dirtiest fossil fuel.
“It is meant to harmonise all of our public and private efforts to ensure that no one gets left behind in the transition.”