New investment pledges boost South Africa’s just energy transition funding pool to $11.8bn

1 Oct 2023

Denmark, the Netherlands and Spain have joined the group of countries who are partially financing South Africa’s Just Energy Transition.

Denmark, the Netherlands and Spain have officially pledged their commitment to the Just Energy Transition Partnership, expanding the prospective funding pool to $11.8-billion.

This was announced by Rudi Dicks, head of the Presidency’s project management office, at the 11th quarterly meeting of South Africa’s Presidential Climate Commission on Friday, 29 September 2023.

Chaired by Minister of Forestry, Fisheries and the Environment Barbara Creecy, the meeting featured updates on various aspects of the country’s efforts to combat climate change and prepare for the upcoming United Nations Climate Change Conference (COP28) in Dubai.

Before this, a collective comprising France, the European Union, the United Kingdom and the United States had already pledged $8.5-billion to the initiative through grants and loans. Daily Maverick has previously reported that the EU, Germany, France, the UK and the US partnered to support South Africa’s climate action goals by helping finance the move from its heavy reliance on coal to cleaner and renewable energy sources.

The countries, which announced their partnership with South Africa at the COP26 climate negotiations in Glasgow, Scotland, pledged R131-billion ($8.5-billion) over the next three to five years in the form of grants, concessional loans and investment and risk-sharing instruments, including mobilising private-sector funding.

At the conclusion of COP26, UN Secretary-General António Guterres said that “to help lower emissions in many other emerging economies, we need to build coalitions of support including developed countries, financial institutions, those with the technical know-how. This is crucial to help each of those emerging countries speed the transition from coal and accelerate the greening of their economies.

“The partnership with South Africa announced a few days ago is a model for doing just that,” he said.

Addition of new partners

To some extent, developed countries have heeded this call with the addition of more partners for South Africa’s transition plans.

Dicks said: “The components have increased if one looks at it for the initial partners that are there. We have now $324-million, which is the grants component and it totals $8.4-billion. In the time that we have been dealing with the implementation plan, we basically received the request from Denmark and the Netherlands to join the International Partner Group (IPG) ... it pushes us to just below $12-billion of commitments that cuts across the various forms of funding.

“There are others who are also engaging with us around wanting to commit, whether they’re part of the IPG group like Spain for instance … there are a number of additional countries who want to come onboard and support that,” he added.

As part of the partnership, South Africa has developed and handed over a Just Energy Transition Investment Plan to the IPG.

Three priority sectors have been identified including electricity, new-energy vehicles and green hydrogen, with the goal of decarbonising the country’s economy within the Nationally Determined Contributions target range of 350–420 million tonnes of CO₂ equivalent by 2030.

Read more in Daily Maverick: Funding a greener future – Ramaphosa outlines South Africa’s R1.5 trillion three-step energy transition plan

At COP27 in Sharm el-Sheikh in Egypt last year, President Cyril Ramaphosa formally handed over the R1.5-trillion investment plan to the IPG. At the time, the draftees of the plan said the next step would be to formulate an accompanying implementation plan.

On Friday, Dicks said that the Implementation Plan 2023–2027 is a “roadmap that enables us to take targeted and aligned strides cascading it down to a relatively granular level of what particular sets of projects or investment opportunities we need to focus on”.

The draft Implementation Plan will be presented to the commissioners in an “open online session” on 18 October. DM

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Addition of new partners