Following the World Bank’s approval of a US$ 497 loan for South Africa , the International Partners Group (IPG), comprised by the UK, France, Germany, the US and the EU, released a joint statement welcoming and endorsing South Africa’s Just Energy Transition Investment Plan.
The partnership between the countries aims to accelerate the decarbonisation of the South African economy so that the country can achieve the ambitious targets set out in the updated emissions targets of South Africa’s Nationally Determined Contribution.
The Just Energy Transition Investment Plan
During the COP27 Leaders’ Summit on 7 November, South African President Cyril Ramaphosa launched the new Just Energy Transition Investment Plan. It includes three priority areas for funding – the energy sector, as well as electric vehicles and green hydrogen.
The approach of the plan is focussed to ensure that those most affected by the transition are being assisted and not left behind. This includes workers as well as whole communities. Investment for the plan is needed from both the private and the public sector.
International funding
The IPG is mobilising an initial $8.5 billion to catalyse the first phase of the programme. The financing package will be disbursed over the five-year period through various mechanisms, including grants, concessional loans and investments, and risk-sharing instruments. IPG financing will be aligned with the Investment Plan and will target decommissioning of coal-fired power plants, financing alternative employment opportunities in coal mining areas, investments that facilitate the accelerated deployment of renewable energy, and investments in new sectors of the green economy.
The original IPG financing package of USD 8.5 billion includes:
- $2.6 billion through the Climate Investment Funds Accelerating Coal Transition Investment Plan.
- $1 billion from France
- $1 billion from Germany
- $1.8 billion from the United Kingdom
- $1 billion from the USA
- $1 billion from the EU
Some of these funds have already been channelled, while other parts still need to be finalised and channelled in line with the final investment plan.
Progress
The Climate Investment Fund’s Accelerating the Coal Phase-out (CIF ACT) investment plan will provide a total of USD 2.6 billion, including USD 500 million in high-concession funding for accelerating the coal phase-out provided by the CIF.
IPG members are providing about 65% of the funding for the entire CIF-ACT programme. The CIF-ACT investment plan will support the decommissioning and repurposing of three coal-fired power plants, as well as community development and energy efficiency projects in the South African province of Mpumalanga.
France and Germany provide $300 million each for a concessional policy loan to South Africa to support the JETP. The loan will be formally signed during COP27.
A number of IPG grant-funded activities have contributed to the development of the Investment Plan and will support South Africa’s ongoing analytical and policy work towards implementation. These include:
- The UK has funded work with municipalities and affected communities in the two most coal-dependent municipalities in Mpumalanga (eMalahleni and Steve Tshwete Local Municipality) to jointly develop a coherent and inclusive plan for a just transition for each community.
- Germany has funded the integration of renewable energy (especially solar energy) into the existing energy grid. Energy efficiency measures are being developed in collaboration with local authorities.
- The U.S. Trade and Development Agency funded a clean energy and climate infrastructure event series to promote collaboration between the public and private sectors in the United States and South Africa on clean energy issues. The series of events kicked off with a two-day workshop on green hydrogen held in Cape Town from 31 October to 1 November. USTDA also intends to support the preparation of projects to strengthen South Africa’s electricity grid and accelerate the deployment of renewable energy.
- The EU has provided grants to increase the participation of South African civil society in reducing emissions and adapting to climate change, while promoting gender equality and youth participation through capacity building.
France has funded work to develop a climate finance mapping and tracking tool, conduct a study on the localisation potential of solar PV and storage value chains in South Africa, and support Eskom to further develop its JET strategy and implementation plan.
What the funding partners are saying
The Chair of the International Partners Group, UK Prime Minister Rishi Sunak:
“I congratulate President Ramaphosa on the great progress made in the Partnership for a Just Energy Transition in South Africa. In the one year since the COP, South Africa, along with the UK and our friends in the International Partners Group, have shown how serious we are about making the changes we need to stop climate change. The South African JET Investment Plan paves the way for a sustainable and equitable transition away from coal and towards cleaner forms of energy, laying the foundation for a strong green economy.”
The President of the United States of America, Joseph R. Biden:
“The United States is proud to work with the South African government and members of the International Partners Group to support South Africa’s just transition to a cleaner energy future. We welcome the comprehensive JET investment plan and fully support South Africa’s economic transformation in the energy sector. Our support for South Africa’s clean energy and infrastructure priorities, which include efforts to provide coal miners and affected communities with the assistance they need to make this transition, will help South Africa’s clean energy economy succeed.”
The President of the French Republic, Emmanuel Macron:
“France is proud to work with South Africa to implement this partnership for a just energy transition, which will help strengthen the country’s energy security, make its electricity mix greener and set a benchmark for other countries around the world, focusing on the equitable component of this energy transition so as to leave no one behind. I welcome the ambitious investment plan for a just energy transition presented by South Africa and am pleased to confirm that France has just released €300 million of concessional political support to South Africa, which is a first step towards fulfilling our commitment to support South Africa in decarbonisation to the tune of $1 billion.
The Chancellor of the Federal Republic of Germany, Olaf Scholz:
“Climate protection and economic prospects must go hand in hand. The adoption of the investment plan is a milestone on the way to a climate-neutral and at the same time socially just economy in South Africa. Germany is contributing USD 1 billion, a significant portion of which is in the form of grants, to a support package of USD 8.5 billion from the international donor community. This is an ambitious start. More must follow, especially in cooperation with the private sector.
European Commission President Ursula von der Leyen:
“For the EU, climate change must be just. With this partnership and new investments, we can help ensure that no one is left behind. That is why I welcome the adoption of this Investment Plan. It will now launch the South Africa Partnership for a Just Energy Transition, a unique global initiative to accelerate a just energy transition in countries committed to the coal phase-out. It is a flagship of EU-supported multilateral cooperation to limit global warming to 1.5°C.”
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