SA’s private sector stands ready to fund up to R500bn of the almost R1.5-trillion just energy transition (JET) investment plan that President Cyril Ramaphosa unveiled on Friday ahead of the COP27 climate summit, which opened in Egypt on Sunday, with some of those projects already under way.
The plan, which is the first of its kind globally, was sparked by the $8.5bn (R128bn) that the UK, US, France, Germany and the EU offered to support SA’s just energy transition at COP26 in Glasgow a year ago. It was approved by the cabinet last week and endorsed by the international partner group and is expected to be launched formally by the leaders of the group and Ramaphosa in Egypt this week. It outlines the total investment needed over the next five years — in electricity, green hydrogen and new-energy vehicles — to enable SA to achieve its
ambitious climate targets in a just way.
“Based on the scale of need, the $8.5bn is clearly a small part, but it is a very important and a catalytic contribution to kick-start this process during the first five years,” the head of the presidential climate finance team, Daniel Mminele, said in an interview on Saturday.
The R1.5-trillion plan, which was based on extensive evidence and modelling, set out the scale of need into which the international partners would contribute and it would provide a model for others to follow.
“SA is providing global leadership here. We’ve been involved in a process that was the first of its kind in the world. Many other countries in similar situations are looking to SA as a benchmark,” Mminele said.
Now that the plan was out, SA was in a better position to advance discussions with the international partners and other international and domestic funders and there was significant interest, he said.
European countries were revealed on Friday to be the largest contributors to the $8.5bn, along with the climate investment funds led by the World Bank. The European Investment Bank has offered over $1bn, with France and Germany together offering almost $2bn more in their own right, with a further $2.6bn from the climate investment funds.
The money includes grants, concessional and commercial loans and guarantees and will mainly go to the decommissioning of Eskom’s old coal plants and supporting coal mining areas, as well as to expanding SA’s transmission and distribution infrastructure to enable more renewable energy to be brought on to the grid.
Separately, the World Bank announced on Friday that it had approved $497m to finance the shutdown and repurposing of Eskom’s 62-year-old Komati coal power station, whose last unit was switched off last week.
The funding, which will also support affected workers and create new opportunities for local communities, is almost double the amount the World Bank indicated earlier this year and it will see the installation of new solar and wind plants as well as battery storage.
First step
The bank, whose president, David Malpass, visited Komati on Sunday en route to Egypt, said the Komati project was a good first step towards low-carbon development, which would enhance energy security and “can serve as a reference on how to transition fossil fuel assets for future projects in SA and around the world”.
The 216-page JET investment plan document released on Friday shows that SA’s private sector can make R500bn available over the next five years and international and domestic public sector development finance institutions can contribute a further R150bn, to add to the R128bn from the international partner group.
“There is a lot of appetite based on our discussions with the domestic financial sector. Some of it is built into their own projects and pipelines in the renewable space and some is in play already. We have been in discussions with the private sector and encouraged them to indicate to us what enabling actions from the public sector need to be in place to trigger greater flows from the private sector,” Mminele said.
There were also discussions under way with the Global Financial Alliance for Net Zero coalition of leading financial institutions led by former Bank of England governor Mark Carney and there was significant interest internationally, including from philanthropic funders, Mminele said.
The next step would be to put the arrangements in place to implement the plan.
Ramaphosa said the plan would be the subject of consultation and engagement.
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