Climate envoys from four countries and the EU arrive in SA on Monday to explore the potential to fund a coal retirement plan for SA ahead of the UN Climate Change Conference (COP26) in Glasgow in November.
SA’s carbon intensity — it is the 12th-largest emitter in the world — and its high potential for the production of renewable energy as well as green hydrogen make it a good candidate for a globally funded effort to reduce greenhouse gases.
However, while there is at least one concrete proposal on the table, made by Eskom, as well as other more ambitious proposals by expert technical groups, neither the SA government nor the envoy delegation would comment on the potential for a specific transaction.
Energy policy in SA is highly contested and political, and the issues related to Eskom’s capacity, especially its heavy debt burden, make it a complex environment in which to strike a deal.
The visit has been convened by the British high commission and will be led by UK climate envoy John Murton. Envoys for the US, France, Germany and the EU are also included. Three days of talks are scheduled with key cabinet ministers, business, labour and other stakeholders.
The British high commission’s head of climate and energy, John Wade-Smith, said the idea is to initiate a broad conversation about SA’s transition to cleaner energy in a manner that is just and takes account not only of changing energy technologies but also the social impact on communities. “There is quite a lot of opportunity in SA’s energy transition. We want to better understand how we can support that in a manner that is consistent with what SA wants to achieve,” he said.
The lead ministry from the SA side is environment, forestry & fisheries. A spokesperson, Albi Modise, last week said the visit would “assess opportunities for enhanced co-operation around a just energy transition ... The developed economies have a responsibility to fund the just transition to a low-carbon economy and climate-resilient society.”
COP26 is expected, in terms of previous agreements, to mobilise $100bn a year until 2025 to support the energy transition in developing countries. As a country, SA is yet to develop a just energy transition plan, with work by the presidential climate commission still in an early stage to determine what this would entail and how much it would cost.
In the interim, Eskom has proposed its own modest energy transition, which will entail a slightly accelerated decommissioning of Eskom power stations than that mapped out in the Integrated Resource Plan (IRP), the government’s long-term energy plan.
In terms of the plan, eight power stations will be decommissioned (which would in fact amount to somewhat of an acceleration as the plan is lagging behind) and a ninth (Tutuka) would be decommissioned earlier than scheduled.
Funding
In return, Eskom hopes to raise concessional climate change funding from international development funding institutions to make essential investments in the national grid. These are required to connect renewable energy and to build 7,400MW of its own renewable energy and battery storage.
The head of Eskom’s just energy transition office, Mandy Rambharos, said the utility has been talking to overseas development finance institutions for some time.
“Our hope is that coming out of the envoys’ visit funders will see that Eskom is committed to decarbonising, but that we also need financing to do that. Due to our debt situation we need highly concessional funding. We are hoping to get a little more of a financial commitment,” she said.
Wade-Smith said it is too early to anticipate the extent to which the Eskom proposal will be deemed attractive by the UK and its partners. The fact that Eskom does not have the power to change energy policy, which is the responsibility of the government, to enable swifter coal retirement, as well as Eskom’s very large debt burden, which it is unable to service, make for a complicated environment.
“Hopefully, we will become clearer [through the engagements] on where the partnerships can be taken. The fact that we are coming out to SA signals that there is intention and interest to recognise SA’s potential in climate change. We want to explore within the complexities that exist what is viable and what makes sense,” he said.
The department of mineral resources & energy did not respond to a request for comment. Minister Gwede Mantashe has previously said it would be foolish for SA to retire its coal assets prematurely, because coal is one of its important strategic advantages.
Business Unity SA CEO Cas Coovadia said business is committed to achieving a more sustainable energy mix in a way that minimises job losses and creates possibilities for new employment in new industries.
“The meeting with the envoys comes just over a month before the COP meeting, where we will be pushing for developed countries to make good on their commitment in the COP16 Accord to mobilise $100bn a year to address the needs of developing countries in their adaptation and mitigation efforts,” he said.
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