Climate envoys from the US, UK, France, Germany and the EU are exploring SA’s request to fund a “just energy financing facility” with the intention to reach a framework agreement by the time of the COP26 meeting in Glasgow in November.
The aim of the facility is to provide financial and technical support for SA to decarbonise its economy more swiftly. SA has requested that the facility include grant financing as well as substantial concessional debt financing from development finance institutions.
The proposal is for a facility at government level and would raise funds for three sectors: the power sector, where the decommissioning and repurposing of some Eskom power stations and investment in transmission are required; support for the shift to the manufacture of electric vehicles; and the development of a green hydrogen production strategy.
The envoys, led by the UK’s COP envoy John Murton, on Tuesday met minister of the environment, forestry & fisheries Barbara Creecy; public enterprises minister Pravin Gordhan; minister of trade, industry & competition Ebrahim Patel; and deputy ministers of finance David Masondo and of international relations & co-operation Alvin Botes.
In a statement, Creecy said SA’s more ambitious commitment to mitigating greenhouse gases, endorsed by the cabinet and contained in the nationally determined contributions (NDC) under the Paris Agreement, “required an equally ambitious multilateral commitment of financial support by developed countries” for a just transition.
The “just energy transition” refers to the need to shift away from fossil fuels in a way that communities and workers who have depended on it for their livelihoods are not left stranded.
“We need certainty and predictability of the quantum of financing available to us, to accelerate this transition. We do need an irrevocable agreement that we can sign at COP26 where our commitments, as all parties, are clear.
“SA’s just transition requires substantial concessional and grant funding and technical assistance, which takes into account fiscal constraints and supports government’s quest to promote long-term financial sustainability,” said Creecy.
The delegation “commended SA on its revised and ambitious nationally determined contribution” and “agreed to revert on issues ... raised in the meeting”.
Experts from all parties are to form a technical team to work towards an agreement.
Eskom has been in talks with overseas development finance institutions for several months in the hope that it can secure concessional finance. Its initiatives were to a large extent the catalyst for the envoy visit.
The proposal put forward by Creecy and her fellow cabinet ministers involves a broader transaction than that proposed by Eskom, with a broader reach, backed up by political support. However, Eskom’s proposal is by far the most developed and will be folded into the first stages of the bigger initiative.
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