Just weeks before SA takes part in a landmark UN conference in which it hopes to clinch a funding deal for Eskom to transition from its reliance on coal, divisions within the government were once again laid bare.
Mineral resources & energy minister Gwede Mantashe on Thursday warned that green financing for Eskom could be a “dangerous step”.
That is while the presidential climate commission and Eskom espouse a green funding deal for the utility in the lead-up to the UN Climate Convention (COP26).
“My background is in the trade union movement. I’m suspicious of any programme that is based on money, that will give you money. I don’t like that,” the minister told delegates at the Joburg Indaba on Thursday.
“I want us to have a programme, and then we look for funding. If we get green funding, I support it. But we should not collapse our economy because they are greedy for green funding. I don’t believe in that; I think it is a dangerous step to take.”
Mantashe’s comments come a week after several ministers met climate envoys from abroad to explore plans to fund SA’s transition away from fossil fuels, including accelerating the decommissioning of SA’s ageing coal-fired power plants.
Also speaking at the indaba, Eskom CEO André de Ruyter said one need only look at the recent cabinet decision to adjust SA’s nationally determined contribution — its climate action plan — and to lower its target carbon emissions to align with global goals to limit temperature increases to 1.5°C by the end of the century.
The tripartite alliance has also issued a statement that supports green financing, he noted.
This echoed recent comments by Vicky Ford, the UK’s Africa minister, who, when asked about mixed messages coming out of the SA government about the transition away from fossil fuels, told Business Day the most important thing was that President Cyril Ramaphosa and the cabinet had endorsed a nationally determined contribution that was more ambitious than what had previously been on the table.
De Ruyter, however, said he agreed with Mantashe that “we shouldn’t rush into this thing in an unstructured way.
“We should plan carefully. We are tinkering with the aorta of the SA economy. So let’s do this carefully. Let’s do it deliberately. But let’s do it.”
Last month, at Eskom’s annual results presentation, De Ruyter denied there was an impasse over Eskom’s accelerated decommission proposal, saying “maybe the controversy is a bit manufactured by certain members of the media.
“Obviously, there will be debates and engagement. Sometimes the debate will be robust, but it will always be healthy. And we will abide by government policy” as it is made by the department of mineral resources & energy.
Mantashe, who maintains support for coal as a prominent part of SA’s energy mix, was notably not part of last week’s engagements with the climate envoys. The SA delegation was led by the minister of the environment, forestry & fisheries, Barbara Creecy, and included the ministers of trade, industry & competition and of public enterprises, as well as the deputy minister of finance and of the department of international relations & co-operation.
Financing facility
After the meeting, Creecy said SA required substantial concessional and grant funding and technical assistance to implement a just energy transition. As such, SA is proposing the establishment of a just transition financing facility. “This represents a win-win for SA and its international partners, enabling ambitious climate action in SA, addressing social impacts comprehensively while meeting developed-country commitments to finance the transition.”
The intensifying rhetoric around a green deal comes ahead of COP26 in Scotland in November, which Mantashe does not plan to attend.
“If I go to COP26 I think many people will be frightened — ‘what is this coal fundamentalist doing in COP26?’ I’m not pressured not to go, but we will keep our delegation to size and the team that go there, I have confidence in them; they will negotiate a deal that will be helpful for the SA economy.”
On Thursday, De Ruyter said SA’s transition away from fossil fuel will be challenging and exciting. “And it will offer significant opportunities for investors to come and put the money where their mouth is and also earn a fair and reasonable return from investments in the electricity industry,” he said.
Joanne Yawitch, CEO of the National Business Initiative and member of the presidential climate commission, said Eskom’s just energy transaction would enable SA to exploit an immediate “window of opportunity” to access green financing.
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