The government is confident it will be able to secure more funding from developed countries to support its R1.5-trillion climate-change linked development plans.
Environment, forestry & fisheries minister Barbara Creecy briefed the media on Tuesday on some of the important outcomes for SA and other African countries at the UN’s COP27 climate conference that concluded over the weekend in Egypt.
Creecy said she had some bilateral meetings during COP27 with other developed countries that were interested in supporting SA’s just transition energy plan. The Just Energy Transition Partnership (JETP) that was announced at COP26 in Scotland last year secured pledges for $8.5bn in funding for SA’s efforts to cut emissions by moving the energy sector away from coal. The pledges came from the UK, US, France, Germany and the EU.
SA’s Just Energy Transition Investment Plan (JET-IP), published in the run-up to COP27, showed the country would need to invest about R1.5-trillion over the next five years to achieve its transition targets.
“I cannot at this stage announce anything concrete, but there is interest from other developed countries and we do expect in due course to announce the inclusion of further partners in the JETP,” Creecy said.
Securing additional financing will be critical to SA meeting its emissions reduction targets, she said.
Africa contributes 4% to global emissions and SA about 50% of this, or 2% of global emissions.
SA’s revised nationally determined contribution (NDC) submitted at COP26 committed the country to reduce domestic carbon emissions within a target range of between 350-million tonnes and 420-million tonnes of CO2 equivalent by 2030, and to achieve net-zero emissions by 2050. That would be a reduction of about 20%-33% from current emissions by 2030.
“We are putting a lot of effort into mobilising finances for our just transition so that we can achieve that target,” Creecy said.
In getting towards the R1.5-trillion funding target, she said the money required should be in the form of highly concessional loans and grants.
The money so far secured through the JETP has been mainly in the form of concessional loans and it is expected that less than 3% of the $8.5bn will be grants.
Creecy said that COP27 also emphasised the need for increased momentum to reform the multilateral development banks and international financial institutions.
Developing countries in particular were calling on the shareholders of these institutions to take decisive action to scale-up climate finance in 2023, she said.
“The multilateral banks that should be supporting just transitions are very risk averse, which makes it very difficult to access climate financing, and it also makes it very expensive. In our view, development banks should be less risk averse and be prepared to take a first-loss position.”
According to Creecy, SA’s classification as a middle-income country was “not helpful when it comes to finding sources of climate financing” because it cut the country off from access to bilateral aid.
“While we might have an average income which puts us in the category of a middle-income country, we know that 50% of our population live in poverty and we also know that we have very high unemployment rates.”
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