SA’s just energy transition plans have received strong support from global leaders over the past two weeks, accompanied by calls for the plans to be translated into action without delay.
During her visit last week US treasury secretary Janet Yellen said in a meeting with local and international philanthropic institutions that SA will “need to see concrete action soon to keep up momentum on the Just Energy Transition [JET] Partnership”, repeatedly emphasising the US’s commitment specifically to the “just” part of the JET.
Both the US and the EU, which together with the UK, Germany and France agreed at COP26 in 2021 to provide $8.5bn in funding for SA’s JET, have since committed to increase their contributions by making grant funding available for projects in support of those communities in mining areas that rely on SA’s coal-based energy system and will be most affected by the transition.
The US has announced that over and above its $1bn contribution to the JET, it will contribute an additional $45m for projects focusing on the “just” element, while the EU has committed an additional €35m in grant funding and will aim to increase this in time.
In an interview with Business Day earlier in January, the EU’s ambassador to SA, Sandra Kramer, said the EU was “trying to up the €35m because of the importance of getting the ‘just’ part right”.
Kramer — who like Yellen reiterated that the JET partners are supportive of the SA-owned and SA-led decarbonisation strategy — said the government needed to provide an implementation schedule.
The EU and other partners have endorsed the Just Energy Transition Investment Plan (JET-IP) that President Cyril Ramaphosa presented at COP27 in Egypt last year, and will offer support based on this plan, she said. “What we are looking for now is an implementation plan that the government of SA will provide.”
‘Concrete action’
In her meeting with philanthropic organisations in Johannesburg on Friday, Yellen highlighted the urgency of taking action. “We must demonstrate quickly that these coal communities, which are already struggling with unemployment, poverty and the health impacts of coal mining and emissions, will not be left behind in the context of an energy shift that benefits other regions. SA will need to see concrete action soon.”
Yellen said in her discussions with Ramaphosa and mineral resources & energy minister Gwede Mantashe on SA’s JET that the US will try to “support a set of plans that SA has devised itself that involve a gradual transition”.
Speaking during an ANC energy dialogue in Johannesburg last week, Mantashe said some of the disagreement about SA’s JET was due to some interpreting this as a transition from coal-fired energy generation to renewables, when from his perspective this had to be a transition from high to low emissions.
In contrast to the emphasis these investment partner countries are placing on the social and developmental aspects of the just transition, the R1.5-trillion JET-IP focuses predominantly on investment in the electricity value chain, green hydrogen and new-energy vehicles.
The investment plan, which was endorsed by cabinet last year before it was released at COP27, is expected to come under scrutiny during a public consultation process.
While it does make provision for social investment and skills development, more than 95% of the proposed spending is being earmarked for investment in the three areas mentioned above.
Infrastructure
In a recent briefing note, Gaylor Montmasson-Clair, a senior economist for sustainable growth at Trade & Industrial Policy Strategies, said when looking at details to ascertain to what extent the JET partners and investment plan were “decarbonisation versus just transition plans”, infrastructure projects are allocated 93% (R1.37-trillion) of the R1.5-trillion funding and “economic diversification and innovation are allocated a mere R83.4bn”.
According to Montmasson-Clair, social investment and inclusion, as well as skills development, receive R9.6bn and R2.7bn, respectively. Overall, in the JET-IP, R60bn is considered to be necessary for a just transition in Mpumalanga’s coalfields.
Referring to the R60bn, Yellen said these investments cover a range of activities, including funding to support local communities and to develop supply chains for new-energy technologies, and partnering with the coal workforce through job reskilling.
For Eskom’s Komati power station in Mpumalanga, the first of at least four old coal-powered stations that will be decommissioned within the next five years, the World Bank has approved SA’s request for a R9bn project to repurpose the power plant using renewables, and to create opportunities for affected workers and communities.
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