SA will need both grant funding and concessional loans to assist with its transition to clean energy, despite being a middle-income country, US deputy climate envoy Jonathan Pershing told journalists on Friday.
Pershing was one of the five climate envoys from the developed world who this week met the SA government to discuss financial support for SA’s energy transition. Expert officials from all parties are working to reach a framework agreement on a mechanism for how this could be done, in time for the COP26 meeting in November.
SA has proposed a “just energy financing facility” to assist with funding for three sectors: the power sector, which will involve the retirement of coal and investment in the national transmission grid; the manufacturing of electric vehicles; and the production of green hydrogen.
The Biden administration has pledged $11.4bn a year to support developing countries with the energy transition, as part of its commitment to the COP. As a whole, developed countries have committed to raising $100bn a year to assist the developing world.
“There are multiple sorts of finance. One is straight grant funding, which does not need to be repaid. Second, there are loans at a rate that is much less than the market rate. In SA, both will be needed and we will talk to our SA partners about both. SA is a middle-income country, so often does not have access to concessional loans, but that does not mean there is no need here,” Pershing said, who is on an African tour to discuss climate issues.
“We see this from both perspectives. We see the opportunity for ourselves; we care; it matters to our citizens. But we also see it as an opportunity to partner with a critical growing region and we are actively looking to be that partner,” he said.
The four countries and the EU which participated in the visit to SA had each individually stated what they could offer financially in terms of the own budget planning processes. He did not put a number on what that had been.
In a separate briefing on Friday, UK COP26 envoy John Murton said that the UK recognised the need for a long-term partnership with SA to assist with the energy transition.
“This was an initial visit, timed with the release of SA’s updated ambitious Nationally Determined Contribution. It was a chance for us to understand the scope of SA’s ambition. We are hoping that by COP26 we will be able to give greater clarity on the scope of how we will be working together,” said Murton.
Commenting on the SA government’s desire for economywide support, rather than a narrow focus on renewable energy, Murton said that clearly the energy sector “had to be the leading edge” of the transition as the country did not have sufficient energy which was holding back the economy.
“SA has the most carbonised energy system in the world and you shift to battery vehicles powered off a grid that is driven by coal you are not going to decrease net emissions,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.