South Africa’s government will utilize 90% of an $8.5 billion climate-finance package that wealthy nations offered it to transition to cleaner energy to bolster its power supply, according to an investment plan released on Friday.
The funding deal, pledged by the US, UK, the European Union, Germany and France, was unveiled at last year’s United Nations-led climate talks in Glasgow, and details will be finalized at the COP27 meeting in Egypt next week.
South Africa envisions $7.65 billion being invested in electricity generation and transmission, $700 million in developing green hydrogen projects and $200 million in an electric-vehicle industry over the next five years. The bulk of the funding will be in the form of loans, the plan showed.
The package “is not sufficient to meet the scale of our ambition going to COP27. That is the message we will be taking forward,” President Cyril Ramaphosa said in a webcast address. “Our plan can really only be fully and properly executed if there is more grant funding and funding made available in concessional loans and investment packages,” and developed nations are open to South Africa’s request to make more money available, he said.
South Africa is the world’s 13th-biggest source of greenhouse-gas emissions. The climate-finance package is key to closing many of the nation’s old and malfunctioning coal-fired plants and replacing them with renewable sources.
The so-called Just Energy Transition Partnership is expected to serve as a prototype for similar deals with coal-dependent, developing nations such as Vietnam, Indonesia and India.
South Africa expects the climate-finance package to attract significant additional capital to help it transition away from using coal to generate electricity, according to Daniel Mminele, the head of the government’s climate-finance task team.
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