(Bloomberg) -- South Africa’s National Treasury said it expects as much as $2.4 billion to flow into the country this year from a climate finance pact with some of the world’s richest nations.
South Africa has secured pledges of $9.3 billion under the so-called Just Energy Transition Partnership — an agreement with Germany, France, the European Union, UK, US, Netherlands and Denmark - in the form of grants, loans and guarantees. While the pact was initially inked in 2021 a series of procedural setbacks and infighting in the South African government over a promise to shut coal plants has delayed its implementation.
“We are currently engaging with the partners to raise further funding from the JET package,” Mmakgoshi Lekhethe, deputy director-general for asset and liability management at the National Treasury, told reporters Monday on the sidelines of a conference in Pretoria. “The ultimate objective really is to move toward developing a good growth strategy.”
South Africa’s pact is seen as a prototype for similar programs that are now being developed with Vietnam, Senegal and Indonesia. Together the JETPs total more than $40 billion in investment pledged to the developing countries on the condition that they lessen their dependence on climate-warming fossil fuels.
The money underpins South Africa’s Presidential Climate Commission’s recommendation that the government set up a body that would guide and raise investment for the energy transition.
South Africa relies on coal for about 80% of its electricity generation and has the most carbon intensive economy of any of the Group of 20 nations.
The latest setback to the program was a request made in June to the World Bank-linked Climate Investment Funds that it run three coal-fired plants at below capacity rather than close them as it had initially agreed.
South Africa has to explain to the CIF by about the end of October how it will do that. Acceptance of its plan is needed to secure $500 million in concessional loans from the fund that would in turn trigger about another $2 billion in lending from development finance institutions and private companies.
Dipak Patel, head of climate finance and innovation of the Presidential Climate Commission said South Africa’s slow pace of implementation was needed to ensure support from communities for the investments.
Alternative Livelihoods
Those include facilitating investment in renewable energy plants, transmission lines and providing alternative livelihoods for coal miners, power plant workers and communities dependent on economic activity linked to the dirtiest fossil fuel.
“It is meant to harmonize all of our efforts, public and private, to ensure that no one gets left behind in the transition.”
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